2019 open enrollment

2019 Open Enrollment Guide: 7 Healthcare Trends You Need to Know

This year in healthcare has been both interesting and tumultuous. In 2018 alone, the Affordable Care Act has undergone significant changes at the hand of the current presidential administration. First, the Cadillac Plan tax was delayed from 2020 to 2022, in January.

Then, in April the administration announced two new exceptions to the individual mandate and gave states the authority to cut back on the 10 essential health benefits mandated by the ACA. Later the government released new rules that expanded both association health plans, and short-term ones, in June and August, respectively.

These rules, in addition to multiple cuts in government funding, have worked to cripple the ACA. Still, until the act is officially repealed, it’s the law of the land. As such, you’ll need to know how these changes will affect your 2019 open enrollment.

Luckily, The Olson Group is prepared and ready to help. Here’s a list of top seven healthcare trends and changes you need to be aware of for your 2019 open enrollment.

 

Learn more about the recent expansion of association and short-term health plans. 

 

1. Plan Changes and Limit Increases

The IRS, in May of this year, announced new annual contribution limits for Health Savings Accounts (HSAs) for the upcoming plan year. For 2019, the annual limit on deductible contributions to a health savings account will rise by $50 for individuals and $100 for families.

one dollar bills

Now, the annual contribution limits will be $3,500 and $7,000 for individuals and families, respectively. On the other hand, the minimum deductible of a high-deductible health plan (HDHP) is unchanged for 2019. The deductibles for these health plans, the only type that can be paired with an HSA, will remain $1,350 for individuals and $2,700 for families.

Conversely, the annual HDHP out-of-pocket maximums, for 2019, will increase. Next year, out-of-pocket maximum’s for HDHPs will be $6,750 for individuals and $13,500 for families.

 

2. Penalties Are Still Relevant

Beginning late last year, and continuing through this summer, the IRS sent over 300,000 proposed-penalty letters to employers for violations of the ACA’s employer mandate in 2015. Some of these letters proposed penalties for large employers that exceeded $1 million each.

And, as an employer, you shouldn’t predict these letters to stop. Mark Spittell, managing director at KPMG’s Compensation & Benefits Practice, expects 2016 assessment letters to be issued before the end of this year.

Penalties for violating the “employer shared responsibility payments” (ESRP) come in the form of a 226-J letter. An employer has only 30 days to respond to this letter. And, they must complete and return their response, via Form 14765, to challenge any part of the IRS’ assessment.

document

It’s important your firm handles these letters and responses as quickly as possible. Because the penalties can be significant. In a worst-case scenario, an employer with inadequate health coverage could pay for the cost of this coverage, in addition to penalties up to $2,000 a year for every full-time employee.

In addition to ESRP penalties, employers need to be aware that Forms 1094-C, 1095-C, and Summary of Benefits Coverage (SBC) all still need to be filed. Employers that fail to complete Forms 1094-C and 1095-C, or complete them with errors, could face both reporting-related penalties and ESRP penalties.

Additionally, the penalty for a failure to provide employees with an SBC is less punitive but still significant. For 2018, a penalty of $1,128 per participant can apply to the failure to provide an SBC as required.

 

3. Utilize Big Data

Every year, through benefits technology, your organization can collect a treasure-trove of health data. This data, with the help of online resources, can provide an analytics-based guideline for improving employee’s health outcomes.

Employers should use this information to implement personalized clinical management and employee engagement programs. These programs let you maximize your healthcare dollars.

 

4. Digital Tools

Digital tools today, play as important of a role as ever, in both open enrollment and benefits in general. Online enrollment platforms let employees easily pick and enroll in their benefits plan. As mentioned above, they can also help your firm analyze important health data.

digital tools

Similarly, digitally-driven benefits such as telemedicine, are growing in importance and utilization. So, it’s crucial your firm both understands and takes advantage of these digital tools, for your 2019 open enrollment. Because the role of this online equipment will only continue to grow.

 

5. Incentives for Comparison Shopping

Modern consumers are no strangers to spending hours online searching for the best deal for a particular product. Yet, this propensity to comparison shop doesn’t extend to healthcare. According to Employee Benefits Advisor, only a little more than one-third (36 percent) of Americans say they’ve used the Internet or mobile apps during the last year to comparison shop for healthcare.

This number is a huge improvement, since 2012. That year, only 14 percent of consumers said they comparison shopped for healthcare. Still, your business should do all it can to promote comparison shopping for healthcare among your employees.

To encourage your staff to participate in this trend, your firm should consider offering incentives. Even small financial incentives, such as $50 gift cards, can push employees to use these healthcare transparency resources.

The quality and cost of healthcare can vary widely within the same city or even the same neighborhood. So, utilizing these transparency resources can result in significant savings for both your employees and your organization overall.

You wouldn’t expect someone to buy a car without them researching the vehicle first. So, why wouldn’t you expect your staff to do the same for healthcare. Especially, as the cost of healthcare and health benefits continues to rise. In 2019, the cost to provide healthcare coverage is expected to rise to $15,000.

 

6. Integrate Enhanced Benefits

Enhanced benefits, also known as voluntary or ancillary benefits, are more important to your health plan’s success than you may realize. Benefits such as vision and dental care, identity theft protection, or short-term disability all affect the outcomes of your overall benefits plan’s success.

