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... an Employee Benefits, Health Care/Insurance/Funding, Consumer Driven Healthcare -  Trusted Advisor - helping organizations of all types and size reduce human capital related costs, improve morale, and maximize organizational objectives relative to wellness and health care. 

Thursday, April 12, 2018

ACA Modifications for 2018 and 2019

Earlier this week (4/9/2018) the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) issued final regulations and guidance that profoundly alter the Affordable Care Act (ACA) both immediately, and in 2019 and beyond.  The objective of the new guidance is " increase coverage access in the ACA by offering plans that have lower premiums".  America's Health Insurance Plans (AHIP), a national advocacy and trade association, said that it "...supports the policies that encourage state flexiiblity, support innovation and promote affordability".

Most of these changes affect the Individual and Small Group (under 50 employees) market segments; but there is some impact to the large group market as well.  To access the HHS Notice of Benefit and Payment Parameters for 2019 Fact Sheet, click here -

Following is a summary* of the more relevant aspects of the guidance and regulations impacting virtually everyone that has, or is considering purchasing health insurance:
  • Relief from the Individual Mandate - Although the individual mandate and associated penalty has been eliminated starting in 2019, the guidance has broadened the so called "hardship exemptions" which allow affected individuals to avoid the individual mandate penalty THIS YEAR, in states that deferred to federally facilitated exchanges (39 states, including Nebraska).   Importantly, the guidance allows the exemption to be retroactive two (2) years, so even affected consumers facing a penalty from 2017 could conceivably avoid the fine.  The guidance stipulates the following broadened use of the hardship exemption:
    • if one lives in a county, borough, or parish in which one or no ACA qualified plan is offered, and the consumer can show that the lack of choice resulted in their failure to purchase qualified coverage; or
    • if one is opposed to abortion, and lives in a location where the only available plan covers abortion services.
NOTE: Federal officials and private researchers have indicated that about half of the U.S counties have one ACA insurer in 2018.
  • Beginning in 2019:
    • States will have the authority to cut back on the ACA's "10 essential health benefits (EHB)". While states will not be able to summarily eliminate any of the listed benefits; they can allow insurers to include limits on the number of physician office visits and cover fewer prescription drugs, for example. However, plans that cover EHB's must do so with no annual or lifetime dollar maximum.
    • States will have more options and flexibility in establishing their EHB-benchmark plans.
    • Insurers will no longer be required  to sell the metallic, standardized set of benefit plans (i.e., bronze, silver, gold, platinum).
    • The responsibility for evaluating the adequateness of (PPO) network contracted healthcare providers will shift from the federal government to the states, in states that use
    • Insurers will have more latitude in meeting the ACA's "minimum loss ratio" provision, which requires fully insured plans to rebate premium income amounts that exceed 80% (85% for groups with 100+ employees) of incurred claims.
    • There will be new "income checks" to prevent people form claiming government subsides that wouldn't otherwise be eligible for such assistance.
    • Federally facilitated exchanges will be required to discontinue tax credits for enrollees who fail to file taxes and reconcile past tax subsidies.
    • Out of pocket maximum limits increase to $7,900 and $15,800 for individual and family coverage respectively.
The CMS guidance also extended the transitional policy allowing for the continuation/renewal of so called "grandmothered plans" for an additional year.  Previously, such plans were set to expire at the end of 2018.
Between 2013 and 2017 the average health insurance premium costs more than doubled in states using the federally facilitated exchanges (39).  Also, at present (2018) half of all U.S. counties have only one insurance company offering health insurance coverage to individuals.  For these and other reasons, HHS and CMS are looking for ways to lure health insurers back to the marketplace; and allow for lower premiums.

*The above list is merely a summary of the final regulations and guidance released by HHS/CMS, and represents some of the more pertinent and relevant provisions.  Again, to access a fact sheet summarizing all of the provisions, click - 
To access the 523 page final regulations, click


Wednesday, March 21, 2018

Medical Expense Tax Deduction UPDATE!

