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2018 ACA Update – Clearing up Common Misunderstandings

It’s seems like only yesterday that the Affordable Care Act (aka ACA, ObamaCare) was signed into law.   In fact, the law will celebrate it’s 8th anniversary on March 23, 2018…….and it was a big deal.   Yet, in all of this time and all of the front page conversations, so much is still not clear to so many.

Many misunderstandings are creating frustration for individuals, employees and employers.   Insurance and Benefit professionals spend countless hours providing service and guidance to those caught up in this ongoing learning curve.   I would like to take some time to highlight the most common, and often costly misunderstandings.

For Employers

The Employer Mandate to provide Affordable Coverage is in effect

Employers (and Controlled Groups) with 50 or more Full Time Equivalents must offer their eligible full-time employees health insurance that provides minimum essential coverage that is both affordable and provides minimum value.   Just this week, the IRS has released information to remind employers that they are going to be collecting penalties.   The Wall Street Journal (2-13-18) is reporting here that:

The financial impact on businesses could be significant. The nonpartisan Congressional Budget Office estimated in 2014 that companies would owe about $139 billion in penalties from fiscal 2016 to 2024.

“There are penalties of three, four, five million dollars,” said Alden Bianchi, an attorney at the firm Mintz Levin. “There is a smaller group of employers that really didn’t understand how the rules applied and didn’t offer coverage or sufficient coverage in 2015. … To a smaller company, a half-million is an existential threat.”

Employers need to offer coverage to at least 95% of their eligible full-time employees.  Penalties apply for non-compliance.  For additional information on affordability,  minimum value and penalties please contact Paula Wilson at paula@paulawilson.com.     (IRS Employer Mandate Penalties)

The Individual Mandate is still  in effect

Employers should remind their employees that the individual mandate is still in effect as well as the penalties for non-compliance through the end of calendar year 2018.  Employees declining coverage in 2018 should be warned.  Employers accepting employee declinations without proper counsel should provide time for employees to meet with your benefit advisor/agent.  We are always happy to provide this time to our clients.

Overwhelmed by 1095-C Tracking and Reporting on your Age Rated plan?

Employers subject to 1095 reporting in an age rating environment can often make their life easier with a bit of planning.    Employers offering more generous plans can often offer a Bronze level plan at no copay to the employees.   This would allow the 1095-C to be easily completed as the cost to the employee for a qualified plan would always be $0.  Because California considers groups from 1-100 to be small group, this reporting nightmare is a reality for employers with 51-100 employees.

Employers can make this reporting easier with thoughtful benefit planning and the advice of experienced benefit agents.

Plan Documents (WRAP) Documents

Employers must update and distribute a complete set of Plan Documents to all employees per ERISA.  These important Plan Documents will include but are not limited to Summary Plan Descriptions, Summaries of Benefits and Coverage as well as other documents needed based on your employee benefit package.   Simply offering an Employer Sponsored medical insurance plan constitutes an Employee Welfare Plan and you must comply with ERISA.  Be sure to ask your agent or administrator about these documents.

For Individuals and Employees

Preventive Care is covered at 100%. 

I am still shocked at the number of people who are not taking advantage of this benefit, if not for themselves….for their children.  As a society, we are living in a time when lifestyle related diseases can be caught and dealt with if you just know your numbers.  Make time to know your numbers.

Surprisingly, we spend a good part of our customer service hours explaining uncovered expenses that many thought were covered under this important benefits.   Blue Shield recently provided an excellent illustration to understand the coverage.  You can find that link here.

Even if you’re feeling fine, scheduling an appointment with your doctor for preventive care services is important. Through a preventive exam and routine health screenings, your doctor can determine your current health status and detect early warning signs of more serious, costly problems.

What’s covered in a preventive care visit

During your visit, your doctor will determine what tests or health screenings are right for you based on factors such as your age, gender, health status, and health and family history.  Plus, your medical plan covers 100% of the costs for preventive health services when care is provided through network providers. Be sure your physician understands your expectations of the free visit and testing.   IF the physician orders tests that are not covered within the limitations of ACA YOU WILL BE responsible for the charges.