These ancillary lines of coverage help maximize the effectiveness of your firm’s healthcare dollars. Combining medical and enhanced benefits under a single health plan may enable your company to analyze a wider range of data.

As previously mentioned, the more data you have, the better you can engage in proactive outreach and clinical support for employees. Especially for those with chronic conditions.

Those with chronic conditions, often known as high utilizers, cost billions of dollars themselves. The sickest five percent of patients use a full third of Medicare’s budget. Similarly, this five percent consumes over half the spending of Medicaid.

 

7. Employee Education

Employee education is or should be, the most vital component of any open enrollment. According to a 2018 poll by Unum, the average employee spends 30 minutes or less reviewing benefits materials before open enrollment.

Despite this fact, 77 percent of employees say they’re prepared for open enrollment, according to a UnitedHealthcare Survey. But, according to the same study, only 6 percent of these respondents could successfully define all four basic health insurance concepts.

And, per an HSA Bank white paper, just 10 percent of employers believe their workers understand their health plans. Clearly, most employees aren’t taking the time to completely understand their benefits plans. It’s an employer’s responsibility to ensure your staff has a thorough understanding of their benefits.

Your broker or HR team can help employees with their benefits selection. But, holding employees’ hands through the process doesn’t actually help these individuals. To get the most from your healthcare dollars, all your staff must know what benefits are available to them, and how they can affect themselves and their family.

 

The Wrap

Open enrollment is critical for establishing a baseline of prosperity for your employee benefits plan. Follow these seven trends to maximize the success of your company’s 2019 open enrollment.

association health plans

Short-Term and Association Health Plans: New Tools for a New ACA

This year, the White House has shaken up the healthcare landscape, without repealing the ACA. Since the beginning of 2018, the Trump administration has reintroduced both short-term, and association, health plans. Each of these plans, give employers additional options and flexibility for providing healthcare coverage for employees.

In this article, we will define both plan types, detail their qualities, and explore the pros and cons of each. These plans, if used correctly, can be another tool for you in the fight against the rising costs of health coverage.

 

Short-Term Health Plans

Short-term health plans are health insurance policies that offer limited coverage but less expensive premiums. On August 1, 2018, President Trump announced an expansion of these short-term policies. The administration, with their new rules, are seeking to redefine short-term, limited duration insurance.

Now, short-term plans can extend to 12 months at a time.  And, people can renew their short-term coverage for, up to, 36 months. This period was based on the model created by the Consolidated Omnibus Budget Reconciliation (COBRA) Act.

But, consumers can only extend their policy for the same amount of time, as the original length of coverage. So, if you bought a twelve-month policy, you may only renew that policy for 12 months, at a time.

 

Association Health Plans

In June of this year, the Trump administration also announced a rule that expands the consumer availability of association health plans (AHPs). Association health plans allow small businesses to band together to purchase insurance. These kinds of insurance plans have existed for years. Albeit, in a much different form than what they will be.

The new regulations will allow more association plans to come to market. Because of these recent laws, more small businesses and individuals who work for themselves can form and join association health plans. Early association health plans, before this recent rule, usually required the association’s members to share some economic or other common purposes beyond enrolling for health insurance.

Under the new rules, AHP members can be connected by geography alone or simple professional interest. Through these recent regulations, providing members with insurance can be the primary purpose of an association health plan.

 

Possible Effects of More Short-Term Health Plans

The expansion of short-term health insurance could lead to a multitude of effects, both positive and negative. The Trump administration believes the growth of these policies will transform the healthcare system. They believe those unable to afford health insurance under the current ACA, can now afford coverage.

Health and Human Services Secretary Alex Azar reinforced this idea and said the short-term plans will provide a much more affordable option for those unable to purchase coverage through the ACA marketplace. Azar believes these short-term policies, “may be as much as 50 to 80 percent cheaper than the Obamacare exchange plans.”

Similarly, Kev Coleman, lead researcher for HealthPocket, believes the benefits included in short-term plans will improve with their expansion. The better the benefits, the better these plans are for their enrollees. Among the improvements are the policy’s increased coverage and renewal dates.

As previously mentioned, short-term plans can now last for a year. Additionally, you can re-enroll in your short-term plan for up to 36 months. These broadened timeframes create a more useful product for those in need of health insurance but can’t afford traditional ACA marketplace policies. But these are just the positives of short-term plans. There are also many possible disadvantages to discuss.

The clearest disadvantage of these short-term policies is they don’t have to meet ACA requirements for “minimum essential coverage,” and can deny coverage based on pre-existing medical conditions. This lack of ACA requirements means short-term plans don’t necessarily have to provide coverage for issues including, asthma, maternity care, lung cancer, and mental health care.

The lack of these areas of coverage could result in severe financial penalties for those with a chronic disease. According to Chris Hansen, the president of the American Cancer Society Cancer Action Network, people who buy these short-term policies could face astronomical costs of care. And, these costs may force plan members to forgo treatment entirely.

 

Possible Effects of More Association Health Plans

Like short-term insurance, association health plans will offer both positives and negatives. The first positive of association health plans is they can provide more affordable healthcare plan options for small employers and self-employed individuals than what they can currently find on the ACA Marketplace.

Also, unlike short-term policies, association health plans do have to follow certain ACA guidelines. New association health plan regulations prevent these plans from screening applicants based on claims experience or charge higher rates to individuals with pre-existing conditions. Similarly, association health plans can’t have bans on lifetime or annual limits for services covered.