The Tax Cuts and Jobs Act, signed into law in late December, 2017, contained some great news for folks that incur significant medical expenses AND itemize deductions on their tax return.  Historically, the threshold used to determine the amount of eligible/deductible expenses has been 7.5% of adjusted gross income (AGI), until an increase to 10% in 2013.  In other words, eligible expenses exceeding 10% of AGI are deductible expenses, and can be considerable given the rather generous list of allowable expenses.
(See - )

In 2013, this threshold was increased to 10% of AGI (per the Affordable Care Act (ACA)), which made it a bit more challenging to arrive at a reasonable figure for tax deduction purposes.  Seniors were given a pass on the increase until 2017.  Enter the Tax Cuts and Jobs Act, which, and this is extremely important - for 2017 and 2018, took the threshold back down to 7.5% Unless Congress acts, the threshold will return to the ACA increased level of 10% in 2019.

Example: For 2017 and 2018, a couple filing jointly with annual adjusted gross income of $50,000 could deduct qualified medical expenses that in total, exceeded $3,750 ($50,000 x 7.5%).

Importantly, the tax reform law also significantly increased the standard deduction amounts for singles and married couples filing jointly for 2018, to $12,000 (from $6,350) and $24,000 (from $12,700) respectively.  So careful attention must be paid in evaluating whether it makes sense to itemize, and thus take advantage of the lower medical expense threshold; or simply take the standard deduction. Regrettably, you can't do both.

This temporary (but hopefully made permanent) reduction of the medical expense deduction threshold could be particularly welcoming news to seniors who have, on average, higher medical expenses, including Medicare premiums.  But seniors aren't the only benefactors of the threshold reduction, since there are so many expenses that can be included in the calculation.  Here's a partial list of items that can be included in the list of allowable/deductible expenses:
  • Medicare premiums - Parts B, C, D, and Medigap plans. (Hint: in many cases, seniors can find their part B and D premium amounts on social security payment statements.)
  • (Qualified) Long Term Care insurance premiums and services
  • Fees/Deductibles/Copays/Coinsurance related to services provided by doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, therapists, and nontraditional medical practitioners.
  • Payments for prescription drugs (including insulin) that require a prescription (Note: over the counter drugs are not eligible).
  • Eyeglasses and contacts, including solutions/cleaners
  • Smoking cessation programs
  • Weight loss program costs
Again, the link to access IRS publication 502 which includes all eligible expenses is -

Individuals who obtain health insurance through their employer are cautioned that premiums paid by employers, and employee paid premiums that do not appear on form W-2 are NOT allowed for consideration in the deduction.  Most employees pay their share of premiums on a pre-tax basis through IRS section 125, which would render such premiums disqualified in the threshold calculation.  Also, otherwise eligible expenses that are reimbursed through a Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), or Flexible Spending Account (FSA) are NOT eligible for inclusion in the determination of deductible expenses.

Because the threshold reduction may potentially return to 10% in 2019, filers would be wise to take advantage of the reduction in preparing their 2017 tax return, and/or aggregate qualified expenses this year (2018) in order to, as my dad used to say - "make hay while the sun shines"!


Monday, March 12, 2018

IRS Updates 2018 HSA Family Contribution Amount

On March 5, 2018, the IRS issued a bulletin which contained, among other things, revised cost of living adjustments (COLAs) for 2018.  The previously passed tax reform law (i.e., Tax Cuts and Jobs Act) created the need for the revised COLAs, which have a direct impact in the employee benefits world affecting Health Savings Accounts (HSAs).  The Tax reform law now requires the IRS to use something called the "chained consumer price index" to calculate COLA provisions under certain provisions, one being HSA annual contribution limits.

As a result, the 2018 FAMILY HSA contribution maximum is now $6,850, which is $50 less than the previously announced 2018 family contribution limit of $6,900.  Importantly, the INDIVIDUAL, or "self-only coverage" 2018 limit is not affected, and remains at $3,450.