What’s not considered a preventive care visit

If you discuss new medical concerns or a current illness, the entire visit may be considered a medical treatment visit and would not be covered as preventive care.  Copayments, Deductibles and Coinsurance will apply. You will be required to pay the plan’s physician office copayment or coinsurance.

The complete definition and detail of what is covered under the Preventive Benefits can be found at  the Healthcare.gov website here.

If your employer offers you Affordable and Minimum Value Coverage you cannot go to the State or Federal Exchange and receive a subsidy.

Employers may charge the employee up to 9.69% of his pay as a contribution to the employee only coverage.   Employees often look to the State Exchanges for lower cost coverage when employers require employee contribution.

You will be asked to make repayment if you are receiving subsidies in error.   This often occurs when:

The Employee does not disclose the offer of the employer based coverage at the time of application to the Marketplace, or,

The Employee does not advise the Marketplace in which they are already enrolled of any change of income or employment status to justify continued eligibility.

It is important that employers utilize their benefits professional/agent at the time of open enrollment to review needs and address these issues with the employee.

 

Paula Wilson, RHU, REBC is a insurance agent specializing in benefits for employers in the Southern California area.

 


My thoughts on the status of Wellness Programs

With a bit a research you will find that nearly every report, from bloggers to Rand, clearly report that Wellness Programs that have a Disease Management program AND effectively communicates with the employees, will see the most return for their investment.

Spending a lot of money on Healthy Lifestyles is warm and fuzzy and may help the country out in the long run, but there isn’t so much of a bang for a buck.  Especially for the average 100 employee group.

True wellness companies just aren’t in that small employer (<500) market any longer and the costs associated with putting one together just don’t make sense.   

In a time where the competition lies in the bells and whistles, most carriers have built in a wellness program for their clients.   Anthem Blue Cross of California has one of the best I have seen.  Their Wellness Program is called “Time Well Spent” is turnkey.   It provides the employer and the employee with the following:

  • Wellness calendar with links to print or download 3 different flyers on the topic of the month.  This allows for quick distribution to employees.
  • Provides an introductory brochure to let employees know that it is time to get online and create an account for their health plan.
  • They are reminded to get their annual exam so they know their numbers.  Risk Assessments require current cholesterol, blood pressure and sugar
  • Provides a free Health Risk Assessment.
  • Employees with identified risks will be contacted in some manner by the carrier to jump into their disease management program.

I cannot detail the cornucopia of information that is available through this program.  I can say that Anthem of California’s is very impressive and user friendly.

Frankly, most carriers have these program.   In order to stand out to our clients, I try to pass the information on to both employer and employees.  Although, without the commitment from the employers, they won’t get much traction.   In the case of Anthem Blue Cross, it is VERY simple for an employer to decide if this effort will work for them.   I only need print out the calendar, a few sample brochures, some of the reports backing up the efficacy of this particular route and get them going.    

During this time of national change, employees are a bit worried about hearing from HR departments and Benefit Agents on their health plans.  Employers looking for ways to bring some sunshine into their benefit program should consider this opportunity to spread a little positive action.


ObamaCare: It’s not Working, It’s Winning

Professional health insurance agents have a front row seat to the carnage that ObamaCare is creating as it rolls out on top of Americans.   We are the referees on the field.  Over the next year, as our small business clients receive their 2014 cancellation notices, which every single one of them will, the pain inflicted is going to be hard to watch and a constant moving target to overcome.   Nonetheless, we will fight to continue to deliver a winning result.

I’ve always thought of my “game” as another way of casually addressing my profession, a profession that I take very seriously.   I have worked very hard for over 30 years to ensure the financial health and access to health care for all of my clients.   There is an army of agents in this country who have remained very involved in health care legislation over the years to protect our clients from what is happening now.  Because of this ongoing commitment to be involved on a daily basis, we also know this law better than anyone.   No professional agent has been surprised by anything that has unfolded in the past 2 years as issues come to light.  The complete and total destruction of access to affordable health care is in process.   Continued financial health is being ripped from the hands of all of my clients.

As the dismantling continues and public outcry ensures, the administration makes minor gestures to settle the roar to a rumble.   Moves to extend coverage on non-grandfathered plans, delaying the penalties of the employer mandate and blaming the chaos on the computer system are nothing more than distractions.

