Why is 2018 the Year To Audit Your Healthcare Premiums? Because Obamacare Insurers Just Had Their Best Year Ever — Politico

This is from Paul Demco writing at Politico on March 17, 2018: 

Obamacare is no longer busting the bank for insurers. 

After three years of financial bloodletting under the law — and despite constant repeal threats and efforts by the Trump administration to dismantle it — many of the remaining insurers made money on individual health plans for the first time last year, according to a POLITICO analysis of financial filings for 29 regional Blue Cross Blue Shield plans, often the dominant player in their markets. 

The biggest reason for the improvement is simple: big premium spikes. The Blue plans increased premiums by more than 25 percent on average in 2017, meaning many insurers charged enough to cover their customers’ medical costs for the first time since the Affordable Care Act marketplaces launched in 2014 with robust coverage requirements. ... 

The POLITICO analysis found the Blue plans spent an average of 80 percent of premium revenues on medical costs last year. That’s below the 85 percent threshold that’s viewed as a rough benchmark for profitability, and it’s a 12 percentage point improvement over 2016. 

“They understand the risks of the market better now than they did at the start of the ACA exchanges,” said Deep Banerjee, an analyst with Standard & Poor’s who has written extensively about the marketplaces. 

The gains were particularly notable among some of the biggest insurers. Health Care Service Corporation spent 77.7 percent of premiums on medical claims, an improvement of 18.5 percentage points over the prior year. Similarly, Blue Cross Blue Shield of North Carolina saw its margin improve by just over 10 percentage points.... 

Here’s What Congress is Stuffing Into Its $1.3 Trillion Spending Bill

HR and Healthcare Related Issues from the Washington Post:

Immigration enforcement: The bill bumps up funding for both U.S. Customs and Border Protection and for U.S. Immigration and Customs Enforcement — delivering increases sought by the Trump administration. But there are significant restrictions on how that new money can be spent. Democrats pushed for, and won, limitations on hiring new ICE interior enforcement agents and on the number of undocumented immigrants the agency can detain. Under provisions written into the bill, ICE can have no more than 40,354 immigrants in detention by the time the fiscal year ends in September. But there is a catch: The Homeland Security secretary is granted discretion to transfer funds from other accounts “as necessary to ensure the detention of aliens prioritized for removal.”

... Health care: Left out of the bill was a health-care measure sought by GOP Sens. Susan Collins (Maine) and Lamar Alexander (Tenn.) that would have allowed states to establish high-risk pools to help cover costly insurance claims while restoring certain payments to insurers under the Affordable Care Act. Trump, who ended the “cost-sharing reduction” payments in the fall, supported the Collins-Alexander language. But Democrats opposed it because they claimed it included language expanding the existing prohibition on federal funding for abortions....

Opioids: The bill increases funding to tackle the opioid epidemic, a boost that lawmakers from both parties hailed as a win. The legislation allocates more than $4.65 billion across agencies to help states and local governments on efforts toward prevention, treatment and law enforcement initiatives. That represents a $3 billion increase over 2017 spending levels.​ ...

Restaurant tips: In December, the Labor Department proposed a rule that would allow employers such as restaurant owners to “pool” their employees’ tips and redistribute them as they saw fit — including, potentially, to themselves. That generated a bipartisan outcry, and the bill spells out explicitly in law that tip pooling is not permitted: “An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” ... 

Apprenticeships: Federal money for apprenticeship programs will increase by $50 million, and there’s a $75 million increase for career and technical education programs. The office of House Speaker Paul D. Ryan (R-Wis.) noted that other job training and “workforce development” programs also stand to benefit, including “more money for child care and early head start programs to help make it easier for job seekers to enter or return to the workforce.” This has been an area of concern for former “Apprentice” star Ivanka Trump....