Still, like short-term insurance, association health plans don’t have to follow the ACA’s guidelines on covered health benefits. So, these plans don’t have to cover mental health care, emergency services, newborn care, or prescription drugs. Furthermore, the new rules allow plans to charge different rates based on gender, age, and location.

 

The Wrap

Both regulations create expanded tools for those looking for insurance but can’t afford traditional health plans. Still, before you utilize these either of these policies, make sure you look at both the advantages and disadvantages of each. Short-term and association health plans may change the healthcare landscape, but that change may not be for you.

aca compliance for 2018

What Employers Need to Know About ACA Compliance for 2018

Two years into Donald Trump’s presidency and the Affordable Care Act is still, somehow, alive. Despite the push to repeal and replace the ACA, the law remains intact. So, let’s check out what you need to know, as an employer, about ACA compliance for 2018.

 

What’s Staying the Same (For Now)?

Employer Mandate

The first important piece of the ACA that’s not changing is the employer mandate. Applicable large employers (ALEs) must provide “minimum essential coverage” to at least 95 percent of their eligible employees. Your business will be heavily penalized if you fail to provide this coverage.

 

Applicable Large Employers

Also staying the same is the calculation to determine whether an employer is subject to ACA requirements. As previously mentioned, any employer considered an applicable large employer must provide their staff with coverage. A business is regarded as an ALE if they employ an average of 50 or more full-time equivalent employees during the previous calendar year.

applicable large employer

Minimum Value

Another part of this legislation that’s staying the same in 2018 is the minimum value rule. The minimum value refers to the comprehensiveness of a health plan, i.e., how much it covers. Applicable employers must provide coverage that pays for at least 60 percent of medical expenses. This 60 percent is based on an average for a standard population of employees.

 

What’s Changing?

Individual Mandate

The individual mandate, unlike the employer mandate, is changing soon. Congress, with the passage of the latest tax bill, eliminated the penalties attached to the individual mandate of the ACA. So, individuals will no longer be penalized with a tax if they don’t purchase insurance.

NOTE: The individual mandate is, contrary to popular belief, still in effect for 2018. Next year, 2019 will be the first year the penalty will disappear. Until then, you will still owe the government a penalty if don’t have health insurance or an exemption from the mandate.

 

Enforcement Notices

While not technically a change, in 2018 the IRS has begun sending enforcement notices to employers. Though, these notices aren’t for the current year. Instead, these notices are for compliance in 2015 through 2017. It’s been estimated the IRS has sent 30,000 notices regarding the employer mandate this year already. Your firm needs to be prepared to both receive and respond to an IRS notice if it comes.

form

 

Out-of-Date Form Lines

Some ACA rules have changed due to the enactment of new laws or the expiration of temporary provisions. In some cases, the IRS has failed to update the forms quickly enough. One example, per BenefitsPro, is Form 1094-C. There are lines on this form that only apply to the 2015 and 2016 filing years, and not for 2017.

 

Affordability

The minimum value employers must provide remains the same, but the affordability for the 2018 plan year has changed. This year ALEs must provide employees with coverage that doesn’t exceed 9.56 percent of the employee’s household income for the year. This number is down from 9.69 percent in 2017.

 

Preventive Services

Something else changing in 2018 is the list of preventive services any ACA-compliant health plan must cover. These services include covering:

  • Depression in adults
  • Low dose aspirin for adults over 50 who have cardiovascular risk
  • Preventive care for women; such as breast cancer screening
  • Syphilis screening for asymptomatic, non-pregnant adults

hospital room

SBC Template

Finally, the template for the summary of benefits and coverage (SBC) has been updated for 2018. Any insurance company or employer-sponsored health plan must provide those enrolled with a summary of the health plan’s benefits and coverage. Make sure your business is using the new template for these summaries.

 

The Wrap

During the past two years, the ACA has appeared to be on life support for long stretches of time. So, while we don’t know if the act will survive for much longer, as long as it does, it’s still the law. Make sure your business avoids any unnecessary penalties by staying on top of any updates to ACA compliance for 2018. Check back at The Olson Group anytime an ACA change is announced.

associated health plans

Trump’s New Executive Order: Association Health Plans and More

*Photo courtesy Gage Skidmore

 

Last Thursday, President Donald Trump signed an executive order that, according to the Washington Post, is “intended to circumvent the ACA by making it easier to buy different types of health plans with lower prices but also fewer benefits and protections.”

There are three key highlights at the heart of this executive order. These highlights involve Association Health Plans (AHPs), Short-Term, Limited Duration Insurance (STLDI), and Health Reimbursement Arrangements (HRAs).

All of the changes proposed by this executive order are designed to promote more choice and access to health care coverage. Especially for small business owners and employees.

 

Association Health Plans

Under association health plans, small businesses can form and join associations, which offer insurance to members. These associations typically form through particular professional, trade, or interest groups.

stethescope

Trump’s executive order also includes direction for the Secretary of Labor. The order urges the Secretary to consider allowing these association plans to be sold across state lines. These transactions are something that has been against ACA regulations, until this point.

The hope of this directive is that consumers have more choice than they did in the past. Selling plans across state lines could give workers a broad range of insurance options at lower rates in the large group market.