I truly believe that President Obama, his administration and their followers think this is a real “game” in the true sense of the word.  Their primary goal is not to expand coverage to the masses or reduce the cost of health insurance.   If it were, they would hang their heads in shame, not to be seen in public for years.     Their goal is to win.  They are out banging their chests in victory because they are winning the game.

Where there are winners, there are losers.   Insurance agents see the effect of the bullying that has been perpetrated on the losing public every day.  The scene plays out over and over with every phone call and every visit.   An insured comes in because their plan has been cancelled and they need to replace it with an “ObamaCare approved metallic plan”.   In most instances, the new market presents a plan of options that include twice the premium, twice the out-of-pocket risk and an overall reduction in benefits.

Consumers who have long become accustomed to dozens of choices in health care options, are shocked to find only 4 basic choices in this new world.   It is truly heartbreaking as I watch the client walk in and go through the phases of denial.   Their shock and anger are quickly turned into acceptance as I pat their hand and assure them that I am showing them all of their choices.  There is no longer anywhere to go for reasonable options.  At least we are around to show them the entire market.  (Exchanges only show you exchange plans)

When I get to the point in the conversation where I have to tell them that more than half of the top rated physician and hospital groups are no longer included within their plan, they shrug their shoulders in complete and total surrender.   They complete the application process and move on with their day.    The problems they are about to face as they enter the exchange or overloaded insurer online systems is not their biggest problem.   The technical problems are just convenient cover for the myriad of real problems.   Their real problem is that they are living in a country that is retreating and accepting the beating that has been unleashed on them.  This isn’t only redistribution of wealth; it’s retaliation on the successful middle class.

As I move around my business circles, I am amazed by how many people think this is all just going to go away and be fixed.   American’s who think people are going to stand up and fight this national plague need to think again.   No one is fighting this!  Every single person that goes through process this gives up.  They have no choice but to accept the increases in premium, thousands of dollars more in out-of-pockets costs and in most of my cases, a complete loss of access to the care that they and their children deserve.

If you are in the “sit back and do nothing while it implodes” crowd, you are in the same surrender mode.   Have you considered what an implosion looks like?   You need only to understand that many of the winners will lose their jobs, face a reduction in hours or be forced in and out of MediCaid as the Exchanges find their sweet spot.   Thousands will find themselves on a medical access seesaw.   At that point, we will all be on the losing team.

Has anyone stopped to consider what the effect of this complete surrender to a government imposed hardship is going to do to the working class people in this country?   My clients are the majority.  These are not people asking for handouts from the Exchanges or MediCaid.   These are the people who make those programs solvent.   They are too busy working to fight.

This President and his followers are nothing more than schoolyard bullies, dancing in the end-zone as the rest cower en masse.   They got their win and they don’t care about the pain they are inflicting on the multitudes or the type of transformation of America they are causing.     

Mr. President.  Congratulations on your win.  What are you going to do next?


More Money! Insurance Rebates On the Way!

PPACA requires health insurers to maintain specific loss ratios.  If an insurer spends more than 20% on non claims related expenses, they need to provide rebates to the insureds. (15% for large employers).  Sounds great!

This portion of PPACA went into effect for premiums paid starting 1-1-2011.   The deadline for calculating and returning your overpaid 2011 premiums is August 1, 2012.  Many of you have already seen communications letting you know where your insurer stands on this issue.

FOR EMPLOYERS

Employers need to start thinking about how they are going to handle this refund check.  For some employers this may not be a daunting task. For others, not so easy.   You need to remember that premiums are plan assets and need to work for the member of the plans.  The law does NOT allow the employer to pocket those premium refunds unless the employer paid 100% of the premiums with no employee contribution.  Let’s consider some of the rules for the use of these rebates when any level of employee contribution is involved.

The employer has three options when dealing with the rebate.  Simply stated, they can offer:

  • A Cash rebate
  • A Reduction in future employee contributions
  • An Increase in future benefits

The DOL is discouraging Options 2 and 3 unless the cash rebate is just too expensive to process.