HSA account holders are affected if they have HSA qualifying, family coverage, and already made their full, 2018 HSA contribution, or have authorized a periodic contribution totaling $6,900.  Here's what such affected individuals need to do to avoid the 6% excess contribution penalty*:

  • Individuals who have already made their 2018 contribution totaling $6,900 should contact their HSA custodian/trustee to determine the best way to withdraw/return the now $50 excess contribution.  In most cases, this will involve completing a simple form.
  • Individuals who have elected to have a pro rata portion of the previously announced $6,900 maximum withdrawn from payroll should contact the appropriate personnel at their employer (Human Resources, Controller, CFO, manager, owner, etc.) and request an adjusted payroll withdrawal amount reflecting the revised, $6,850 maximum.
  • Affected individuals that take appropriate action prior to 12/31/18 will avoid the 6% penalty* for making an excess contribution.
* Technically, an HSA excess contribution is subject to both the 6% excise penalty and ordinary income tax on the income earned from the excess contribution.  Presumably, since the amount of the reduction is so small (i.e., $50); and the reduced amount is coming relatively early in the year (March), there has been no mention of this aspect of the penalty.  However, we want our readers to be aware of this aspect of the excess contribution penalty, and if necessary, contact their tax /preparer and/or HSA custodian.


Wednesday, January 24, 2018

More ACA (Tax) Delays

The recently signed (1/22/2018) "short-term spending bill", also referred to as the "continuing resolution" (CR) does more than keep the United States government open and fully functioning until February 8, 2018.  It also delivers yet another set of Affordable Care Act (ACA) delays.  Employers offering group health insurance to their employees can breathe a collective sigh of relief as virtually ALL employers offering ALL types of group health insurance (i.e., small group, large group, fully insured, self-funded) will benefit from these delays.  Here's what's happening and when....

The ACA's so called Cadillac tax, originally set to take effect this year (2018), and previously delayed by congress to 2020, is now delayed until 2022.  But wait....there's more!!!  The triggers for Cadillac tax applicability are required to be reset prior to the implementation of the Cadillac tax, which is welcome news to affected employers.  So originally, benefit amounts that exceeded annual, cumulative thresholds set by the ACA ($10,200 for employee only coverage; and $27,500 for employee plus dependent(s) coverage) would be subject to a 40%, employer directed excise tax.  The recently passed, 2018 CR bill requires these thresholds to be reset prior to 2022.  The Cadillac tax applies to all forms and types of group health insurance.
For a review of the Cadillac tax, see -

The HIT tax only applies to fully insured group health insurance plans, and originally took effect in 2014.  This tax added 2% - 2.5% to premiums in 2014, then ramped up to 3% - 4% in 2015 and beyond,  and is collected and remitted by insurers to the federal government.  This tax increases in future years commensurate with premium increases.  Congress suspended the HIT tax for 2017, but it resumes in 2018.  Per the CR, it is now set to be suspended for 2019, resulting in reduced premiums to impacted employers beginning in 2019.

Although the medical device tax does not have a direct impact on health insurance, it definitely has a cost shifting impact on the ultimate cost of coverage.  Originally taking effect in 2013, Congress suspended the medical device tax, which applies a 2.3% tax on revenues derived from the sale of U.S. medical devices, for 2016 and 2017.  The CR now delays this tax through 2019.  Presumably this tax would resume in 2020, barring an additional delay or repeal.

Importantly, the ACA's Comparative Effective Research Fee (CERF), which applies to all group health insurance plans, is NOT delayed by the CR.  So affected employers must still comply with the collection and remittance of this tax.  Generally speaking, insurers collect and remit this tax on behalf of fully insured plans, and partially self-funded employers must calculate/collect/remit this tax in July of each year.
For a review of the CERF, see -

Note: The ACA's transitional reinsurance fee, which applied to all group health insurance plans from 2014 - 2016, went away after 2016 and is no longer applicable.
(see -


