Health Plans

It's The Great Health Insurance Renewal, Charlie Brown!

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It’s you and your health insurance broker.  You’re thinking, this year I’m really going to get tough with this insurance company and I’m gonna ‘em them who’s boss.  I’m gonna be a tough negotiator and this is the year I’m gonna to get a better deal for my employees.  Seriously, you might as well be Charlie Brown saying to himself, “This year I’m really gonna kick that football” and like every other time, Lucy swipes the football away from you at the last second—just like she always does.  There you are, lying flat on your back wondering what just happened.

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Don’t be that guy this year, when your BUCA (Blue Cross, United, Cigna, Aetna) plan sends you this year’s increase—you need to fight back. When you hear your broker tell you that healthcare costs “just go up”, or when they bring you this year’s gimmicky product that’s supposed to make everything better—you need to fight back. Find that broker who is more like Snoopy, the Flying Ace, shooting fake reasons for increasing costs out of the sky. You can find one at www.healthrosetta.org. Or just call me. I’ll fight for you.

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Your employees are counting on you to look for a plan that provides transparency and lowers costs.  They’re hoping you’re going to come up with a plan that reduces out-of-pocket and gives them better access to high-quality healthcare.  I know what you’re thinking, “Better care, lower out-of-pocket? But I’m already paying more than I can afford.  Better care is going to cost even more!”  All I can tell you is that you’re wrong.  You’re not listening to the right advice.  Stop being a blockhead!

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Let me give you an example of what happened at one of my clients this week.  We uncovered that an employee is taking a high cost brand name drug.  After some research, we determined that the brand name is just a quirky dosage of the generic ingredient.  The drug was costing the employer $733.00 per month.  I know that’s not much, but when we found out a local, independent compounding pharmacy could make the same dosage of the generic that the brand had for only $75.00 per month, we rejoiced like we’d won the lottery!  Transparent Advisor = 1, Big Bad PBM = 0.  And that was only one prescription! Imagine what we’ll find when we analyze every drug in their claims report.

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Don’t let your employees be the one kid who looks in their treat bag and all they have is a rock.  That’s no good for anyone. Be the employer everyone wants to work for because your health plan is the best around. It IS possible! You CAN do it! And it’s NOT scary! #letsfixhealthcare

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Need help designing the best health plan in town? You can count on us. Message us at cristy@custombenefits.work. We can help.

Look Backward to Plan Forward | North Carolina Employee Benefits

We have entered Open Enrollment season and that means you and everyone in your office are probably reading through enrollment guides and trying to decipher it all. As you begin your research into which plan to choose or even how much to contribute to your Health Savings Account (HSA), consider evaluating how you used your health plan last year. Looking backward can actually help you plan forward and make the most of your health care dollars for the coming year.

Forbes magazine gives the advice, “Think of Open Enrollment as your time to revisit your benefits to make sure you are taking full advantage of them.” First, look at how often you used health care services this year. Did you go to the doctor a lot? Did you begin a new prescription drug regimen? What procedures did you have done and what are their likelihood of needing to be done again this year? As you evaluate how you used your dollars last year, you can predict how your dollars may be spent next year and choose a plan that accommodates your spending.

Second, don’t assume your insurance coverage will be the same year after year. Your company may change providers or even what services they will cover with the same provider. You may also have better coverage on services and procedures that were previously not eligible for you. If you have choices on which plan to enroll in, make sure you are comparing each plan’s costs for premiums, deductibles, copays, and coinsurance for next year. Don’t make the mistake of choosing a plan based on how it was written in years prior.

Third, make sure you are taking full advantage of your company’s services. For instance, their preventative health benefits. Do they offer discounted gym memberships? What about weight-loss counseling services or surgery? How frequently can you visit the dentist for cleanings or the optometrist? Make sure you know what is covered and that you are using the services provided for you. Check to see if your company gives discounts on health insurance premiums for completing health surveys or wellness programs—even for wearing fitness trackers! Don’t leave money on the table by not being educated on what is offer

Finally, look at your company’s policy choices for life insurance. Taking out a personal life insurance policy can be very costly but ones offered through your office are much more reasonable. Why? You reap the cost benefit of being a part of a group life policy. Again, look at how your family is expected to change this year—are you getting married or having a baby, or even going through a divorce? Consider changing your life insurance coverage to account for these life changes. Forbes says that “people entering or exiting your life is typically a good indicator that you may want to revisit your existing benefits.”

As you make choices for yourself and/or your family this Open Enrollment season, be sure to look at ALL the options available to you. Do your research. Take the time to understand your options—your HR department may even have a tool available to help you estimate the best health care plan for you and your dependents. And remember, looking backward on your past habits and expenses can be an important tool to help you plan forward for next year.

