President Signs Important ACA Modification Bill!

Yesterday (October 7, 2015) the President signed the Protecting Affordable Coverage for Employees, or PACE Act, giving states the flexibility to define "small employer group", for purposes of the Affordable Care Act (ACA).  The PACE Act also redefines the definition of small employer to 1 - 50 employees.  This is an extremely important tweak to the ACA, especially for employer groups that employ between 50 - 100 full and part-time employees.  Had the PACE Act not been signed into law, the ACA was set to change the definition of small employer group from the current, 1 - 50 employees, to 1 - 100 employees, as affected plans renewed on and after January 1, 2016.  

For more information on the impact of this law, click - https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

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Long Term Care's Silver Tsunami

Recently I read an article in a trade publication that addressed the so called "silver tsunami", related to long term care.  While the word "tsunami" certainly got my attention, some of the statistics mentioned in the piece had me downright concerned. As an employee benefits consultant/broker, health insurance is almost always at the top of the list in terms of importance and cost, followed by dental, life insurance, disability income, vision, and tax preferred spending accounts (e.g., health savings accounts, flexible spending accounts, health reimbursement arrangements).  However, with 10,000 Americans turning 65, each and every day, and the propensity to need some form of assisted care in the future as we age, LONG TERM CARE INSURANCE (LTCI) deserves a "seat at the table".  Here are some important considerations relative to long term care, which includes facility care at various levels, and potentially care received in the comfort of one's own home...

Based on insurance company – Northwestern Mutual Life Insurance Company’s 2014 Long Term Care Study:

• Currently 1 in 3 Americans provides or is expected to provide care for a loved one.
• The largest share of caregivers is in their peak earning years of age (45-64).
• 47% of working caregivers reduce or deplete personal savings to cover expenses related to care giving.
• 80% of primary and 50% of secondary caregivers reduced retirement plan contributions to cover long term care related expenses.
• 75% of Americans agree that as people live longer, the need for long term care is greater.
• By the year 2020, it is estimated that 25% of the workforce will be 55 years of age or older.

And finally…

• Someone turning 65 years of age today has a nearly 70% chance of needing some form of long term care services/support in their remaining lifetime.

There are a number of quality insurance companies offering long term care insurance protection in the form of both individual and group policies. And, there are a several factors to take into consideration when evaluating long term care insurance.  Some of these factors include:

1. The maximum benefit period (usually expressed in a number of years, or in some cases, for life).
2. The per day or per month benefit amount.
3. The total amount of benefits available or the lifetime maximum benefit (generally determined by multiplying the per day benefit amount (no. 2.above) by 365, then multiplying this figure by the number of years associated with the maximum benefit period (no. 1. above).
4. The length of time before benefits are payable (referred to as the benefit waiting period).
5. Whether or not the policy provides coverage for care provided in and out of a nursing home, assisted living facility, and/or the person’s home.
6. Whether or not the policy only provides benefits for licensed care givers.  Some policies provide benefits to care givers that are not necessarily licensed providers, but rather, friends, neighbors, and relatives.
7. Inflation protection.
8. Partial or full return of premium in the event benefits are never triggered.
9. Whether or not the policy can continue with limited benefits if the policy owner decides to stop paying premiums (generally referred to as a non-forfeiture option).
10. Whether the policy pays benefits based on an expense incurred, indemnity, or disability model.
11. Whether the policy is considered qualified or non-qualified.  (Note: in order to be eligible for tax deductability of premiums, the policy must be qualified.).

And unlike other forms of insurance that have clearly defined benefit “triggers” (e.g., death, accident, fire, theft), LTCI benefits are usually triggered by a physician’s certification of either or both of the following:

1. Inability to perform a specific number of “activities of daily living”, or ADL’s, which may include bathing, continence, dressing, eating, toileting, and transferring; or
2. Cognitive impairment (e.g., dementia, Alzheimer’s disease).

