- Complex Case Management
- Inpatient Management
- Outpatient Management
- Telehealth Services
- Nurse Health Coaching
- Maternity Management
- Behavioral Health
On Monday, House Republicans unveiled the long-awaited legislation intended to overhaul former President Barack Obama’s signature health care legislation, the Patient Protection and Affordable Care Act (ACA). The bill, titled the American Health Care Act (AHCA), would make major changes to the ACA that impact individuals, employers, insurers, and providers in significant ways, as summarized below.
Provisions Impacting Employer-Sponsored Coverage
The most significant development impacting employers under the proposed law is removal of the employer mandate.
- Large employers would no longer face penalties for failing to offer coverage that meets the minimum value and minimum essential coverage requirements of the ACA.
- Additionally, the proposed bill would repeal the widely unpopular excise tax on high-cost coverage (the so-called Cadillac Tax) and offer tax credits to small businesses for providing coverage to employees.
- The law would also require employers to indicate on Form W2 the months of coverage each employee was eligible for coverage. (Note: It appears the legislation is intended also to eliminate the ACA’s annual employer 1094/1095 reporting under Section 6056 of the Code. That would be a natural by-product of the employer mandate repeal, but the bill does not appear to eliminate this obligation expressly. This may be addressed in a future amendment to the bill.)
Changes to Account-Based Plans
- The bill would increase the annual HSA contribution limit to equal the out-of-pocket maximum amount established for that year under the HSA rules (currently $6,550 for self-only coverage and $13,100 for family coverage).
- The rules would also be modified to allow both spouses (if over 55) to make “catch-up” contributions to the same HSA account.
- Also, a new special rule would allow HSA account holders to use HSA funds to pay for health care services performed up to 60 days prior to the account being established.
- The bill would also reduce the excise tax on distributions not used for medical expenses from 20% to 10%.
- Finally, the AHCA would remove the ACA’s cap on contributions to health FSA plans.
Changes to the Individual Market
While leaving in place popular provisions of the ACA such as the requirements that insurers cover dependents up to the age of 26 and pre-existing conditions, the AHCA would otherwise significantly redesign the ACA’s changes to the individual market.
- First, the bill does away with the individual mandate and repeals the cost-sharing subsidies and premium tax credits made available under the ACA to individuals who enroll in coverage on the exchanges.
- In turn, the AHCA puts in place refundable tax credits that individuals could use to defray the cost of coverage, including coverage outside the exchanges.
- Like under the ACA, these tax credits are eligible for advance payment. The amount of the credits will vary based on age and income, and excess payments can be deposited directly into an HSA account.
- Tax credits are not available for any coverage that includes abortion services.
In place of the individual mandate, to incentivize individuals to maintain coverage, the bill provides for increased premiums (30% for 12 months) for individuals who have had a gap in coverage of at least 63 days.
- The bill also creates the “Patient and State Stability Fund,” which provides significant payments to states ($10 to $15 billion per year through 2026) to help stabilize the individual and small group insurance markets and to assist high-risk patients.
- Also, beginning in 2020, the ACA’s requirements around essential health benefits will sunset.
- Finally, the bill allows carriers greater flexibility to vary premiums based on age by up to a 5:1 ratio, up from 3:1 under the ACA.
Changes in the Medicaid Program
Unsurprisingly, the AHCA would repeal the ACA’s expansion of the Medicaid program.
- It would also put into place a per-capital allotment of federal Medicaid dollars to the states, which is expected to rein in the future federal financial commitment to the program.
- Similar to other provisions, the bill would bar Medicaid dollars from being used on abortion providers.
- It would also require states to disenroll high-dollar lottery winners and incentivize states to assess participant eligibility on a more frequent basis. (Note: The bill will also reverse major cuts to the Medicare Disproportionate Share Hospital program, which provides safety net funding to more than 3,000 hospitals that disproportionately treat indigent patients).
Repeal of ACA Taxes
Finally, the AHCA would repeal numerous taxes—in addition to the Cadillac Tax discussed above—that either have gone into effect or are expected to become effective under the ACA.