Still, it’s important to know that, while the order will make it easier to form these associations, they will always need an insurance company willing to back the group. Because these arrangements typically experience high volatility, many carriers refuse to support them.

 

Short-Term, Limited Duration Insurance

Under the Obama administration, short-term health insurance plans were limited to a three-month duration. The executive order pushes for the expansion of these plans to cover up to a year.

It’s also important to know what regulations short-term insurance plans follow. These plans are not subject to the same ACA requirements that other insurance policies are. Regulations such as essential benefits, mental health coverage, maternity care, and full prescription coverage are no longer required.

Many experts believe that the expansion of short-term plans could result in a rise in premiums for exchange plans. And then a subsequent departure form exchange plans to short-term health plans.

 

Health Reimbursement Arrangements

Health reimbursement arrangements (HRAs) are commonly referred to as health reimbursement accounts. These accounts help you pay for covered health care services and other eligible medical expenses. HRAs, as opposed to other savings accounts, are controlled by the employer, not the employee.

short-term insurance

The new executive order, according to Employee Benefits News, “allows for employers of all sizes to create an HRA and pay for employees to get individual policies outside of the employer, on a tax-free basis.”

Currently, HRAs are only applicable for retiree health, or small-group health plans. An increase in the use of HRAs could give employers more flexibility in covering workers. For example, HRAs could be used to provide funding for part-time workers to purchase insurance on the individual market.

It’s important to know that HRA changes aren’t subject to implementation for at least 120 days.

 

Challenges to Come?

CNBC has reported that if the executive order continues, it could be in violation of the Employee Retirement Income Security Act. According to the report, states could argue that through the executive order, could violate ERISA. ERISA is the piece of legislation which governs large-group health plans.

Legal experts say states might contend that associations formed to buy insurance, are not employers under ERISA. In the past, under ERISA, federal regulators have typically required that members of these associations have “a high degree of common interest beyond just buying insurance.”

 

The Wrap

It’s important to understand this new executive order, and how it could impact health insurance. Still, it’s just as important that you keep in mind until further guidance is issued or legislation is signed, all current ACA requirements remain in effect, including penalties for noncompliance.

Make sure to check in with The Olson Group for more analysis regarding this executive order, as further information and legislation is released.

open enrollment

10 Easy Steps to Improve Your Open Enrollment Process

For many HR representatives, open enrollment is similar to the doors of Walmart opening on Black Friday: pure chaos (and the occasional tasing).

In 2017, this period will be especially hectic, as health care reform and political turmoil swirl. These eleven steps can be used to improve your company’s open enrollment process.

 

1. Plan ahead

Employers need to begin planning their open enrollment four to five months in advance. This planning process should include:

— Auditing your materials (pamphlets, memos, videos, etc.) for any errors or changes in facts

— Preparing a marketing plan

— Compiling your support materials

— Discovering what employees want to know more about/know the least about

— Scheduling any meetings, webinars, benefits fairs, etc.

— Beginning communication with your benefit partners to ensure you’re on the same page, and ready to go for open enrollment

Planning ahead will make your enrollment period far less stressful when it comes around, which will benefit all your employees, not just your HR professionals.

diversity committee

2. Consider new benefits

Your business also has to ask itself numerous questions regarding new benefits offerings:

— Would employees be interested in new popular options such as HSAs or wellness programs?

— Should you offer auto-enrollment for certain benefits?

— Did you offer similar plans last year? If so, how interested were employees?

— Which benefits were employees most likely to use?

All of these questions can help you determine if your company should consider offering new benefits, or which old benefits it should replace with new ones. The benefits landscape is constantly changing, and it is up to each employer to adapt how they see fit.

 

3. Review last year’s results and set new goals

Each year you should discuss how your previous open enrollment process went. It is important to figure out what went well and what could be improved. Reviewing last year’s process is the best way to improve this year’s. This review factors directly into the next part of the step, setting clear goals.

The two questions businesses have to ask themselves when setting goals for their open enrollment processes are: What do we measure and how do we measure it? Your company has to decide what metrics it is going to collect and use to measure success. These metrics should be tied directly to your goals. You then need to confirm how you will gather and measure the data.

data

Some examples of open enrollment goals are:

— Increase enrollment in the company’s consumer-driven health plan by __%

— Get __% of employees saving for retirement

— Engage __% of employees in viewing the wellness program video

— Reduce printed OE material budget by __%

— Decrease the number of calls to HR hotline by __%

 

4. Communicate

Communication with your employees is the key to any successful open enrollment period. Ask employees if there is any topic they’d like to know more about, or which topic confused them the most. Discover how employees would like to be contacted (email, phone, meeting, etc.) with information regarding open enrollment and benefits.

Survey employees to find out how their experience was last year. All of this information is key to improving your open enrollment. Ultimately, this time is for your employees, and it is vital to get their point of view.

 

5. Prepare your staff

Your staff should not go into open enrollment meetings and have to ask basic coverage options questions. This information needs to be distributed to all your employees, prior to any official open enrollment meetings.

preparation

Deliver this information through the communication channels we discussed above. The Society for Human Resource Management (SHRM) says there are four main questions your employees want to know:

  • Why do I need the coverage?
  • Which features fit my needs?
  • What value does the program provide?
  • How much is this going to cost me per paycheck?

Answering these questions will give your staff a solid foundation of understanding their employee benefits plan. This knowledge makes the open enrollment process easier and more efficient for everyone.

