With all cards on the table, is this Pay or Play 2.0?
Where do we stand now?
New changes in the last 24 hours were made among them:
1. Repeal the 10 essential health benefits mandate (Conservative Caucus)
2. Add an addition $15B into a flexibility fund (for states to manage Medicaid) (Coverage Caucus – side note here – Senator Cassidy R-LA – who worked with Senator Collins R-ME on a separate bill is heading the coverage caucus as they are working to keep coverage in the Medicaid programs)
3. Keep the .9% Medicare tax for high-income earners making over $200,000 filing single for six more years – this would be to keep bringing in new revenue (This was originally in the bill to sunset as of 2018, then adjusted to sunset this year but looks to be sunsetted in 6 years)
What else did I miss?
Earlier this week, additional changes were made to the bill as it was attempted to garner enough votes to pass on the floor of the House. Most of these are changes in implementation dates to appeal to different parts of the House GOP.
1. Moving the repeal of the Tanning & Medical Device tax from 2018 to 2017
2. Moving the repeal of the business tax cap for executives in health insurance companies from 2018 to 2017
3. Sunset new Medicaid expansion for states that have not expanded from 2020 to 2017 (Kansas is currently trying to expand Medicaid as we speak)
4. NY Representatives add an amendment to move $2.3B Medicaid costs from local (county – excluding large metropolises like NYC) to the State Budget
5. Lower the medical expense deduction from 7.5% under the original bill now to a new low of 5.8% and to move up implementation from 2018 to 2017
6. Delay Cadillac tax from 2025 now pushed out to 2026
7. Repeal the maximums and over the counter medication bans on Flexible Spending Accounts from 2018 to 2017
8. Increase the HSA limits to maximum out of pocket costs from 2018 to 2017
What does this all mean? Well, to be absolutely frank – not much, if they don’t have the votes today. What does it mean in the future, though, EVERYTHING.
I don’t think you will find someone who doesn’t think we have work to do on the ACA. I am the first to say it. I also think that we have to get a bi-partisan committee to work together with consumer groups; AARP; AHIP; AHA; AMA and the healthcare consulting (i.e. the broker) community. We are in the battle on a daily basis. We know what can work and what should work and this needs to be done right and it needs to be done soon.
There are good ideas out there and we have to approach this on a more macro level and look at the outside forces that are affecting the current delivery system, i.e. lowering the cost of pharmaceuticals by introducing competition; providing incentives for smaller companies to do more development on generic alternatives; banning pharmaceutical companies from shelving generic patents when they become available; more efficient medical record data sharing; cutting out redundancy; providing affordable medical malpractice insurance programs to incent OBGYNs and other speciality providers who want to provide care but can’t afford the malpractice premiums; identifying high-cost chronic conditions and look at possibly pooling them into a national program such as Medicare, as we do with End Stage Renal Disease; providing TRANSPARENCY to the consumer by giving them the means to shop for a procedure with outcomes and cost as easily as they can today with houses; technology and cars; getting more funding and education to fight the opioid epidemic.
We cannot continue to kick the can down the road, adjust the programs to suit a small group of interest. The health of this country is at stake; the health of its citizens are at stake and millions of jobs are at stake. We need to pull this out of the halls of Congress and get the experts, who manage this, at the table now before it is too late.
There are solutions, there is a way – but we have to do this together with experts and support it as a country. This is one thing neither party should own but every party should want to see succeed.
Dismantling the employer option . . . and then there were none
There is a well known English nursery rhyme by Mother Goose, about an egg that sat on a wall and had a great fall. All the king’s horses and the all king’s men could not put that poor egg back together again.
As we have been following the repeal and replace of the Affordable Care Act (ACA) or aka – Obamacare, the elimination or capping of the employer tax-exclusion on employer sponsored benefit programs, has been brought up again. This idea has been floating around for the last couple of years as a way to increase revenue and now looked at as one potential revenue funding option in a replacement to the current Affordable Care Act (ACA).
So what is the employer tax – exclusion? Currently employees are NOT taxed on the employer paid portion of their benefits for income and payroll tax purposes. Under this new regulation, the employer paid portion of premiums could end up being considered taxable income. In addition, the employer could face higher FICA (Federal Insurance Contributions Act) matches, which would be an added financial burden to the employer.
FICA is made up of the employer and employee both contributing equal shares of Social Security Tax (6.2%); Medicare Tax (1.45%) for a total of 12.4% and 2.9% respectively. Currently there is a cap on Social Security, so once you have paid this tax on $127,200, you no longer pay the 6.2% Social Security tax. You can find more information on this and additional taxes HERE.