You aren’t going to cut everyone a check and be done with this.   Premiums that were originally deducted from the employees paycheck on a pre-tax basis will be given back to them as a taxable event.  If you use it to reduce future premium deductions, you will save that accounting step.  Either way, it’s fairly easy for you to deal with.

The fun part for employers is going to be deciding how to divvy up the money.   The money must be returned to the employee proportionally  the way the premium was collected.  Also, the money has to go back only to the employees that were participating in the plan that is providing the rebate.   Let’s say you have two insurers in play and both of them give you a rebate.  Of course the rebates won’t be the same.   Your process needs to go like this, per carrier:

  • Who will get a rebate?  You will need to go back and see who was on the plan IN 2011.  Don’t fall into the trap of looking at your current invoices.  You have certainly experienced open enrollment and some employees have changed coverage.
  • How were they covered?  Were they in the same bracket all year?  Did they add dependents?  Did they experience an age change?  You can’t look at one invoice to determine their annual contributions.  You can’t even look at the payroll unless it specifies the insurer for each employee each month (if more than one insurer is in play).
  • Terminated employee money does not have to be returned to the terminated employee.  But, it does have to be evenly distributed the remaining employees still participating in that plan.
  • How will you distribute this rebate to them?  Cash or reduction in future payroll deductions.

The insane thing about this process is that rebates are expected to be very small.  Even in States with really inept actuaries, average rebates are expected to average $44 per employee for small groups and $14 for large groups.  That is a ridiculous amount of work for the benefit.  But employers must rebate the money.

FOR INDIVIDUALS

Individual policyholders have to pay a bit of attention as well?   If the individual paid for their health insurance with post tax dollars, there is nothing to discuss.  Cash the check.   But if the you wrote off your health insurance premiums, you will now need to pay tax on the returned premium.  Again, a ridiculous exercise for a small amount of money.

As the June 25th SCOTUS expected opinion date looms closer, employer must continue to plan as if everything is staying in place.  PPACA’s impact on employers and the added responsibility to follow numerous new regulatory hurdles is not something you want to be scurrying around for this fall.  Be prepared, pay attention and be prepared to act.

In our next blog we are going to review what we already know about the W-2 regulations that will be in effect for all W-2’s issued after 1-1-13. (for 2012 tax year)

Paula L. Wilson, RHU, REBC

Elections have consequences!


Health Care Reform Is Here To Stay (And YOU better plan on it)

No one seems to want to talk about it.   But it is almost here and you will be affected by it.  It is time to seriously start paying attention.

For Everyone:  There are reports from all directions that confirm what I keep saying:   Health Reform isn’t going away.   Many states are just waiting to enact Plan B.  Just this week Peter Lee, the Executive Director of the California Exchanges said:   “The shape and speed and nature of that effort may change a little.  We need to see, how do we adjust course after that decision.”   As a matter of fact, there is talk around Sacramento that the State just might go ahead and write their own individual mandate.   And why not?  Massachusetts did it and there isn’t any law on the books in California stopping them.    If the entire Federal Law gets thrown out in the severability issue, employers better not take a deep breath.   California would be the one State you could bet on to go after the employers.   After all, someone needs to fill up these insured pools with money so the claims can get paid.

For all Employers:  Employers who continue to ignore the reality of the situation are going to be unpleasantly surprised.   Even if the Individual Mandate is struck down by SCOTUS, the Employer Mandate will remain.  Large employers will have to make some decisions.  They may be inclined to pay to the $2,000/$3,000 fine per employee to un or underinsure, but they should be considering the entire picture when making those decisions.  Even small employers will be affected.  They are going to be inundated with employees looking for answers.   Who else are they going to ask?   Small employers not subject to the employer mandate will be analyzing which way to go with their benefits in the future.   They aren’t just going to lose all of their employees to the competition without some consideration.

Between the employees and HR, employers better have a benefit agent with some knowledge and history of being on top of benefit legislation knowledge.   Determining how to keep employees while rationally taking advantage of the individual and group subsidies will take some finessing.   Avoiding regulatory hurdles from the IRS, HHS, DOL and the new slew of agencies is going to be fun for all.