 

6. Utilize Technology

Any company that doesn’t utilize the latest technology is going to have trouble keeping up with their competition. This statement holds true for open enrollment too. New HR technology can help you both communicate with employees and administer benefits enrollment.

Online enrollment technology allows your employees to enroll on their own time, where they want and provides an improved experience overall. This technology makes open enrollment easier for employees to complete and less stressful for your HR team to manage.

 

7. Identify and Recognize Your Employees’ Needs

If you want to really improve your processes, you have to understand what your employees need. One of the best ways to understand these needs is to develop personas and segment your staff.

drinking coffee

Segmenting your staff allows you to tailor open enrollment materials to specific groups that will be more receptive to them. For example, your millennial employees will likely be more receptive to information about pet insurance, than baby boomers.

Use segmentation, internal surveys, and employee feedback to shape your benefits package. The more input your staff has, the more likely they are to respond positively to the company’s employee benefits offerings.

 

8. Stay Up-to-Date

Unless you’ve gone full ostrich during the past eight months, you’ve probably heard about health care reform. President Trump and Congress have already attempted to pass legislation that would replace the current ACA policy. But up to this point, they haven’t found success.

Still, the battle over health care reform is far from over, and it wouldn’t be a total shock if to see the ACA eventually repealed and/or replaced. This state of flux makes it important that your HR team and benefits broker is staying up-to-date on all of the latest health care reform news.

Additionally, health care legislation, in general, is exceedingly erratic. Your HR professionals and broker have to be able to answer any employee questions about new, or possible health care changes.

 

9. Set Office Hours

Many open enrollment communications occur through materials such as an email or flyer, or in group settings. These are obviously the most cost and time effective options for reaching a group of employees.

handshake

Still, there may be employees who want to ask more sensitive questions, and wouldn’t feel comfortable doing so in a group or electronic setting. Your HR team has to have open office hours for employees to come in and ask questions one-on-one.

 

10. Give Them Enough Time

“It is a rushed process, and I feel like I don’t have time.” This statement was the number two open enrollment frustration, by employees in a recent Namely survey. There is a rather simple solution to this frustration. More time.

Instead of one week of open enrollment, give staff members two or more weeks. Similarly, prepare your employees ahead of time. Beginning at least six weeks in advance of open enrollment, start preparing your team for what they need to know before open enrollment begins.

 

The Wrap

Only 20 percent of workers said they had enough information to make informed decisions about their benefits, according to Aflac’s 2015 WorkForces Report. This type of disconnect is common among workplaces and leads to a chaotic and ineffective open enrollment period.

Use these five steps (and make sure nobody brings a taser to work) to improve your open enrollment process.

health savings accounts

Health Savings Accounts: What Will HSAs Look Like Under Trump?

Health savings accounts (HSAs) find themselves at the forefront of political upheaval. Republicans are attempting to repeal and replace the ACA within the next few years. And HSAs will likely play a pivotal role in any future policy decisions.

These accounts are the rare thing that both political parties have mentioned in a positive light. President Trump and Republican leaders such as Paul Ryan and Tom Price have all referenced the importance HSAs will play in the future of healthcare.

Because these accounts are going to loom large in the future of healthcare, it is important to understand them completely.

What are Health Savings Accounts? What are their advantages and disadvantages? And what is coming next for HSAs? We will break down and answer each of these questions.

 

What are Health Savings Accounts?

A Health Savings Account is a tax-favored account that you put money into, to help pay your deductibles and other healthcare expenses. You cannot use money in your HSA to pay for health insurance premiums. Additionally, you must have a high-deductible health insurance plan (HDHP) to utilize an HSA.

Similarly, to qualify for an HSA you cannot have any other primary medical coverage, be enrolled in Medicare, or be claimed as a dependent on another’s tax return. Contributions to HSAs are made pre-tax, and any asset growth is tax-free.

Employees are usually responsible for contributions to HSAs, but employers can add money as well. An employer can contribute the full limit if it so chooses, but generally will give smaller amounts, periodically. The maximum contribution amounts are $3,400 for individuals and $6,750 for families.

 

Pros and Cons of HSAs?

Health Savings Accounts, like virtually any other decision, have both advantages and disadvantages. It is important to know both sides, to make an informed decision regarding your healthcare.

 

Pros

The first advantage of HSAs is their tax benefits. These accounts offer three significant tax savings. There are no taxes on contributions, the growth of funds, or their withdrawal (if used for medical care).

Because money can be contributed pre-tax, it also reduces an individual’s end-of-year tax burden. If you contribute the maximum of $3,400, all of that money is subtracted from your taxable income at the end of the year.

affordable health insurance

Another advantage of an HSA is the fact that they are linked to high-deductible health plans. These plans can benefit certain people because they have significantly lower premiums. If you aren’t a high healthcare user, you will likely save money from having these smaller premiums.

A different positive of HSAs is that they require consumers to be highly educated about healthcare. Employees must now comparison shop the prices of their medical care. This process necessitates people becoming better overall healthcare consumers.

 

Cons

The first disadvantage of HSAs is that it all hinges on an individual’s ability to save money. Many individuals and families do not have extra money to put in an HSA. For these people, the tax advantages of HSAs are essentially nullified.