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Is Your Health Plan Affordable for 2019? | North Carolina Benefit Advisors

The Affordable Care Act’s employer shared responsibility provision — often called the employer mandate or “play or pay” — requires large employers to offer health coverage to their full-time employees or face a potential penalty. (Employers with fewer than 50 full-time and full-time-equivalent employees are exempt.) Large employers can avoid the risk of any play or pay penalties by offering all full-time employees at least one group health plan option that meets two standards: It provides minimum value and it is affordable.

Minimum value means the plan’s share of total allowed costs is at least 60 percent and the plan provides substantial coverage of physician services and inpatient hospital services.

Affordable means the employee’s required contribution (payroll deduction) for self-only coverage, if elected, does not exceed a certain percentage of the employee’s household income. The affordability percentage changes slightly each year based on the law’s indexing rule. For 2018, the percentage is 9.56 percent. For 2019, however, the percentage increases to 9.86 percent.

Although the change is minor, it means that employers may increase their plan’s employee-only contribution rate and still meet the affordability standard next year.

Determining Affordability

The first step in determining whether a group health plan option is affordable is to define the employee’s “income.” Employers do not know their workers’ total household income, so the play or pay rules offer employers three optional safe harbor methods to define income using information known to the employer. Employers may use any of the safe harbor methods. They also may use different methods for different classes (such as one method for hourly employees and another method for salaried employees), provided that the chosen method is applied uniformly to all employees in the class.

The three IRS safe harbor methods are:

1. Federal Poverty Line (FPL)

The FPL method is the easiest of the three methods. Multiply the mainland FPL amount for a single-member household by the affordability percentage, then divide by 12. As long as the self-only contribution rate does not exceed the resulting amount, the plan’s coverage is deemed affordable. For instance:

  • 2018: ($12,060 x 9.56%)/12 = $96.08 per month

  • 2019: ($12,140 x 9.86%)/12 = $99.75 per month

The FPL chart is updated every year in late January. For 2019 calendar-year health plans, the employer needs to refer to the current FPL amount ($12,140) since the new FPL amount will not be available until after the plan year starts. If the health plan year starts February 1, 2018 or later, however, the employer may refer to the new FPL amount which likely will be a little higher.

2. Rate of Pay

This is the most convenient method to define income when applied to hourly employees. Multiply the employee’s hourly rate of pay times 130 hours per month (regardless of how many hours he or she actually works), then multiply by the affordability percentage. As long as the self-only contribution rate does not exceed the resulting amount, the plan’s coverage is deemed affordable. For instance:

  • 2018: ($11* x 130) x 9.56% = $136.70 per month

  • 2019: ($11* x 130) x 9.86% = $140.99 per month

* Replace $11 with the hourly employee’s rate of pay.

For salaried employees, the rate of pay method is somewhat complicated so employers generally avoid using this method for non-hourly employees.

3. W-2

The W-2 method requires using current W-2 wages instead of looking back at the prior year. W-2 wages means the amount that will be reported in Box 1 of Form W-2. Pretax contributions, such as § 125 plan contributions and 401(k) or 403(b) plan deferrals, are not included in Box 1, so using the W-2 safe harbor method may understate the employee’s actual income. Coverage will be deemed affordable if, for each month of the plan year, the self-only contribution does not exceed the Box 1 amount multiplied by the affordability percentage.

Summary

Large employers can avoid the risk of potential penalties under the ACA’s play or pay rules by ensuring that they offer full-time employees at least one minimum value plan option that also is affordable. Affordable means the employee’s contribution to elect self-only coverage would not exceed a certain percentage of the employee’s income.

The percentage used to determine affordability changes from year to year is based on the law’s indexing formula. For 2018 plan years, the affordability percentage is 9.56 percent, but it increases to 9.86 percent for 2019 plan years. Employers and their advisors will want to keep this information in mind as they finalize their group health plan offerings and employee contribution rates for 2019.

Originally published www.thinkhr.com

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The News about Association Health Plans | North Carolina Employee Benefit Advisors

On June 19, 2018, the U.S. Department of Labor released its Final Rule regarding Association Health Plans (AHPs). AHPs are not new, but they have not been widely available in the past and, in some cases, they have not been successful. The Final Rule is designed to make AHPs available to a greater number of small businesses as an alternative to standard ACA-compliant small group insurance policies.

This article answers common questions about AHPs under the current rules (which groups can continue to use) and the new rules.

Is group medical insurance the same for small and large employers?