We are sitting in a precarious situation if we start to look changing or altering the current employer model, as part of the repeal and replace. The Kaiser Foundation has data showing 156 million Americans covered through employer based plans through the end of 2015. As of 2017, approximately 175 million Americans receive healthcare through the employer based model.
Remember the risk pools? The employer based market is heavily involved in helping to balance risk pools by spreading out the costs of the healthy and unhealthy covered employees.
If the employer has no incentive to offer these benefits to their employees, or they end up costing both the employee and the employer more money, the employer could easily have their employees go to the individual marketplace to purchase their coverage by offering a salary increase to the employee to offset some of the costs. This would mean higher income taxes to the employee. The costs in the individual market are higher; the choices are lower and employees would lose the benefit of having their employer advocate in coverage disputes.
If Congress decided, instead, to cap the employer-tax exclusion, this would in turn, cause the employer to look at providing less rich benefit to employees, to stay underneath the maximum premium cap so not to trigger a tax. This would push employees to higher out of pocket costs and possibly shift the cost of the premium from the employer to the employee at a faster rate then we are seeing today.
The employer-sponsored health insurance is a valuable benefit and a keystone to the American worker and a financial foundation for the healthcare system today. If we attempt to upset this model, while undergoing additional repeal and replacement options, we run the risk of the entire system breaking, just like that egg. And there is not a king nor a horse strong or powerful enough to be able to pick it up, once the system has fallen off the wall.
10 Things To Know About New York State Paid Family Leave
Paid Family Leave is coming to New York in 2018. ShelterPoint Life has put together a great 10 point overview:
1 – PFL is available for the following qualifying events: Having a child, adopting or fostering a child, caring for a sick family member, or caring for a family member after a qualifying military leave event.
2 – When returning from PFL, you are entitled to return to your same or comparable position without loss of benefits you would have accrued otherwise.
3 – Even new Dads will be able to use it! PFL’s bonding benefit is for both men and women.
4 – If you’re having (or adopting) a baby in 2017, you can still take some bonding time after PFL goes into effect next year.
5 – Most employees in New York will get it.
6 – If you already have health insurance through your employer, they will maintain your health insurance coverage for the duration of the time you’re away from work.
7 – PFL will benefit employees at organizations of all sizes, not just organizations with more than 50 employees, as FMLA does.
8 – Once in effect, New York will have one of the most comprehensive family leave programs in the nation.
9 – The first year PFL is in effect (2018), you can take up to eight weeks of paid time off with 50% compensation of your salary up to 50% of the state’s average weekly wage.
10 – The benefit increases every year for the first 4 years
Pulling the plug on Healthcare in the US – Dissecting the Regular Facts from the Alternative Facts
The 21st Century Cures Act
By Rob Bujan
Oh goody! Another bill to repeal and replace the ACA! nope, wrong. This is one of the last bills that President Omaba signed into law before leaving office. The 21st Century Cures Act is packed with investments for improved healthcare.
There are some great programs to address the heroin and prescription opioid epidemic; improve mental health; improve the timing on drug trails within the FDA and accelerate cancer research discoveries.
It also had a program included that allows employers to provide an account to give to employees to shop for their health insurance plans in the marketplace or directly with an insurance carrier in the individual market.
For many years, brokers have been using Health Reimbursement Arrangements (HRA) coupled with a high-deductible plan. An employer would put a plan with a $4000 deductible for hospital care, for example, have copays for medication and doctor visits. About 20% – 25% of employees in a group setting drive approximately 80% of high-level (inpatient) claim costs, so the employer could fund the deductible for the employee if they had a claim that processed against the deductible, which would normally be less frequent than office visits or pharmacy claims. The premium would be lower, and the employer would use those savings to fund the deductible. The HRA money was used only if a claim entered the deductible mode. The money was not taxable money to the employee if they used it.
Some employers also used these accounts to allow employees to purchase individual health plans to give employees a choice and not administer benefits. These were also known as Premium Reimbursement Accounts (PRA) The ACA actually did away with this program as they did not want employers to adversely select against folks who could drive up claim costs, and they did not want employees who could get a subsidy in the marketplace to use that subsidy and receive tax free money from their employer.
The new bill allows HRA stand alone account to pay for premiums for employers with less than 50 employees. With some new mandates, they can curb some of the abuse that they felt could occur under the original model. If an employer decides to offer this, the employer must offer it to all their employees (no discrimination). They are NOT allowed to offer a group product next to this reimbursement program (to protect the risk in the group market), and employees must identify they have this reimbursement if they shop in the marketplace and get an advance premium tax credit (APTC). The APTC would be reduced dollar by dollar so there is no double dipping. The maximum amounts that employers could provide to employees would be $4,950 for employee-only coverage and $10,000 for employee/spouse; employee/child or full family coverage.
