Archive for Business Insurance

The “Skinny” as a strategy…

As the implications of health care reform become more apparent, large employers are increasingly grappling with coverage options to avoid the penalties. Over the past few months, there has been considerably more attention paid to the problems faced by the staffing industry and similar employers as these temporary and variable hour employees are generally common law employees of the organization, and ultimately such companies are on the hook as it relates to offering health coverage.

One option some employers are looking at is the offer of a “no minimum value plan” – this is a group health plan that provides medical care, but may not satisfy the 60% minimum value threshold. Granted, if an employer offers such a plan that is not minimum value, an employee may apply for a tax credit at the exchange and this could trigger a $3,000 penalty ($3,000 for any full-time employee that receives a tax credit), but this penalty would be lower than the penalty associated with not offering any health plan at all (the $2,000 penalty/every full-time employee).

These types of plans are starting to make their way into the market for just this reason – as a viable alternative to staffing companies and/or other companies that operate in a similar fashion. At the end of the day, it allows employers to satisfy the coverage requirement under the Patient Protection and Affordable Care Act (PPACA) and avoid the hefty penalty associated with that option. So, it minimizes the risk financially. Also, if employees accept the “skinny” plan, they will not be penalized with the individual tax penalty currently in effect for not having coverage – in some respects, a win-win for both parties.

Some employers are using a modified version of this strategy. These employers offer employees two options: (1) a skinny plan, and (2) a richer option with a premium contribution cost that just barely meets the 9.5% wage threshold, which few low income employees are expected to take. This strategy enables employees to opt for the skinny plan that they can afford, while the offer of the richer option immunizes the employer from the play or pay penalties.

A third strategy is to simply offer the richer option and allow it to be unaffordable. For example, the plan could be offered on a fully contributory (i.e., employee pays all) or nearly fully contributory basis. This strategy avoids the “no offer” penalty, although the employer is still liable for the “unaffordable” penalty, but only with respect to those employees granted a premium tax credit.

Keep in mind, these strategies are aggressive. There are those who argue the skinny plans will not provide sufficient coverage to satisfy the “minimum essential” coverage criteria, but under the current regulations, it seems a possibility. Eventually, these plans may not pass muster, but for now there is nothing definitive against going this route so it is something to consider.

Posted in: Business Insurance, Covered California, Health Care Reform (ACA)

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Obama Administration Announces More Delays for Employer Mandate to 2016

The Obama administration announced today that it will extend the deadline for the implementation of the health care mandate for medium sized businesses to 2016.

Employers with 50 – 99 workers are given a two year reprieve on offering health care to their full-time employees. Requirements for companies with 100 or more workers are reduced by 25%.

Larger employer (over 100 employees) are also seeing their requirement to offer health care to their full-time employees reduced from 95% to 70%.

The administration claims that stratifying the two phase-ins for businesses across America will ease the financial and administrative burdens for employers who have not offered health insurance benefits in the past.

The move today was well received by the majority of the business community.  Most believe the postponements will allow employers additional time to understand the applicable rulings that will affect their businesses.

For the full Washington Post Article, click here

Posted in: Business Insurance, Covered California, Health Care Reform (ACA)

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Obamacare rules on equal coverage delayed: NY Times

WASHINGTON (Reuters) – The Obama administration is delaying enforcement of a provision of the new healthcare law that prohibits employers from providing better health benefits to top executives than to other employees, the New York Times reported on Saturday.

Tax officials said they would not enforce the provision this year because they had yet to issue regulations for employers to follow, according to the Times.

Internal Revenue Service spokesman Bruce Friedland said employers would not have to comply until the agency issued regulations or other guidance, the newspaper reported.

The IRS was not immediately available to confirm the Times story.

The rollout of the Affordable Care Act, known as Obamacare, has been marked by a number of delays in implementing certain parts of the law. In November, the administration announced a one-year delay in online insurance enrollment for small businesses.

Technical problems with the enrollment website plagued its launch on October 1, but they have largely been fixed and more than 2 million people have signed up for private insurance. The White House hopes to have 7 million people sign up by March 31, the deadline for coverage under Obamacare.