Friday, December 1, 2017

Preventive Healthcare Services and Coverage

An important and often overlooked benefit of the Affordable Care Act (ACA) is full coverage and benefits for preventive care.  Specifically, the ACA established that virtually all private health plans must provide 100% coverage (i.e., no cost share) for a host of preventive healthcare services.  The only exception to this requirement are so called "grandfathered" plans, which are becoming more scarce every year.  So in short, all non-grandfathered health insurance plans (i.e., individual, small group, large group, fully insured, and partially self-insured) may not require cost-sharing such as copays, deductibles, or coinsurance, for any of the listed preventive services, within the following broad categories:
  1. Evidence Based Screenings and Counseling
  2. Routine Immunizations
  3. Preventive Services for Children and Youth
  4. Preventive Services for Women
The list of required preventive services comes from four specific government bodies including:
  • The U.S. Preventive Services Task Force (USPSTF)
  • Advisory Committee on Immunization Practises (ACIP)
  • Health Resources and Services Administration (HRSA) and Bright Futures
  • Institute of Medicine (IOM) 
Underscoring the importance of this benefit, and the need for people to seek preventive screening and care, is the fact that cost is often a real or perceived barrier in seeking preventive care.  The following data from the Kaiser Family Foundation captures the depth of this challenge by gender, income relative to federal poverty level (FPL), and insured status:

The list of covered preventive services has grown considerably since this aspect of the ACA went into effect for non-grandfathered plans beginning/renewing on or after September 23, 2010.  In 2012, specific "Women's Preventive Services" were added, including some contraception drugs and devices.  Initially, some 38 specific preventive services were indicated on the list, and as recently as 2014, there were 63 distinct preventive services included.  Currently (2016/2017) there are 72.

Starting in late 2017/early 2018, the list of required covered preventive services increases to 98, and includes coverage for cholesterol screening and some statin drugs. So as health insurance plans begin renewing, and preventive care services grids are updated, expect to see certain statin drugs like Atorvastatin, Lovastatin, Simvastatin, and Pravastatin covered at a $0 cost-share, as early as the end of 2017The actual drug(s) and dosages covered without a cost-share will vary depending on the insurance company and coverage.

The USPSTF's  new guidelines affecting cholesterol/lipid disorder screening lists the following criteria for obtaining no cost screenings and covered statin drugs, for patients with no prior history of cardiovascular disease:
  • Patient ages 40 - 75;
  • have one or more cardiovascular risk factors such as dyslipidemia, diabetes, hypertension, or smoking; and
  • have a calculated 10-year risk of a cardiovascular event of 10% or greater.
IMPORTANT: All insurance companies and plans provide a detailed grid outlining the covered preventive services for the particular plan year.  These grids can typically be found on employer, administrator, and/or insurance company web portals.

To access a comprehensive list of all covered preventive services by type, gender, frequency, click -


Friday, September 8, 2017

The ACAs Health Insurance Subsidies

In order to accomplish its objective of "affordable health insurance coverage", the Affordable Care Act (ACA) created three (3) separate, cost reducing initiatives:

1. Premium Tax Credits - reduce out of pocket PREMIUM costs;

2. Cost Sharing Reductions (CSR) - reduce point of service out of pocket costs such as copays, deductibles, and coinsurance; and

3. Medicaid Expansion - designed to close the gap on eligibility for coverage based on income that is below the thresholds for nos. 1. and 2. above.

Eligibility for, and applicability of premium tax credits and cost sharing reductions is based on "modified adjusted gross income" (individual or family), and affect insureds differently depending on the number of individuals in the household.  Medicaid eligibility rules vary by state, and are impacted by each states decision to expand its Medicaid program, pursuant to the ACA.  Generally speaking, individuals that are not eligible for the above tax credits and/or CSR's because their income falls below the minimum thresholds (generally less than 100% of the federal poverty level - see below), may be eligible for Medicaid.  (Note: Another program - the Children's Health Insurance Program (CHIP) - provides low-cost health insurance to children (and in some cases, pregnant women) whose families earn more than the Medicaid threshold.)

The 2017/2018 calendar year chart below lists the income eligibility thresholds for:
1. Premium tax credits only;
2. Premium tax credits and CSRs; and
3. Medicaid eligibility in states that expanded under the ACA .

So for example, a family of four with income below $61,500 per year would be eligible for both premium tax credits (to offset the cost of the coverage); and CSRs (to offset point of service costs such as copays, deductibles, and coinsurance).  The range of income figures depicted reflects the lower end of the federal poverty level scale (i.e., 100%) to the highest level (i.e., 400%).  Per ACA guidelines, the lower the income amount, the higher the premium subsidy and CSR, and vice versa.