Finally, the federal government encourages the purchase of LTCI by allowing tax deductability of a portion, and in certain instances, all of the premiums paid for coverage.  For example, in 2015, an individual between the ages of 60 - 70 can deduct up to $3,800 if such premiums and other allowable medical expenses exceed 10% of adjusted gross income (AGI).  Tax deductability of LTCI premiums paid for group/employer provided coverage depend on the structure of the organization (i.e., partnership, S corporation, C corporation).  And, like many other insurance benefits provided by employers, LTCI benefits received are tax free to covered employees and dependents!

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2016 Health Savings Account (HSA) Guidelines

Earlier this summer (2016) the IRS released its annual guidance affecting Health Savings Accounts (HSA), and associated qualified high deductible health plans (QHDHP).  Interestingly, for the first time since rules were relaxed to allow contribution amounts to be higher than a percentage of the deductible (remember those days?), the IRS chose to keep the maximum HSA contribution limit for individual coverage static; but increased the HSA family coverage limit.  Despite keeping the maximum allowable HSA contribution amount unchanged for those having individual only coverage, the IRS did, however, increase the maximum out of pocket limit associated with the required/accompanying QHDHP for individuals (in addition to families).
Here's an overview of the changes affecting both HSAs and QHDHP's, starting in 2016...

Health Savings Account (HSA) contribution limits:

• Individual Coverage: $3,350 (no change from 2015)
• Family Coverage: $6,750 (an increase of $100 from 2015)
• As a reminder, so called family coverage is defined as an individual plus one or more dependents.

Qualified High Deductible Health Plan (QHDHP) out of pocket limits:

• Individual Coverage*
• Deductible must be at least $1,300 and no greater than $2,600 annually.
• Out of Pocket limit (deductible plus additional requirements such as post deductible copays and coinsurance) may not exceed $6,550 annually (which is a $100 increase from 2015).
• Family Coverage
• Deductible must be at least $2,600 annually
• Out of Pocket limit (deductible plus additional requirements such as post deductible copays and coinsurance) may not exceed $13,100 annually (which is a $200 increase from 2015).

* IMPORTANT: Recent guidance issued by the trilogy of ACA compliance and enforcement -Departments of Labor/Treasury/Health & Human Services – affects QHDHPs (both inforce and newly established) starting in 2016.  The guidance indicates that the annually published ACA out of pocket maximums affect so called “aggregate” or "non-embedded" family deductibles that are part of many QHDHP’s.  (Note: QHDHP’s that utilize embedded family deductibles and grandfathered plans would not be impacted by the change.)  

This means that QHDHPs having a non-embedded or aggregate deductible for family coverage will be required to limit the deductible exposure facing any one family member to the ACA individual maximum out of pocket limit for 2016, which is $6,850.

For more information on this guidance and the impact on affected plans, go to -https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

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ACA 2016 Maximum Out of Pocket Limits and CDH Plans

Recent guidance issued by the trilogy of Affordable Care Act (ACA) compliance and enforcement -Departments of Labor/Treasury/Health & Human Services – could have a major impact on many of the Consumer Driven Health Plans (CDHPs) currently in force, starting in 2016.  In short, the recently published guidance (released in the form of an FAQ) indicates that the annually published ACA out of pocket maximums affect so called “aggregate” family deductibles that are a part of many CDHP’s.  CDHP’s that utilize embedded family deductibles and grandfathered plans would not be impacted by the change.  Here’s what all of this means…

Click here to access the full article -https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Supreme Court Rulings Affecting Employee Benefits

The Supreme Court of the United States (SCOTUS) recently issued separate rulings affecting the health insurance and employee benefits sectors.  The "King v. Burwell" decision assures that health insurance subsidies will continue to be provided to eligible individuals in all states, even those that don't have a "state based health insurance exchange".  And the "Obergefell v. Hodges" ruling held that state laws (in 14 states) banning same sex marriages were unconstitutional.  While the former ruling affecting ACA subsidies will primarily assure continuation of previously implemented aspects of the law, and prevent what could have been serious disruption, chaos, and premium rate impact; the later ruling will require examination of, and changes to many policies and procedures.  Here's a brief overview of the more pertinent areas deserving attention...