For the Average Consumer:  If the Individual Mandate fades away, rates are going to rise.   And they are going to rise like there is no tomorrow.   Does this sound like it’s going to end well?  When all is said and done PPACA is going to be the death knell of the current system.   A death that was premeditated by the U.S. Congress over time.  Forbes did a great article on the incidents leading up to the end desired result.  For the good of my profession and general public, I really hope the professional insurance agent survives in a manner in which they can remain in business.  I think the need for assistance is going to increase exponentially.

For Insurance Professionals:  Insurance agents making a living sells on rates and not taking this profession seriously are going to be in a world of hurt.   You can wish all you want, the California Exchange isn’t going away.  And remember, for an individual to get a subsidy, they have to purchase their insurance from the Exchange (If and how you can sell it remains to be set in stone).  Mr. Lee went on to say, “It’s misleading and not productive to just look at all of the ‘what-ifs,'” Lee said. “California will address the needs of Californians. And that includes the exchange.”    There is one “what-if” we don’t hear them talking about.   “What-If” national leadership changes and the Federal Funding to the States goes away.

Now, anyone with any institutional knowledge knows how well the State can compete with the private market in the absence of Federal Funding.   Mr. Lee can hope all he wants, unless they get the Federal Funding to support the premium subsidies…….well, game on.

Paula Wilson, RHU, REBC, Southern California Insurance Agent and Benefits Consultant


2014 – Mandates, Exchanges and Executive Carve-Outs

2014 – Mandates, Exchanges and Executive Carve-Outs

Employers have come to me for years asking if they can write a health insurance plan for the Key Employees within their company and exclude the rank and file.   Over the past 20 years there has been as many ways to accomplish that goal as there have been laws passed to prevent it all together.  Therefore, employers that can still afford coverage, continue to offer reduced benefits to all employees and throw in ancillary products as good faith gesture.

Intrusion of government plans have continued to increase the price of group health insurance by eroding the participation.   Healthy Families and expanded Medicaid opportunities drain these employer pools of the healthy young premium payers leaving the higher risk behind to push premium higher.  The implementation of ObamaCare over the next few years is the Gorilla beating on the backs of my employer clients.   The employer mandate and penalties are sending company planners running into the hills looking for cover.

Health Insurance agents desperate to keep agency commissions up are pushing voluntary benefits in hopes of staying in business when their base medical commissions erode or change to a direct-fee basis.   There is nothing wrong with voluntary benefits if the employees can afford those extras in this economic environment.  However, I want my clients and potential clients to understand that we have to work with what it given to us and there may be a workable and affordable solution to the future of their benefits.

The employer mandate has many facets but I would like to focus on just one here today.   There is a penalty that affects employers who offer benefits but whose employee contributions exceed 9.5% of an employee’s adjusted gross income (AGI).  This rule applies to employees that fall below 400% of the Federal Poverty Level (FPL).  The penalty is $3,000 for every qualified employee that goes to the Exchange for coverage.   The exchange will offer those low to mid income employee’s plans with highly subsidized premiums.   If it benefits the employer to have the employee go to the Exchange, why not push them there?

Why not design a plan of benefits designed to attract those Key Employees and charge a premium that intentionally blows the mandate limit of 9.5% AGI at an income level of your choice?   In the end, these employees receive low cost subsidized coverage of THEIR choice from the exchange and your key employees enjoy the plan that will keep them with the company.   Finally, a management carve out plan built to suit!

Of course, all employees are important for any company to succeed.   Those low cost voluntary plans currently on the market could easily become either partially or fully subsidized by the employer for a great set of benefits that every employee to hang their hat on.  Ancillary benefits with a great interactive Wellness Program leads to healthier happier more productive employees.

Will this work for all companies?   Maybe not this exact example, but as well informed educated agents we are here to explore the many ways this new law can be screwed together to make the best of the whatever survives the upcoming HHS regulation or Supreme Court decisions.  Coming up with the perfect plan that will avoid the 2018 Cadillac tax and conforming to new market participation requirements will need to be properly finessed.

Large employers planning ahead should be looking for the right agents for the planning to be done.  Slick marketing and new agents aren’t going to have the institutional knowledge to understand how the road ahead is going to change.

Paula L. Wilson, RHU, REBC

Paula L. Wilson, Inc.

A Professional Benefits agency since 1986

951-694-1009