- Among those are:
- The insurer tax (effectively a federal insurance premium tax),
- The prescription medication tax,
- The tax on over-the-counter medications,
- The medical device tax.
- It would also eliminate taxes on high-income earners that were levied under the ACA to help pay for the law.
Republicans have signaled an aggressive timeline for deliberations on the law. Committee hearings are expected to take place immediately, and the bill could reach the floor of the House in as little as one week.
This blog post should not be considered as legal advice.
On December 31, 2016, Judge Reed O’Connor of the United States District Court for the Northern District of Texas entered a nationwide injunction in Franciscan Alliance v. Burwell. The order prohibited the Department of Health and Human Services (HHS) from enforcing certain provisions of its nondiscrimination rule promulgated under ACA section 1557, namely those that prohibit discrimination on the basis of gender identity or termination of pregnancy.
The remaining provisions of the rule—prohibiting discrimination on the basis of disability, race, color, age, national origin, or sex other than gender identity—are in effect as scheduled, mostly beginning January 1, 2017.
MedCost published a summary of Section 1557 here. HHS has published a summary here and FAQs here. Section 1557 applies antidiscrimination laws to entities receiving assistance under certain federal agencies. These rules have required various plan changes from self-funded plans to implement the protections afforded under the rules.
In the December 31 ruling, Judge O’Connor stated that “[w]hile this lawsuit involves many issues of great importance—state sovereignty, expanded healthcare coverage, anti-discrimination protections, and medical judgment—ultimately, the question before the Court is whether Defendants exceeded their authority under the ACA in the challenged regulations’ interpretation of sex discrimination and whether the regulation violates the Religious Freedom Restoration Act as applied to Private Plaintiffs.”
Finding that HHS exceeded its authority under the ACA, he enjoined the agency from enforcing the provisions of Section 1557 regarding plan changes for nondiscrimination on the basis of gender identity and pregnancy termination until further judicial or legislative action.
This blog post should not be considered as legal advice.
Stories of Success
If you’re one of the 80% of employers who have offered employee wellness programs and information,[i] you may be searching to see what is working at other companies. Developing a culture of wellness can decrease sick leave absenteeism by an average 28%, and workers’ compensation and disability costs by an average 30%.[ii]
How can you increase your employees’ job satisfaction and overall health, while saving hard-earned health care dollars? Here are four power ideas for more successful employee wellness programs
1. Offer Choices.
“One size does not fit all in employee wellness programs,” said Crystal Spicer, MedCost Human Resources Manager. As a company offering financial and health solutions for employer benefit programs, clients were asking what wellness outreach MedCost was doing for their own employees.
The MedCost HR team realized that what worked for one employee didn’t necessarily fit another. So the company’s wellness committee designed a point-based program with multiple ways to boost health and earn financial incentives.
The annual program, kicked off in 2016, measured points earned for employee wellness activities on a quarterly and a yearly basis. This chart shows multiple ways that MedCost employees could earn points for the financial incentives at year’s end:
“We got people’s attention, which is what we were striving for,” said Crystal. One group of women came to work an hour early to walk together – even climbing stairs.
A Weight Watchers group cosponsored by the company attracted 20 people. Sherry lost 56 pounds. Glenn lost 36. Trish, motivated on her own, lost 40. And their new habits of exercising and eating helped them keep it off.
MedCost offered $100 drawings quarterly for those who met point goals. At the end of 2016, those who accrued the 2,400 points will receive a $500 contribution into their personal Health Savings Account.[iii] Employees enrolled in a Preferred Provider Organization plan could earn a gift card for $250.
Fitness classes offered after work onsite were another way to add points. The company shared costs with employees who signed up for the six-week classes. From the beginning, classes were well-attended.
Financial incentives are effective for successful employee wellness programs. Four out of five employers use financial incentives to promote wellness.[iv]
“Getting buy-in is key,” said Crystal. “Earning these financial incentives are obtainable because there are a whole variety of ways to get there.
2. Incorporate Employee Suggestions
Our annual support of the Triad American Heart Association’s walk hit new levels this year – and not just financially. Jenny implemented a leadership contest to raise the most employee contributions, with the winner earning the right to wear this Southern Lady hat, red beads and tutu (See Figure 1).