To access the complete article, click --https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

ACA's Small Group Definition Changing

2016 is shaping up to be yet another impactful Affordable Care Act (ACA) year, particularly for employers with 51-100 employees (full and part-time).  The two year reprieve from the ACA's employer mandate/shared responsibility for such employers ends beginning in 2016.  But perhaps more importantly, and having a potentially greater impact, is the redefinition of what constitutes a so called SMALL EMPLOYER.  Plans that begin or renew on or after 1/1/2016 that are: (i) fully insured; (ii) non-grandmothered; and (iii) have 1-100 employees, will be required to comply with certain ACA regulations heretofore applicable only to fully insured groups with fewer than 51 employees. Let's take a look at the impact of this redefinition...

To access full article, go to - https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Understanding the ACA's Modified Community Rating Requirements

This week's post is dedicated to explaining one of the many new provisions of the Affordable Care Act (ACA) which is scheduled to be implemented in 2014 - MODIFIED COMMUNITY RATING (MCR for the rest of this blog post).  Let me begin by stipulating which stakeholders this provision affects and which it does not:




To access the complete article, click - https://smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Health Insurer For Sale!

Insurance holding company - Assurant Inc. - announced their intent to exit the health insurance marketplace by 2016; and have retained investment banking firm - Barclays Capital - to locate a potential buyer for their health insurance and employee benefits subsidiaries.  Like the legions of health insurers that have exited the market before and after passage of the Affordable Care Act (ACA), the reason is simple - quarterly losses in the millions with seemingly no end in sight.  In the case of Assurant Health (and its more recognizable subsidiary insurers in the health insurance market including Time, John Alden Life, and Union Security Life) it appears the ACA was the proverbial "straw that broker the camel's back".  Here's what we know based on a variety of media outlets, and Assurant's own press release...

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Health Care Payment Alternatives

Back in the 1960's, the average cost of an overnight hospital admission was around $100.  Not coincidentally, most health insurance plans at the time set their deductible amounts somewhere between $0 and $100.  Today, adjusting for geographical differences, PPO discounts, etc., an overnight stay in a hospital will run you between $1,700 - $2,500.  According to the Kaiser Family Foundation (KFF), the average health insurance plan deductible in 2014 for an individual covered by employer based coverage was $1,214 (up from $826 in 2009).  Smaller employers (fewer than 200 employees) tend to have higher deductibles (nearly $1,800); while larger employers lean toward lower deductibles ( $971).  Clearly, there is a relationship between health insurance deductible amounts, and the average cost of an overnight hospitalization.

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

Defined Contribution in Health Insurance

 

Many in the health insurance and employee benefits space are claiming to have found the next new, innovative and sure fire way to reduce health insurance costs.  Actually its an old idea, originally deployed in the retirement/pension area of the overall employee benefits palette, and fairly recently resurrected for use in employer provided health insurance.  The next "silver bullet"?

DEFINED CONTRIBUTION

(Remember 401(k)s gradual replacement of many defined benefit retirement pension plans in the eighties?)
Two large, well known U.S. businesses recently announced their intent to go with a defined contribution strategy for their health insurance offering (Time Magazine and Hilton Worldwide), joining others previously taking the plunge including Darden Restaurants, Sears, and Walgreens.  So what are the pros and cons to such an approach?  What is it exactly?  How does an employer deploy it?

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

King v. Burwell ~ Deciding the ACA's Future

Next week (March 2, 2015), the Supreme Court of the United States (SCOTUS) will take up a very important case - King versus Burwell.  All politics and rhetoric aside, this case has the potential to virtually upend the Affordable Care Act (ACA), and stakeholders should be informed as to its implications.   At the core of the case is whether or not the federal government has the authority to issue subsidies (or tax credits) to otherwise eligible individuals that reside in a state that does not have a "state based health insurance exchange" (emphasis on the word - state).  Nearly three years ago, the SCOTUS rendered a decision addressing the constitutionality of the ACA...specifically the individual mandate. This time around, the SCOTUS will be interpreting specific language within the 2,700 pages of the law, and their determination could have a profound impact on the future of health care in America.