The other disadvantage of HSAs is also an advantage; the fact that HSAs are linked to high-deductible health plans. These high-deductible plans can be unaffordable for less wealthy employees. Some of your employees may be unable to support these high deductibles, especially if they have family coverage.

Another negative of HSAs is again, related to something that could be positive; actively shopping for your medical care. Being a more educated healthcare consumer is a good thing.

Still, the amount of time and effort that goes into comparison shopping could be very stressful. Also, consumers will not always have the knowledge necessary to make the best decisions when shopping for their medical care.

A different disadvantage is that healthcare consumers with HSAs tend to cut back on all healthcare services. According to Paul Fronstin, with the Employee Benefit Research Institute, policyholders cut back on everything, including high-value services they need.

ER visits increase, and many will even forego preventative screening exams. People forego these exams despite the fact that under the ACA, they are free to the consumer. Bypassing any care, especially preventative, could lead to higher medical costs in the future.

 

What’s Next for HSAs?

One thing seems to appear sure for Health Savings Accounts; they are here to stay. Employee Benefits News reports that HSA participation has grown from 3.2 million in 2006 to over 20 million in 2016. Similarly, total HSA investments have grown to over $4.7 billion.

HSAs are also increasingly attractive to younger employees. According to Yahoo, millennials contribute up to 20 percent more to their accounts than other generations. Also, the election rate for those under the age of 26 rose from 41 to 45 percent.

Similarly, the newly released American Health Care Act keeps HSAs in the forefront of the healthcare discussion. The proposed replacement for the ACA would increase contribution levels and overall plan flexibility.

financial wellness

Contribution levels for HSAs would be $6,550 for individuals and $13,100 for families. Additionally, policyholders would be allowed to contribute excess money from premium tax credits to their HSAs. This money would not count toward their contribution limit.

Also, you could use money in your HSA for over-the-counter drugs. Under the ACA, money in an HSA could only be used for over-the-counter drugs if you had a prescription for that drug.

The American Health Care Act increases HSA flexibility through two other provisions. One of these provisions allows both spouses to make catch-up contributions to one HSA. Currently, only the employee/policyholder can make catch-up contributions.

Finally, policyholders can now reimburse themselves for qualified medical expenses incurred before HSA-qualified coverage begins, as long as the account is established within 60 days. As of right now, the ACA does not permit this action.

 

The Wrap

No matter how you feel about Health Savings Accounts, one thing is for sure. They are not going anywhere. Even if healthcare doesn’t undergo any radical changes, HSAs have been increasing in number and use.

Get to know the ins and outs of HSAs and high-deductible health plans, so you’ll be ready for whatever the future of healthcare holds. If you have any questions contact us or call 402-289-1012.

healthcare coverage

Inauguration Day: How Healthcare Coverage Could Change Under Trump

Photo Courtesy Gage Skidmore

 

Today marks the official beginning of America’s 45th president, Donald Trump. Trump’s inauguration brings about some serious questions surrounding the Affordable Care Act.

Congress, with the blessing of Trump, has already made moves that signal, at least some, changes are on the way. While a full repeal may take some time, some estimates have placed it at two to three years; the ACA will likely look differently in the upcoming months.

While it is still the law, (until it isn’t) changes to the ACA will affect millions of citizens and businesses. Here are some possible changes to your healthcare coverage to be on the lookout for in the foreseeable future.

 

1. The Individual Mandate

One of the first pieces of the ACA that are likely to be removed is the individual mandate. The individual mandate required people over the age of 26 to be insured or face a monetary penalty.

This penalty, as of now, is the higher of $695 or 2.5 percent of an annual household income. The idea behind the penalty is that it gets young or healthy people, who typically wouldn’t purchase coverage, to seek medical insurance and avoid the penalty.

If these individuals did not purchase insurance, they would still be buying into the risk pool that helps pay for the coverage of those who are ill or dependent upon health insurance.

Without the mandate, there has been some concern among insurers that there would be little incentive for young people to buy coverage, and balance out the costs of insuring those who are older or sicker.

 

2. Subsides

Another common thread among ACA-replacement proposals has been the elimination of federal subsidies for purchasing healthcare coverage. These subsidies were designed to make purchasing insurance affordable for low- and middle- income Americans.

The Department of Health and Human Services has claimed that 70 percent of marketplace consumers should be able to get healthcare coverage for less than $75 a month (even with significant premium increases).

Some of the proposed replacement plans involve replacing current subsidies with tax credits. Tom Price’s proposed plan would allow for up to $1,200 for adults and $900 per child.

Paul Ryan’s plan would replace current subsidies would give tax incentives to those who remain insured from plan year to plan year, up to $2,900 per individual and $5,700 per family.

Bill Cassidy’s plan would swap subsidies for plans purchased through an exchange for up to $2,500 for adults and $1,500 per child.

 

3. Preexisting Conditions

Guaranteed issue has allowed individuals with pre-existing conditions to obtain health insurance. Still, guaranteed issue could be one of the first pieces of the ACA to go.

Many insurers and politicians have expressed concern over how individuals with preexisting conditions have made premium costs rise. Trump wants to create high-risk pools for those with preexisting conditions to limit these costs.

Price and Ryan want to keep the guaranteed issue provision, but only if that individual has remained continuously insured for the previous 18 months. Cassidy’s plan would do the same, but if coverage is stopped that individual must pay the penalty for each month spent without insurance.