Brad (in the lovely hat and tutu) definitely stood out in the crowd of 7,500 walkers through downtown Winston-Salem.
But even better were the 125 employees, family members and friends who walked between one to four miles on October 29th. Dogs, babies in strollers, music and laughter made this emphasis on healthy hearts a lot of fun.
Another employee suggestion resulted in a weekly “Walk with Me Wednesday” event, beginning in 2015. MedCost is located in a business park with sidewalks, gazebos and ponds. An average six to eight employees walk 15 minutes together at noon, enjoying fresh air, camaraderie and exercise in a beautifully landscaped setting.
One key benefit of this weekly walk is better connectivity among the employees who walk together. In many businesses, department knowledge is often siloed from other departments because of different functions. And employees don’t get to know each other.
“The walks really do benefit the mind as well as the body,” said Karen, a 16-year employee at MedCost. “Walking with others just motivates me to get out and walk.”
3. Take a Long-Term Approach to Your Return on Investment (ROI)
“Looking purely at hard costs, healthcare spending can be one of the largest single expenses for a business, next to payroll,” said Dan Birach, president of HEALTHWORKS division at Carolinas HealthCare System. [v]
“Statistics show that for every dollar an employer invested in areas such as wellness programming and disease management, they enjoyed an ROI of anywhere from $1.50 to $3.80. Healthy employees are more productive and miss fewer days.”
The Society for Human Resource Management reported that 80% of employers offered preventive wellness services and info in 2015.[vi]
Employee wellness programs are having an impact on reduced dollars spent on health benefits. When corporate wellness programs were implemented:
- Claims costs reduced 28%
- Doctor visits reduced 17%
- Hospital admissions reduced 63%
- Disability costs were down 34%
- Incidence of injury reduced 25%[vii]
“A wellness program can make just a small difference at first,” said Crystal. “It has to build gradually.”
Employers offering wellness programs are looking for the same key ingredient for their employees – motivation.
4. Motivate Your Employees for Better Quality of Life
Claudia works with providers (hospital systems, medical offices and other professionals) at MedCost. When doctors diagnosed medical issues exacerbated by her obesity, she took a hard look at her lifestyle. And wanted to change.
“I am involved in Christian ministries in my personal life,” Claudia said. “I wanted to be in better health. My family and friends supported me to make some new choices.”
MedCost wellness choices inspired Claudia to do things differently. In January of 2016, she braved the cold temperatures to begin walking every morning at 7:30 a.m. with several other employees. She climbed stairs at lunch. She focused on her health.
“I’ve lost 30 pounds,” Claudia said. “I love the fact that I have gone from a size 22 to a size 18. My grandchildren are ten and six. I have to get rid of some more of this weight to keep up with them.”
Inspire your employees. Fit your wellness program to your unique business style and culture. One size won’t fit all, so try different ideas to see what resonates with your employees.
Above all, pour on the encouragement. Your employees are spending a large chunk of their time working for you. Your support may not only boost your bottom line, but improve your employees’ health in a life-changing way.
[i] “Eight Things You Need to Know about Employee Wellness Programs,” Alan Kohll, Forbes, April 21, 2016, http://www.forbes.com/sites/alankohll/2016/04/21/8-things-you-need-to-know-about-employee-wellness-programs/2/#4097a3e13e2d
[ii] “Be Stronger, Live Better,” National Association of Health Underwriters Education Foundation, http://www.nahueducationfoundation.org/materials/WellnessBrochure.pdf
[iii] For those enrolled in a High Deductible Health Plan with the company.
[iv] Incentives for Workplace Wellness Programs,” RAND Corporation, http://www.rand.org/pubs/research_briefs/RB9842.html
[v] “Five Things to Consider When Planning Your Wellness Program,” Dan Birach, HEALTHWORKS Division, Carolinas HealthCare System, http://www.carolinashealthcare.org/medical-services/prevention-wellness/employer-solutions/healthworks/info-hub
[vi] Kohll, ibid.
[vii] National Association of Health Underwriters Education Foundation, ibid.