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

2015 ACA Compliance and Planning

As we approach the 5th anniversary of the signing of the Affordable Care Act (ACA) into law, compliance and planning have become more important than ever.  Listed below are ACA provisions that have particular relevance this year, and deserve attention and planning...

To access the complete article, click - https://www.smstevensandassociates.com/ResourceLibrary/tabid/192/Default.aspx

The Demise of a Health Insurer in 1 Year!

 

Although the following chain of events directly affects some 120,000 health insurance policyholders residing in the states of Nebraska and Iowa, it could be a bell weather for individuals residing in one of the other 23 states that have/offer health insurance through a federal government approved/funded, non-profit, member owned health insurer. (see http://sstevenshealthcare.blogspot.com/2014/12/coop-health-insurancealert.html for the states currently offering health insurance through a government funded/approved COOP).
 

March 23, 2010 – The Patient Protection and Affordable Care Act (PPACA) is signed into law by the President.  Section 1322 of PPACA includes a provision allowing for the establishment of “consumer operated and oriented plans”, or COOPs.

January, 2012 – CoOportunity Health is founded as a non-profit, 501c(3) entity in Iowa, led by former Wellmark/Blue Cross Blue Shield executives.

February, 2012 – The Centers for Medicare and Medicaid Services (CMS) approves CoOportunity Health, along with 22 other COOPs in 23 states around the country.  CoOportunity Health receives initial, low interest loans from the U.S. government totaling $112.6 million.  (Note: the loan included a 15 year payback, and an initial interest rate under 0.4% on the solvency portion, and a 5 year payback time frame on the initial start up portion.) This initial amount was divided/used as follows: $14.7 million for initial operations; $98 million as operating capital, meeting insurance department solvency and surplus to premium requirements. (Note: according to the Omaha World Herald; Money & Jobs; December 28, 2014 article, the initial operating capital allocation was $15.4 million and $130.6 million in solvency funds, respectively.)

October, 2013 – CoOportunity Health is officially open for business in the states of Iowa and Nebraska, and begins enrolling members, both on and off the federal health insurance exchange, individual and employer group coverage.

January 1, 2014 – The earliest allowable effective dates of issued coverage.

Q2, Q3, 2014 – CoOportunity Health realizes significant growth, reaching 5,000 covered members by Q2, 89,000 members in Q3, and 120,000 members by early Q4.

November 1, 2014 – 2015 open enrollment begins (concludes 2/15/15)

December 13, 2014 – The $1.1 trillion Budget Reconciliation Act (or CRomnibus Bill) is passed by Congress.  One of the provisions of the bill eliminates anticipated funding for the 24 COOPs, including CoOp Health.  As a result, $60 million of CoOp Health’s anticipated, additional $125.6 million of government funding was eliminated, placing them at risk. (Note: the Iowa Department of Insurance allowed CoOp Health to include the $125.6 million on its balance sheet as an asset.)

December 23, 2014 – The Iowa Insurance Commissioner submits a petition for an “order of rehabilitation”, ceasing any new business activity from that point forward.  Within an issued statement, the commissioner says – “…people who signed up for the first time with CoOportunity Health after December 15, 2014 will not have coverage and should find other insurers”. 

January 7, 2015 – The Iowa Department of Insurance issues guidance strongly encouraging agents and brokers to “explore other coverage options for individuals and groups”.  The guidance also outlines the possibility of CoOp Health’s status changing to “liquidation”.  In such an event, insured groups would be terminated 45 days after a liquidation order is issued.  Affected terminated members would have the option of filing claims through the state guarantee fund, which has a $500,000 per member limit on medical and pharmacy claims.

January 23, 2015 – The Iowa Department of Insurance announces its intent to file a petition with the court for liquidation.  The insurance commissioner indicates that “there is no expectation for additional cash inflow until the second half of 2015 and medical claims currently exceed cash on hand”.  It is anticipated that a hearing will take place in February (2015), and the order to liquidate CoOportunity Health will commence on February 28, 2015.

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