The law, adopted in 2010, says employer-sponsored health plans must not discriminate “in favor of highly compensated individuals” with respect to either eligibility or benefits.

IRS officials said they were wrestling with complicated questions like how to measure the value of employee health benefits, how to define “highly compensated” and what exactly constitutes discrimination, the Times reported.

The ban on discriminatory health benefits was to take effect in 2010. Administration officials said then that they needed more time to develop rules and that the rules would be issued well before this month, when other major provisions of the law took effect.

A similar ban on discrimination, adopted more than 30 years ago, already applies to employers that serve as their own insurers. The new law extends that policy to employers that buy insurance from commercial carriers.

(Writing by Eric Beech; editing by Gunna Dickson)

Posted in: Business Insurance, Covered California, Health Care Reform (ACA)

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Covered CA Launches Self Service Website for Small Business – Press Release

 

FOR IMMEDIATE RELEASE Media Line: (916)   205-8403
Dec. 2, 2013  

COVERED CALIFORNIA LAUNCHES SELF-SERVICE WEBSITE FOR THE SMALL BUSINESS HEALTH OPTIONS PROGRAM

Small Businesses Can Enroll for Coverage That Begins As Soon As January 1st

LOS ANGELES, Calif. — Covered California™ today officially launched the full self-enrollment function of the Small Business Health Options (SHOP) online marketplace.  This significant new function on the Covered California website will enable small businesses to fully enroll for coverage that may begin as early as Jan. 1, 2014.

“Small businesses now have new options to provide more choice for their employees and new affordable options for their business,” said Covered California Executive Director Peter V Lee.  “Covered California has created the Small Business Health Options Program (SHOP) to help the small business owners to get the best value for themselves and their employees.  Since October more than 1,500 small business owners have begun the process of exploring whether the SHOP program is right for them.”

Small-business owners with one to 50 eligible employees may now enroll in Covered California’s Small Business Health Options Program (SHOP) plans for coverage effective Jan. 1, 2014.  Like the health insurance plans in Covered California’s individual market, Covered California’s SHOP plans were negotiated to bring a standardized set of benefits, a robust provider network, and a broad choice of health insurance plans with competitive pricing to employers and their employees.

Previously, small business employers have been able to register online, check their eligibility and work with a Certified Insurance Agent to obtain a quote.  The new system enhancements now allow online enrollment functionality for SHOP, including online quoting, the ability to submit an online application at www.coveredca.com in real-time, and the ability for employers to initiate electronic open enrollment for their employees.

Many Small-business owners qualify for a federal tax credit to help offset contributions toward employee premiums. Beginning in 2014, the only way for small-business owners to access the tax credits is to purchase insurance through Covered California’s SHOP. Small businesses are eligible for a federal health care tax credit if they have fewer than 25 full-time-equivalent employees for the tax year, pay employees an average of less than $50,000 per year and contribute at least 50 percent of their employees’ premium cost. Employers with 10 or fewer full-time-equivalent employees with wages averaging $25,000 or less per year are eligible for the maximum amount of tax credits.

“The tax credits available to small business through Covered California make quality coverage more affordable,” said Lee. “For example, a beauty shop with 10 full-time employees and total wages of $250,000 that purchases insurance through Covered California’s SHOP may be eligible for a $35,000 tax credit in 2014. We know that the tax credit is meaningful for a lot of small business that have been struggling to obtain quality, affordable coverage for their employees.”

In addition to purchasing coverage on the Covered California website, Covered California SHOP plans are sold through licensed agents who are trained and certified by Covered California.  Since registration opened in August, more than 22,000 licensed agents have signed up to become certified to sell Covered California products, with more than 7,000 agents currently certified and available to help individual consumers and small employers in the Covered California marketplace.

The increased website functionality also includes a number of new features available for the Certified Insurance Agent community, such as the ability to create an online profile for an individual consumer or small employer; the ability to start and submit an application on behalf of an individual or small employer; and, the ability to process and manage employer online enrollment applications for SHOP.