 

4. Children Under 26

Another provision of the ACA requires insurers to cover children under the age of 26 as part of their parent’s plan. None of the proposals put forth by Trump, Price, or Ryan mention this provision.

The plan that Cassidy has put forth; though, would continue required coverage of dependents up to 26 years old.

 

5. Essential Health Benefits

Again, neither the Trump, Price or Ryan plans include a mention of essential health benefits being a part of the coverage. The Cassidy plan does not require the inclusion of essential health benefits for insurance.

 

6. Changes for HSAs

Donald Trump has mentioned that he wants to expand the accessibility of health savings accounts, or HSAs. According to our new president, these accounts should be tax-free, allowed to accumulate, and allowed to be passed on to or inherited from family members.

The Price plan would produce refundable tax credits for health insurance premiums and HAS contributions, raise the annual HSA contribution limit, and place a limit on employer’s contributions to health coverage that can be excluded from that employee’s taxable income.

Ryan’s proposed plan would make State Health Insurance Exchanges, which would allow participants to pay premiums through HSA funds without any tax penalties. The Cassidy plan would demand states that use HSA deposit systems to deliver funds into individual HSAs for health-related costs.

 

7. Medicaid

Many Republican leaders have mentioned they want to repeal Medicaid expansion, which has been a big part of the ACA. Both the Price and Ryan plans would repeal Medicaid from 138 percent of the federal poverty level and return it to 100 percent of the FPL.

Cassidy’s plan differs from these two and would offer optional Medicaid expansion for any states that opted for it.

As of now, there is only one certainty with regards to the ACA; change. Changes are coming to the Affordable Care Act, and it is up to you to make sure you are continuously monitoring for these changes.

 

Resources

http://www.benefitspro.com/2017/01/10/10-potential-changes-to-health-care-come-january-2?ref=mostpopular&page_all=1
http://www.cnbc.com/2016/11/16/obamacare-changes-under-trump-gop-commentary.html
ACA compliance-leaves changing

11 ACA Compliance Changes in 2017

“To improve is to change; to be perfect is to change often” – Winston Churchill

The ACA is hardly perfect, but it is trying to improve. Next year will mark an array of changes to ACA compliance. Whether you think theses changes will improve the ACA or not your company must remain compliant with each one.

Here are 11 changes coming to the ACA, you need to know for 2017.

 

1. Transition Relief

Transition relief for the Employer Shared Responsibility for applicable large employers (an average of 50 or more full-time equivalent employees during the prior year) expires on January 1, 2017.

ACA compliance

Applicable large employers have to offer ACA-compliant coverage to their employees starting at the beginning of the new year (2017).

 

2. Flex Contribution Relief

Flex contribution benefits relief will also expire on January 1, 2017. Employers need to review their contribution strategy and ensure they are not providing any flex contribution relief to those plans.

 

3. Grandmothered Plans

Grandmothered Plans, plans that are not entirely ACA-compliant and were purchased between March 23, 2010, and October 1, 2013, can continue to be renewed until October 1, 2017.

These plans, though, have to be terminated at a date no later than December 31, 2017. This termination date means that all grandmothered plans, by the end of 2017, regardless of their renewal date, must be terminated.

ACA compliance

4. Good Faith Effort

Last year, employers were not assessed any penalties for missing or incorrect data on their IRS Forms 1094-C and 1095-C.

This “good faith effort” has not been extended for next year’s reporting. Employers will need to be fully accurate with their reports to avoid a filing penalty.

 

5. Wellness Compliance

Your wellness program must now be in compliance with new rules passed by the EEOC in May 2016. Some of the new rules were immediately applicable, but two parts take effect on January 1, 2017.

These parts are that employers comply with “voluntariness” requirements and the maximum 30 percent reward rule.

ACA compliance

The “voluntariness” requirement states that:

— Companies may not require employees to participate in a wellness program

— Eligibility for a group health plan, or any benefit offered under the plan, cannot be based on participation in the wellness program, with exception for the 30 percent incentive rule

— Your company cannot make any adverse action or adverse employment action against an employee for exercising their rights under the ADA or encouraging other employees to do so

— Organizations must provide employees with understandable written notice that is understandable and describes the medical information that will be obtained by the wellness program and how it will be used

If your company uses a health risk assessment or biometric screening as a part of your wellness program, you need to understand the maximum 30 percent rule.

Any business that uses either of these tests in their wellness program can have a maximum wellness program reward of 30 percent, for self-only coverage under the employer’s group health plan.

 

6. No Extra Filing Time

Last year the government granted employers an extended deadline for employee notification and IRS filing deadlines for the Affordable Care Act. These deadlines have not bee extended for 2017.

As of now the deadlines are as follows:

ACA Information Reporting Forms  2015 Tax Year  Deadlines

 (Forms Filed in    2016)

2016 Tax Year Deadlines (Forms Filed in 2017)
Forms 1095-B and 1095-C due to employees   March 31, 2016  January 31, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper   May 31, 2016  February 28, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically   June 30, 2016  March 31, 2017

 

7. Affordability Requirement Percent

Companies must make sure their employer-sponsored coverage will still be considered affordable for the upcoming year.