Note: The CSR's are only available to individuals making between 100% - 250% of the federal poverty income thresholds.  Also, in order to receive either the premium tax credits or the CSRs, individual health insurance coverage must be purchased on the Exchange (see

Persons in Family/Household100% FPL: Minimum to Qualify forACA Assistance138% FPL: MedicaidCap (in States that Expanded)250%
CSR SubsidiesCap
FPL: Premium Tax Credit Cap
For families/households with more than 8 persons, add $4,180 for each additional person
Source: 2017

It's important to note that while the premium tax credits are firmly embedded in the ACA, the CSR's are not, and have actually been challenged in a court of law. The U.S. House of Representatives sued the U.S. Department of Health and Human Services (HHS) over the release of CSR payments and a district judge ruled in favor of the House.  The ruling was appealed by the Secretary of HHS, and CSR payments were permitted to continue...FOR THE TIME BEING.  Insurance companies rely heavily on both premium tax credits AND CSR's in order to offer individual health insurance, subject to all the ACA guidelines, both on and off the exchanges.  Either a court ruling or a unilateral decision by the White House could summarily end CSR payments, and thus create a significant disruption in the health insurance marketplace.


Wednesday, August 2, 2017

Individual Health Ins. When's Who's and What's

This particular blog post is primarily directed to residents of my adopted home state of Nebraska. However it may shed light on some of the "when's, who's and what's" that health care/insurance stakeholders may be facing in other parts of the country next year.

As we inch closer to the 2018 individual health insurance open enrollment season (WHEN - November 1, 2017 - December 15, 2017), we're beginning to see WHO is going to be selling individual health insurance throughout the country (in NE - Medica Health only).  Unfortunately, there are a number of counties throughout the country that will not have a health insurance seller.  Hopefully, some regulatory changes that have been implemented at the federal level...
(see - ...may encourage more insurers to re-enter those and other counties.

In a clear sign of the times, there are three (3) separate and distinct factors that could significantly impact health insurance cost and coverage in 2018.  Interestingly, some insurers are even resorting to filing separate sets of premium rates with the departments of insurance, that vary based on "scenario". These three (3) factors are based on whether or not the federal government...
  1. continues to collect tax penalties associated with non-compliance of the so called individual mandate (i.e., non-exempt folks that don't purchase health insurance); 
  2. continues paying insurers subsidies to offset plan related out of pocket costs such as copays, deductibles and coinsurance, for those that are eligible for such subsidies (based on income); and
  3. implements a reinsurance program to offset some of the higher costs associated with treating the chronically ill.
The impact of the rate increases filed by Medica Health in NE (and around the country by other insurers) is largely dependent on whether insured individuals are eligible for, and receive premium subsidies.  For example in NE, increases filed by Medica Health (if approved) could reach as high as 60+% (WHAT?) for those that are not currently eligible for premium subsidies (estimated at 20% of the ACA compliant insured population in NE).  Those who qualify for subsidies, which vary based on income, could see little or in some cases, no effect of the rate increases, because the subsidies increase commensurately with premium hikes.  Here are some examples:

Omaha, NE20172018
For a 25-year-old making $30,000
Monthly cost to member$203.20$203.20
For a 40-year-old (no subsidy)
Monthly cost to member$368.40$579.12
For a 60-year-old making $36,000
Monthly cost to member$287.79$287.79
Source: Omaha World Herald, Steve Jordon

At the time of this writing (August 2, 2017) these rates are merely "filed", and not yet "approved" by the Nebraska Department of Insurance.  However, recent history tells us (notwithstanding the aforementioned 3 factors) insurance department's have been approving health insurance premium rate filings.  In addition, these renewal rates provide a glimpse of WHAT new business rates might look like for those newly entering the individual health insurance market next year, and those moving from insurers like Aetna and Blue Cross Blue Shield of Nebraska who have exited both the exchange and non-exchange markets for 2018.