About the Small Business Health Options Program (SHOP)

The Affordable Care Act includes provisions to encourage small businesses to offer health coverage for their employees by making insurance more affordable and easier to purchase. Covered California has created the Small Business Health Options Program (SHOP) to facilitate the purchase of affordable health insurance for small-business owners.

SHOP is a second marketplace—separate from the one for individuals—and is designed to give employers and their employees more options for health coverage.  Using this marketplace, small-business owners can shop for health insurance in ways that offer convenience and choice, which is comparable to how large companies shop for employee health insurance today.

In 2014, health insurance companies participating in SHOP are: Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan and Western Health Advantage.  These plans will be sold through Certified Licensed Insurance Agents trained and certified by Covered California.

Small businesses are not required to buy insurance for their employees. SHOP is completely voluntary, and small businesses will not be penalized for non-participation. Small businesses can enroll in a SHOP plan year round.

About Covered California

Covered California is the state’s marketplace for the federal Patient Protection and Affordable Care Act. Covered California, in partnership with the California Department of Health Care Services, was charged with creating a new health insurance marketplace in which individuals and small businesses can get access to affordable health insurance plans. With coverage starting in 2014, Covered California helps individuals determine whether they are eligible for premium assistance that is available on a sliding-scale basis to reduce insurance costs or whether they are eligible for low-cost or no-cost Medi-Cal. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Small businesses can purchase competitively priced health insurance plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits.

Covered California is an independent part of the state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the Governor and the Legislature. For more information on Covered California, please visit www.CoveredCA.com.

Posted in: Business Insurance, Covered California

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Companies Prepare to Pass More Health Costs to Workers

The Wall Street Journal  by Theo Francis

Companies are bracing for an influx of participants in their insurance plans due to the health-care overhaul, adding to pressure to shift more of the cost of coverage to employees.

Many employers are betting that the Affordable Care Act’s requirement that all Americans have health insurance starting in 2014 will bring more people into their plans who have previously opted out. That, along with other rising expenses, is prompting companies to raise workers’ premium contributions, steer them toward high-deductible plans and charge them more to cover family members.

The changes as companies roll out their health plans for 2014 aren’t solely the result of the ACA. Employers have been pushing more of the cost of providing health insurance on to their workers for years, and firms that aren’t booking much sales growth due to the sluggish economy are under heavy pressure to keep expenses down.

Some are dealing with rising expenses by making employees pick up a bigger share of the premiums for coverage of family members. Employees this year are responsible for an average 18% of the cost of individual coverage, but 29% of the cost of family coverage, according to a survey of employee health plans by the Kaiser Family Foundation and the Health Research & Educational Trust.

“We have seen employers do more cost-shifting, if you will, for an employee to pay a higher portion of the cost of dependent and spouse coverage,” said Tracy Watts, U.S. health-care reform leader at Mercer, a benefits consulting unit of Marsh & McLennan Cos.

Between 15% and 20% of eligible workers nationwide tend to skip insurance, benefits consultants say.

Towers Watson & Co., a benefits consulting firm, figures that about half of the usual opt-outs will sign up for next year—meaning an enrollment increase of about 7% or 8%, and a corresponding increase in costs of about 5%.

Haverty Furniture, an Atlanta-based retail furniture chain with stores in 17 Southern and Midwestern states, expects health-care costs to rise by about $2 million, or 20%, next year.

The company expects the bulk of that to come from enrollment increases, and it is raising premiums, deductibles and copayments in response, Chief Financial Officer Dennis Fink said.

“We do think our per-capita cost is going up, but the bigger piece is just people who’ve chosen not to have coverage,” he said.

A quirk of the Affordable Care Act could make it more appealing for companies to raise rates for family coverage than for individuals, said Vivian Ho, a Rice University health-care economist.

Starting in 2015, companies employing 50 or more people must offer affordable health-care coverage to anyone working 30 hours a week or more.