By Michael Berwanger, JD, Director, Quality Management & Compliance
The Internal Revenue Service recently announced the tax year 2017 annual inflation adjustments for more than 50 tax provisions.
Notably, for the first time in two years and consistent with industry expectations, the IRS has increased the dollar limitation under § 125(i) on voluntary employee salary reductions for contributions to health Flexible Spending Accounts (FSA) from $2,550 to $2,600.
The Revenue Procedure 2016-55 provides details about these annual adjustments. The tax year 2017 adjustments generally are used on tax returns filed in 2018.
For guidance on FSAs, please review the IRS Frequently Asked Questions page.
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Employer health insurance expenses continued to rise by relatively low amounts this year, aided by moderate increases in total medical spending but also by workers taking a greater share of the costs, new research shows.
Average premiums for employer-sponsored family coverage rose 3.4% for 2016, down from annual increases of nearly twice that much before 2011 and double digits in the early 2000s, according to a survey by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)
But 3.4% is still faster than recent economic growth, which determines the country’s long-run ability to afford health care.
And the tame premium increases obscure out-of-pocket costs that are being loaded on employees in the form of higher deductibles and copayments. Another new study suggests those shifts have prompted workers and their families to use substantially fewer medical services.
For the first time in Kaiser’s annual survey, more than half the workers in plans covering a single person face a deductible of at least $1,000. Deductibles for family plans are typically even higher.
Deductibles are what consumers pay out of pocket before the insurance kicks in. Employers sometimes contribute to pre-tax accounts to help workers pay such costs.
It also saves employers money. Having workers pay more out of pocket shaved half a percentage point off premium increases of employer-sponsored plans in each of the past two years, Kaiser researchers calculated.
Since 2011, the average deductible for single coverage has soared 63%, according to the survey, while workers’ earnings have gone up by only 11%.
(Kaiser Health News, Jay Hancock and Shefali Luthra, September 14, 2016)
Competition on these exchanges will be diminished next year when three of the nation’s largest health insurers — Aetna, United Healthcare and Humana — will sell individual plans in many fewer markets. So too will several Blue Cross and Blue Shield plans in various states. That’s on top of the 16 nonprofit co-ops that have closed since January 2015.
The announcements, however, apply generally only to the individual market. The much larger market of employer-sponsored insurance is not part of the health law exchanges.
Most hurt will be marketplace consumers in Arizona, North and South Carolina, Georgia and parts of Florida, where only one or two insurers will be left when open enrollment season begins Nov. 1.
(Kaiser Health News, Phil Galewitz, August 18, 2016)
One-Fourth of Employers Now Offering CDHPs to Avoid Tax
Employers continue to take action to avoid the looming excise or “Cadillac” tax on more expensive health insurance for their employees. This Affordable Care Act tax of 40% annually is currently set to take effect in 2020, but it is already having a major impact.
A 2015 Mercer study found that total health benefits cost averaged $11,635 per employee.[i] This average amount exceeds the Cadillac tax’s threshold of $10,200 for individuals, and would trigger the 40% tax on benefits above the threshold. And small employers are seeing higher increases in medical, dental and other health benefits than large employers.
Employers Turn to
For the first time, 25% of covered employees are now enrolled in Consumer-Driven Health Plans (CDHP). Large employers of 20,000 or more employees have added CDHPs the fastest (73%). A projected 34% of employers with 50+ employees will be subject to the excise tax in 2020 if they make no changes to their current health plans.
High-Deductible Health Plans (HDHP) are a type of Consumer-Driven Health Plans. Employers are saving an average of 18% with an HSA-eligible HDHP instead of a traditional Preferred Provider Organization (PPO) plan.[ii]
One key reason that employees are researching medical costs in advance for services such as maternity care, joint replacements and Emergency Room visits. A 2015 Consumer Health Insights’ survey showed that 22% always talked to others about costs or searched websites for information.[iii]
Employees who have a telemedicine option in their health plans can choose a more appropriate level of care for certain respiratory infections, fevers and nausea (see “Treatment Alternatives to the Emergency Room”). Choosing the right level of care reduces time away from work, boosting productivity. And employees save unnecessary dollars from their own pockets.