The goal of this was to get more small group employers who might not be participating in offering group coverage, to do so. It would also increase the individual market and strengthen it by adding more individual to the risk pool, again keeping that pool full. The reality is though; this might be a fix that is a little too late. The individual markets in many states have been hit hard with carriers dropping out; rates increasing due to the medical loss ratios (claims paid versus premiums received) running higher than expected; and an overall lack of choice in the individual marketplace. Most individual plans are in-network only; have local networks with only national coverage in case of a true emergency.
Group coverage offered through an employer is still going to give you larger network access; more carrier offerings and in most cases, lower group rates.
While the 21st Century Cures Act looked good on paper, it is not going to be enough to breathe life back into the individual market without incentives for more competition and a leveling off of rates. The individual market needs both the state and the federal government to come together to work on a better program for those that don’t fall into Medicaid; Medicare or have employer-based coverage. Why don’t we get a discussion about this going and work on fixing one piece of the market at a time? That is how we really could provide a safe and thoughtful way to enhance and adjust our current state of the ACA.
Nov 16, 2016 | By Dan Cook BenefitsPro
As the nation holds its breath in anticipation of the Republican Party’s reform of health care reform, insurers have already moved into the hyperventilation stage.
The health insurance industry is one that, historically, has evolved by increments.
Yet since the passage of the Patient Protection and Affordable Care Act, it has been asked to change by leaps and bounds. But now, with an incoming president and Congress that have vowed to undo the ACA with no replacement plan to offer, the industry doesn’t know what to brace for next.
Outgoing President Obama neatly summed up the dilemma facing the nation in an interview with the media the other day. “If they can come up with something better that actually works, a year or two after they’ve replaced the ACA with their own plan, and 25 million people have health insurance and it’s cheaper and better and running smoothly, I’ll be the first one to say that’s great,” he said.
While there’s been no shortage of criticism of the ACA’s structure, most insurance authorities say its basic components were, in theory, solid. The ACA offered truly affordable health insurance to those with pre-existing conditions and others who, due to their age and other factors, were previously facing budget-busting insurance premiums—if they could get coverage at all.
The poor were finally able to “buy” basic coverage, and insurers’ profits were somewhat protected by the “buy-or-pay-a-fine” law included to extract money from those who might not want coverage so that the subsidy pool could be filled.
Republicans say they intend to continue to offer affordable coverage to those with pre-existing conditions. (The poor will apparently be on their own again, at least based on current GOP statements.) But they do want to eliminate the “mandate.”
But insurers fear that, without the stick of the mandate, the carrot of pre-existing coverage just won’t work. And they will face the choice of either plummeting profits or escalating premiums—or both.
President-elect Trump and others in his party have floated various “solutions” to creating a mandate-less national health system. But insurers who spoke to The Hill poked large holes in all of them.
In a tweet reported by The Hill, the Kaiser Family Foundation’s Larry Levitt laid out the challenge facing the GOP: “There is a bipartisan desire to guarantee insurance for pre-existing conditions. Sadly, there’s no magic pixie dust that makes it easy.”
IRS Publishes 2016 Draft Forms for ACA Reporting
With the first ACA reporting deadlines for employers in the rearview mirror, the IRS has released draft forms for 2016. These drafts, if finalized, will be used when employers file in 2017.
The deadlines for reporting of 2016 health coverage are expected to return to the original dates:
– Deadline to distribute forms to employees and covered individuals will be January 31, 2017
– Deadline to file paper forms with the IRS will be February 28, 2017.
– Deadline to file electronically with the IRS will be March, 31, 2017.
The draft forms offer few changes from the 2015 forms. Of note, the line 14 code series reflects wording changes in a few codes and new codes 1J and 1K. These new codes discuss conditional offers of coverage to spouses.
Also, the “Plan Start Month” box on Form 1095-C will continue to be optional for 2016.
Draft instructions for employers to complete the forms have not been issued at this time.
Filing for 2016 will reflect several differences that we will expect to see reflected in the instructions to complete the forms. Chief among these is that employers will be required to offer minimum essential coverage to at least 95% of full-time and full-time equivalent employees to avoid the A “no offer” penalty. Transition relief was available for the 2015 coverage year that required an offer to 70% of employees to meet the requirement to offer coverage.
Early releases of all draft forms are at www.IRS.gov/draftforms.
(Go to 7/7/2016 release date)
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