But affordability is measured using the cost of individual coverage, capping the cost at 9.5% of income, Ms. Ho said.

Raising family rates could help companies recoup costs without running afoul of that limit, she said. Starting now, instead of next year, would allow a more gradual change.

U.S. Department of Health and Human Services spokeswoman Joanne Peters said that the health-reform law is keeping a lid on health-care costs overall, and makes it easier for employers to offer coverage. “Since the Affordable Care Act became law, health-care costs have been slowing and premiums are increasing by the lowest rates in years,” she said.

Gannett Co., which owns more than 80 newspapers and 23 television stations, expects one factor in its increased health costs to be the addition of more employees to its insurance plans due to the ACA rules, according to a person familiar with the company’s projections.

To address an overall increase in costs, Gannett has replaced the two plans for families it used to offer its workers with a single high-deductible plan that requires employees to pay the first $3,000 of medical costs each year, according to workers at the Indianapolis Star, one of the company’s papers. For those with individual coverage, who make up a little over half of Gannett’s insurance pool, the figure is $1,500.

The company also scrapped a sliding scale that let lower-income workers pay lower premiums. For some employees, the result was a 60% jump in monthly premiums for family coverage, to $575 from about $360.

Gannett said more than half of its employees will see premiums fall by 12%.

United Parcel Service Inc. made headlines in August when it said that it would bar spouses from its nonunion health plan if they could get coverage at their own jobs. The company said it expected to see an increase in its health-care costs in part from adding employees to its plan who currently opt out.

About 6% of employers ban coverage for spouses who can get it elsewhere, and another 6% impose an explicit surcharge for covering a spouse, according to Mercer. American Electric Power Co., for example, began imposing a $50 monthly surcharge this year to cover spouses with access to insurance at their own workplace. AEP said 92% of its employees usually sign up for coverage, so it doesn’t expect a surge of new enrollment.

In another shift this year, companies have become increasingly aggressive about steering employees toward plans in which they pay more of the initial costs for their care in exchange for lower premiums.

Trucking and logistics company Ryder System Inc. has replaced one of its two insurance options with one such high-deductible plan. Ryder is encouraging employees to choose the new option in part by raising the cost of more traditional coverage.

These changes are expected to keep Ryder’s total premium cost lower even as it keeps the share of employee premiums that it pays steady at about 70%, executives said. They accompany earlier decisions to close Ryder’s plan to spouses who can get insurance elsewhere.

“In some ways, the low-hanging fruit has been plucked,” said Boon Ooi, Ryder’s vice president of compensation and benefits. In response, he said, “what organizations frequently do is to look at trying to encourage employees to move into the more efficient plan.”

Health-care cost growth has slowed in recent years, and benefits consultants expect an increase of about 5% for 2014, below recent averages. The ACA isn’t expected to raise health-care costs significantly for most companies in 2014 either.

The employer mandate was postponed until 2015, and other major provisions have already largely kicked in, including a requirement to cover children as old as 26, ending lifetime limits on coverage, and covering preventive care without out-of-pocket charges.

But for industries dependent on hourly workers, including retailers and hospitality companies whose young and low-wage workers more often opt out of coverage, the individual mandate may have an effect.

The problem isn’t per-person costs—indeed, companies’ average costs could fall with an influx of the younger, generally healthier workers who had previously tended to opt out. But adding more enrollees will nonetheless raise a company’s total costs.

—Joann S. Lublin contributed to this article.

Posted in: Business Insurance, Health Care Reform (ACA), Personal Insurance

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Covered California Upholds Original Deadline – Press Release

Dear Colleagues and Interested Parties:

 

FOR IMMEDIATE RELEASE Media Line: (916) 205-8403
Nov. 21, 2013  

COVERED CALIFORNIA UPHOLDS ORIGINAL DEADLINE FOR ENDING HEALTH PLANS THAT DON’T MEET LAW’S STANDARDS

Strong Enrollment in New Health Insurance Marketplace a Factor in Decision

SACRAMENTO, Calif. — As consumer enrollment continues to grow, the Covered California™ Board unanimously voted today to uphold its Dec. 31, 2013, deadline for health insurance companies to discontinue plans that don’t meet basic standards. The board cited that extending the deadline offers no benefit to the consumer and may create confusion about accessing affordable health care coverage through Covered California. 