Yes and no. Federal law imposes certain basic requirements on all group medical plans, regardless of the employer’s size. For instance, plans cannot exclude pre-existing conditions nor impose annual or lifetime dollar limits on basic benefits. If the plan is insured, it also is subject to the insurance laws of the state in which the policy is issued.

Small group policies, which are sold to employers with up to 50 or 100 employees, depending on the state, are subject to additional requirements. These policies must cover 10 categories of essential health benefits (EHBs), including hospitalization, maternity care, mental health and substance abuse treatment, and prescription drugs. (Some states allow certain grandfathered or grandmothered policy exceptions.) For most small employers, their options for group medical insurance are limited to small group policies that comply with the full scope of ACA requirements. On the other hand, the policies are subject to guaranteed issue and adjusted community rating rules, so carriers cannot refuse to insure a small employer nor use any past claims experience in setting rates.

Large group policies, which can only be sold to groups with at least 50 or 100 employees, depending on the state, are not required to cover all EHBs. Carriers have more flexibility in designing coverage options and developing premium rates in the large group market. This means larger employers have more options to choose from and may be able to purchase coverage at a lower cost than would apply to a small group policy. Note, however, that there is no guaranteed issue protection, so carriers can accept or reject each employer’s application or use the employer’s past claims experience in setting rates.

Lastly, self-funded plans are subject to the ACA and other federal laws, but generally are exempt from state laws. They typically are not feasible for small employers, however, due to the financial risk of uninsured programs.

What is an Association Health Plan (AHP)?

Group insurance covers the employees of an employer (or an employee organization such as a labor union). An AHP, as the name implies, covers the members of an association. Unrelated employers can obtain coverage for their employees through an AHP provided the employers form a bona fide association. Traditionally, this has meant that the employers had to have a “commonality of interest” and their primary interest had to be something other than an interest in providing benefits. For this reason, AHPs generally have been limited to associations formed by employers in the same trade, industry, or profession.

The Final Rule makes AHPs available to a wider range of businesses by expanding the meaning of “commonality of interest.” Once the Final Rule takes effect, an association may be formed by employers that are:

  • In the same trade, industry, or profession, regardless of location; or
  • In the same principal place of business; i.e., in the same state or in the same multi-state metropolitan area.

Under the new rules, the employer’s primary interest in associating may be benefits coverage, although they still will need to have at least one other substantial business purpose other than benefits. This is a key difference from the current rules.

When does the new Final Rule take effect?

The Final Rule expanding the definition of an association for purposes of an AHP will take effect on staggered dates:

  • For fully insured AHPs: September 1, 2018
  • For self-funded AHPs:
    • If in existence on or before June 19, 2018: January 1, 2019
    • If created after June 19, 2018: April 1, 2019

As noted, the new rules do not replace existing rules. Employers and associations may continue to follow the existing rules (which generally limit AHPs to employers in the same trade, industry, or profession). The new rules merely expand the opportunities for AHPs, such as making them available to employers in the same state or metropolitan area even if they are in different industries.

Are AHPs limited to employers with employees? What about sole proprietors?

Currently, sole proprietors, such as mom-and-pop shops without any W-2 employees, purchase medical insurance in the individual market. Individual policies often cost more than group policies or AHPs. The new rules will expand the availability of AHPs to include sole proprietors who work a minimum number of hours (so-called working owners).

What about state laws? Will AHPs be available nationwide?

Insurance products, including AHPs, are regulated by state law. Under both the existing and new rules, AHPs are multiple employer welfare arrangements (MEWAs). State laws on MEWAs are quite complicated. In some states, MEWAs are prohibited. In others, insured MEWAs are allowed but self-funded plans are prohibited. The laws vary from state to state, so different carriers will make different decisions about whether they want to design and market AHPs in various jurisdictions around the country.

A number of states are very concerned about AHPs and may prohibit them in their states or impose strict requirements to ensure they will provide reliable and effective coverage. Other states will view AHPs as cost-effective alternatives to ACA-compliant policies for small employers and look to encourage their expansion.

What’s next?

There is no clear answer to what’s next. Over the coming months, carriers across the country likely will review the reasons they have or have not offered AHPs in the past, and whether they want to consider new approaches in the future. Along with economic and market issues to consider, carriers also must consider the state insurance laws in different jurisdictions. At the same time, many state legislatures and insurance commissioners will be reviewing their existing rules and whether they want to promote or expand the availability of AHPs in their area.

Oh … and the lawsuits. Yes, that also is what’s next. As of this writing, attorneys general in different states are planning to join together in challenging the federal government’s Final Rule on AHPs. Their stated concern is that effective regulation is required to ensure that plans provide adequate coverage.

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