Some employers offer pricing transparency tools such as HealtheReports™ which compares costs for a complete procedure. Employees can review local facilities that offer mammograms, colonoscopies, X-rays and other services. HealtheReports also lists comments from members about their recommendations for health care organizations.
A New Era in Health Care
CDHP plans require a shift in thinking about medical spending. In traditional plans, employees are used to handing over their insurance card and paying a small copay.
It can come as a jolt to employees to realize that CDHP coverage begins with paying expenses up to a higher deductible before insurance kicks in. For this reason, employers must proactively educate employees when introducing CDHP options.
Our next blog will detail key steps for employers to take in providing tools for smart decision-making. Employers who can manage staff expectations with a balanced understanding of the changing health care industry will build a productive partnership with your team.
[i] “With the Excise Tax in Their Sights, Employers Hold Health Benefits Cost Growth to 3.8% in 2015,” Mercer Global, November 19, 2015, http://www.mercer.com/newsroom/national-survey-of-employer-sponsored-health-plans-2015.html (accessed August 8, 2016)
[iii] “Debunking Common Myths about Healthcare Consumerism,” McKinsey & Company, December 2015, http://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/debunking-common-myths-about-healthcare-consumerism (accessed August 11, 2016)
Cost & Government Regulations Are Major Factors
If you’re like most employers, covering the costs of your employees’ health care is a major concern. Expenses for employee hospitalizations, chronic diseases and drug costs are threatening to swallow up annual profits for businesses.
Employer-sponsored health premiums rose 203% between 1999 and 2015.[i] This is why more employers are choosing high-deductible health plans (HDHP), as the graph below shows. Is it possible to manage health care costs and still do business?
What Is an HDHP?
A high-deductible or consumer-driven health plan has lower premiums and higher deductibles than traditional insurance plans.[ii] Instead of copays, a covered employee would pay health costs until the deductible is met.
Many companies offer a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) that offers significant tax advantages for both employers and employees. The HDHP combined with HSA or HRA contributions can shelter income from taxes while helping to keep premiums low.
How can your Human Resource department explain this shift in benefits, when only 12% of adults have a basic understanding of health terms?[iii] Here are some real benefits to tell employees when migrating to an HDHP:
- “Your income tax will be lower.” Employees contributing to an HSA will shelter that income from federal taxes. This can add up to 39.6% in savings, depending on the tax bracket. Can anyone say “free money”? Especially when companies add their contributions to an HSA if an employee participates in the program.
2. “You will have more control over how you spend your health dollars.” One reason HDHPs are also called “consumer-driven” is because employees have choices about where they shop services. If the same treatment for a respiratory infection can be obtained by a telemedicine call instead of the family doctor, out-of-pocket savings can really add up. And many employers offer price comparisons for services that allow smarter choices before getting treatment.
3. “You will have an automatic nest egg for health expenses.” It’s not easy to save, but payroll deductions can ease planning for costs. And the beauty of HSAs is that employees take this account with them, even if they change jobs. HRAs reimburse qualified medical expenses up to a fixed amount each year — another tax-free savings funded by employers, which can be rolled over to be used in subsequent years.
In this tumultuous era of health care, employees are gaining an increasing amount of financial responsibility. This gives smart employers the opportunity to treat your staff as partners in decision-making.
Educating your employees is a key foundation to bridging the transition to HDHPs as a benefits option. The next blogs will provide important steps to make that transition successfully, and how to manage expectations during the change.
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[i] “Recent Trends in Employer-Sponsored Health Insurance Premiums,” Kaiser Family Foundation, January 5, 2016, http://kff.org/infographic/visualizing-health-policy-recent-trends-in-employer-sponsored-health-insurance-premiums/ (accessed June 16, 2016).
[ii] High Deductible Health Plan (HDHP), HeathCare.gov Glossary, https://www.healthcare.gov/glossary/high-deductible-health-plan/ (accessed June 29, 2016)
[iii] Quick Guide to Health Literacy Fact Sheet, http://health.gov/communication/literacy/quickguide/factsbasic.htm (accessed June 29, 2016)