The board, consistent with President Barack Obama’s recommendations, also urged Covered California staff to implement helpful tools for consumers currently enrolled in affected plans, to better understand their options.

The decision to maintain the original deadline also confirms the state exchange’s commitment to transitioning Californians into plans that are compliant with the reforms of the Patient Protection and Affordable Care Act, protecting consumers from double deductibles and stabilizing the risk pool to control costs for consumers beginning in 2014.

Additionally, Covered California is implementing five key strategies to sustain, if not increase, its enrollment momentum and help affected consumers:

  • Extending the deadline for enrollment for coverage taking effect on Jan. 1, 2014, from Dec. 15, 2013, to Dec. 23, 2013, and extending the deadline for payments due from Dec. 26, 2013, to Jan. 5, 2014. 
  • Establishing a telephone hotline for consumers to resolve enrollment questions. The hotline, (855) 857-0445, will be available beginning Monday, Nov. 25.
  • Sending information directly to nearly 1.13 million affected individuals that provides clear options for coverage. The information will be sent from Covered California and the individual’s current insurance provider.
  • Collecting and reporting data, on a regular basis, showing the impacts of conversion for individuals.
  • Engaging consumers in their communities through the thousands of Certified Insurance Agents, Certified Enrollment Counselors and Certified Educators now deployed statewide.

“The consumer is front and foremost in Covered California’s policy decision process. These new strategies will provide consumers a better enrollment experience, more flexibility in the selection of a plan and, most importantly, increased knowledge with which to make the best health coverage choice possible,” said Covered California Executive Director Peter V. Lee. 

The board and Covered California staff discussed options for maintaining or extending the deadline after President Obama last week gave state insurance exchanges flexibility on when policies that were not grandfathered and are not compliant with the Affordable Care Act could be ended.

About Covered California

Covered California is the state’s marketplace for the federal Patient Protection and Affordable Care Act. Covered California, in partnership with the California Department of Health Care Services, was charged with creating a new health insurance marketplace in which individuals and small businesses can get access to affordable health insurance plans. With coverage starting in 2014, Covered California helps individuals determine whether they are eligible for premium assistance that is available on a sliding-scale basis to reduce insurance costs or whether they are eligible for low-cost or no-cost Medi-Cal. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Small businesses can purchase competitively priced health insurance plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits.

Covered California is an independent part of the state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the Governor and the Legislature. For more information on Covered California, please visit www.CoveredCA.com.

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Posted in: Business Insurance, Covered California, Health Care Reform (ACA), Personal Insurance

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Innovative ways through the ACA provisions for employers

Employers are continuing looking for solutions that help manage there businesses more efficiently and also navigate the provisions of the Affordable Care Act (ACA).  If it make sense, employers should consider looking at alternative funding options – like Self Funding or Level Premium programs.

For those of you looking at these options, below are the provisions that do and don’t apply.

ACA Provisions That Do Apply:

  • Minimum Value Plans
  • Unlimited lifetime maximums
  • Out of pocket & deductible limits
  • Kids to age 26
  • Summary of Benefits and Coverages (SBC’s)
  • 60-Day Notice of Material Modification
  • 90-Day waiting period (exempt from California’s 60 Day)
  • W-2 reporting & plan transparency reporting to HHS
  • PCORI Fees & Transitional Reinsurance Fee
  • Discrimination based on health status

ACA Provisions That Do Not Apply:

  • Minimum Loss Ratio (MLR)
  • Comply with 3:1 pricing guidelines
  • Geographical rating areas
  • State or Federal review of premium adjustments
  • Annual Health Insurance Tax (HIT)
  • Provide Essential Health benefits “EHB”
    • Minimum Value is required so no loss of benefit
    • Self-funded plans typically provide richer benefits than fully insured plans

Interested in learning more?  Please contact us at 916-932-2864 – as we are happy to help.