Beginning January 1, 2017, plans will only be considered affordable if the employee’s required contribution for self-only coverage does not exceed:

— 9.69 percent of an employee’s household income for the year (for ACA employer shared responsibility rules and premium tax credit eligibility)

— 8.16 percent of the employee’s household income for the year (for an exemption from the individual mandate)

ACA compliance

8. Summary of Benefits and Coverage Model Documents

Any employer that offers a group health plan will have to be prepared to use new SBC model materials and documents on or after April 1, 2017.

 

9. Health Savings Accounts Contribution Limits

New maximum HSA contribution limits for next year have been increased by $50. Beginning on January 1, 2017, HSA contribution limits for self-only plans will be $3,400.

 

10. Risk Mitigation Programs

On January 1, 2017, two of the three “risk mitigation” programs for insurers will expire. The two that will expire are:

— Reinsurance – Payments to plans that enroll higher-cost individuals

— Risk Corridors – Set an allowable range for losses and gains

The elimination of these programs could result in much higher premiums for employers and employees.

 

11. Mental Health Parity

Verify that your plan meets recent parity guidance concerning coverage of mental health and substance used disorders. Prepare your organization for possible U.S. Department of Labor audits of health plans’ compliance.

 

The Wrap

Employers need to know what these changes are and what they need to do to stay compliant with them. Save your company thousands of dollars in avoided penalties by understanding each of these alterations.

Just because the ACA isn’t perfect, doesn’t mean your compliance with it can’t be.

 

Resources

https://www.healthinsurance.org/blog/
http://www.wexhealthinc.com/
https://www.associatedfinancialgroup.com/
http://www.employeebenefitadviser.com/
https://www.shrm.org/resourcesandtools/
https://morningconsult.com/
http://www.plansponsor.com/
medical records

ACA Compliance: Top 5 Issues to Look Out for in 2017

 

2016 is barely half over, but it’s never too early to begin planning for next year. Last year saw an increase in regulations companies had to comply with regarding the ACA.

In 2017, companies will have to deal with even more ACA compliance issues. Employers need to look ahead to safeguard their business against potential fines or legal difficulties.

 

1. Plan for the Cadillac Tax

The Cadillac tax, which is a 40 percent excise tax on plans with annual premiums exceeding $10,200 for individuals or $27,500 for families, doesn’t begin until 2020. Still, it is important for businesses to look ahead while preparing for ACA compliance.

Companies should conduct a financial assessment of their current coverage to determine which plans exceed the thresholds. After determining which plans meet the thresholds, organizations need to determine what steps they can take to avoid this tax.

ACA compliance

2. Determine your number of employees

It is important that each business knows exactly how many workers it employs during 2016. This year is the first year that all companies with 50 or more full-time equivalent employees have to offer minimum essential coverage to at least 95 percent of their employees.

Both of these numbers are increases from previous thresholds. Previously, employers of 100 or more full-time equivalent employees had to offer qualifying coverage to at least 70 percent of their staff.

To get a total number of full-time equivalent employees, use the IRS formula. Add up the hours that non-full-time employees are paid during a year and divide the total by 2,080, then add that amount to your number of full-time employees. The answer is the number of full-time equivalent employees.

 

3. Review compliance tactics

Every organization needs to check their 2017 health plan design and eligibility terms against employer shared-responsibility strategy. Companies need to determine whether medical options meet minimum value and essential coverage, and affordability standards.

Individual and IRS coverage-reporting processes need to be evaluated to confirm they meet any changes necessary for 2017.

ACA compliance

4. Prepare for no extra filing time

This year, 2016, employers received an extra two months to distribute necessary forms to employees, and three months to file with the IRS. Current deadlines are as follows:

 

ACA Information Reporting Forms 2015 Tax Year Deadlines 
(forms filed in 2016)
2016 Tax Year Deadlines
(forms filed in 2017)
Forms 1095-B and 1095-C due to employees (to be postmarked if mailed, or sent by e-mail if applicable conditions met). March 31, 2016 Jan. 31, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing on paper. May 31, 2016 Feb. 28, 2017
Forms 1094-B, 1095-B, 1094-C and 1095-C due to IRS if filing electronically. * June 30, 2016 March 31, 2017

 

*Any employer filing 250 or more information returns during the calendar year must file these returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.

The government may still offer an extension, later in the year, but companies need to plan as if these dates are concrete.

 

5. Annual out-of-pocket limits

Companies need to be aware that the proposed annual out-of-pocket limits for 2017. Proposed limits for the 2017 plan year are $7,150 for self-only coverage and $14,300 for family coverage.

Both of these numbers are an increase over last year’s limits. Businesses should evaluate and adjust their health plans accordingly.

 

The Wrap

Last tax season was the last date that businesses were extended good faith effort for incorrect or missing data regarding ACA compliance. Employers must now be entirely accurate and thorough when complying with the ACA-related rules.

To avoid penalties, employers should be proactive and remember these five issues when dealing with their company’s 2017 ACA compliance.

 

Resources

http://www.forbes.com/sites/adp/2016/05/06/3-strategies-for-managing-your-aca-compliance-costs/#4d4469f527be
https://www.entrepreneur.com/article/270094
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/aca-reporting-2017.aspx
http://www.employeebenefitadviser.com/slideshow/10-top-compliance-issues-for-2017-benefit-planning#slide-5
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/eeoc-wellness-final-rules.aspx
http://www.wexhealthinc.com/healthcare-trends-institute/employer-aca-considerations-2017/