Posted in: Business Insurance, Covered California, Health Care Reform (ACA)

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Three Strategic Steps to Getting Your Business Ready for 2014

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Health Care Reform (ACA) has so many provisions to be aware of that it can be downright overwhelming.  Here are the top three, often overlooked, strategies to help your company get ready for the changes to come.

 

  •   Determine who is eligible for the marketplace subsidy.  Unless you pay for 100 percent of your employees’ premium, you have the possibility of a backlash from your staff.  Here’s how it works: If their income is 400 percent or less of federal poverty levels, they are eligible for a federal subsidy to offset their premium and sometimes co-pay expenses (this could make the marketplace plan less expensive than your employers’ group health plan).  If you are providing affordable coverage for your employees this means they end up missing out on their subsidy.  This step may take additional footwork as you will need to find out what their household income is.  You can accomplish this through a simple survey, though you’ll want to make sure it is HIPAA compliant to protect their information.
  • Review all your options.  Purchasing health insurance is a completely different process now.  Self-funding options are now available for smaller groups. New products and financing options are surfacing that mimic group insurance but are individual products,   taking the perceived risk of self-funding out of the picture.
  • Evaluate your compliance.  Certain mandates will automatically be dealt with or are already put in place, such as essential benefits, dependent coverage and lifetime limits.  Others are set at the company policy level and many will need to be updated to stay in compliance.  In particular, note what your waiting period is (must be less than 90 calendar days from the date of eligibility) and how many hours worked are needed to be eligible for coverage (30 hours will be the new federal full-time standard on Jan. 1, 2015).  If you have seasonal or part-time employees, you’ll want to spend extra effort managing the hours they work so eligibility doesn’t catch you unaware.  Payroll services are adapting their products to assist business owners with tracking the hours of part-time and seasonal employees.

Certainly there is a lot more to consider and know regarding the compliance, management, administration and strategy of health care reform.  Unless you’re a large company with dedicated benefit professionals, you probably don’t have the staff or the time to dedicate to these new regulations.  Lean on Innovative Broker Services by calling at 916-932-2864 for guidance on other strategies you can use as you prepare for 2014 and beyond.

Posted in: Business Insurance, Health Care Reform (ACA)

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Why do we still have COBRA?

Application for Health Benefits Pic

With the advent of the health marketplaces, why do we still have COBRA?

The framers of PPACA decided that COBRA should be available even after the health marketplaces become available primarily to avoid possible disruptions in care.  They felt that COBRA beneficiaries, many of whom have significant health conditions, should be allowed to stay with their current health care providers if they chose to.  With reports of narrow networks in some of the marketplaces, this concern has some basis.

The marketplaces will not offer ancillary benefits, so some individuals will elect COBRA to have access to continued dental or vision coverage.  Individuals anticipating a short period before new group coverage becomes effective also may choose to elect COBRA as a simpler bridge than moving into and out of the marketplace.

However, most experts believe that most COBRA-eligible individuals will decline COBRA and elect coverage through the marketplace instead.  Due to the premium subsidies, marketplace coverage may be less expensive than COBRA; it also does not have a maximum coverage period like COBRA does.  As COBRA beneficiaries tend to have claims that exceed premiums, employers will benefit from a migration of this population to marketplace coverage.

It appears that the marketplaces will basically follow the HIPAA special enrolment rules.  This means that if a person elects COBRA they will need to complete the maximum COBRA period in order to enroll in the marketplace outside of open enrollment.

Employers will need to provide the general COBRA notice to newly eligible individuals even after January 1, 2014.  The Department of Labor has provided an updated model COBRA election notice (at COBRA Continuation Coverage) that mentions the marketplace that will need to be given following a qualifying event.  It is unclear when employers must switch to the new notice; since the marketplace coverage will not begin until January 2014 to avoid confusion waiting to move to the new notice until this December may be the best option.

Posted in: Business Insurance, Health Care Reform (ACA)

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