  

California Passes New Law Making Contractors Jointly Liable for Their Subcontractors’ Failure to Pay Wages

Only California would expect an employer to pay someone else's employees.  This is from the law firm of Epstein Beker & Green:  

On October 14, 2017, California Governor Jerry Brown signed Assembly Bill 1701, which will make general contractors liable for their subcontractors’ employees’ unpaid wages if the subcontractor fails to pay wages due. The new law will go into effect on January 1, 2018.
Specifically, section 218.7 has been added to the Labor Code. Subdivision (a)(1) provides the following:

For contracts entered into on or after January 1, 2018, a direct contractor making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other private work, shall assume, and is liable for, any debt owed to a wage claimant or third party on the wage claimant’s behalf, incurred by a subcontractor at any tier acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner.

Under section 218.7, the direct contractor’s liability will extend only to any unpaid wage, fringe benefit or other benefit payments or contributions – including interest – but will not extend to penalties or liquidated damages.

Section 218.7 makes clear that nothing in it “shall be construed to impose liability on a direct contractor for anything other than unpaid wages and fringe or other benefit payments or contributions including interest owed.”

Notably, employees will not have standing to enforce section 218.7 on their own. That is, AB 1701 gives the California Labor Commissioner, labor-management cooperation committees, and unions the right to bring an action against the direct contractor, but it does not provide any private right of action to potentially unpaid employees themselves to bring a claim against the direct contractor for unpaid wages.

For labor-management cooperation committees and unions who prevail in an action against a direct contractor for unpaid wages, they will be entitled to their reasonable attorney’s fees and costs, including expert witness fees.

For judgments rendered against direct contractors, their property may be attached to satisfy judgment. ...
 

Five New Healthcare Bills in the California Legislature Could Greatly Impact Healthcare Costs, Choice and Coverage Levels

SB 910 — would remove an individual's ability to purchase short-term health insurance policies starting in 2019. The Department of Health and Human Services expressly allowed the sale on such plans last year. Recently, HHS further proposed a rule to expand short-term plans from less than 3 month terms to just under a year. CA SB 910’s supporters call these short-term plans “junk insurance” because they don’t have to cover each and every one of the so called 10 "essential benefits" required by PPACA. SB 910 would compel consumers to purchase plans covering areas of health that may not be needed for the purchaser.

SB 974 — would allow low-income adults who are in the U.S. unlawfully to sign up for Medi-Cal. Experts estimate that nearly 2 million of the 3 million uninsured Californians are in the country without legal documentation. State law already offers Medi-Cal to individuals under the age of 19 who are here illegally. This would expand taxpayer sponsored healthcare coverage to adults present unlawfully.

SB 538 — would prohibit agreements that the state viewed as "anti-competitive" between hospitals and insurers. SB 538 proponents believe the legislation would create more price competition among health care providers by adding more bureaucratic oversite at the state level.

AB 587 — This measure would expand the state’s bulk prescription drug purchasing program by allowing counties and local governments to join, potentially enabling them to purchase drugs at lower costs.

AB 595 — would give the state oversight of potential mergers between nationwide health insurance plans. The proposed law would mean that California could veto the marriage of insurance carriers within its boarders, ultimately leading to more carriers exiting California.

  

PPACA Premiums Could Rise 12-32% Next Year

From Insurance News Net:

... Consumer behavior itself, such as the mix of enrollees and their use of health services, is likely to increase premiums by 7 percent in each of the next three years.

Milliman, which conducted the analysis, said the cumulative effect is that premiums could rise by more than 90 percent through 2021.

Expected rate increases will vary wildly across the nation, analysts warned, but said states that promote their markets or take steps to regulate prices down would fare better than others.

Taxpayer-funded subsidies will blunt rising costs for most people on Obamacare's exchanges, but several million Americans will take it on the chin. ...

 

Yet Another Study: Wellness Programs Are Not Generating Medical Savings

From Modern Healthcare: 

The Affordable Care Act required the CMS conduct an independent evaluation of wellness programs that targeted various health conditions experienced by Medicare beneficiaries, and that study found no evidence of cost savings.

"Utilization and expenditures actually increased among (chronic-care management) program participants," the report said.

The findings are based on spending data for Medicare enrollees in fall prevention, weight loss and chronic care initiatives. The CMS followed beneficiaries one year after they joined a wellness program.

The results mirror those found in the corporate world, where companies are increasingly funding wellness programs meant to improve employees' health.

Corporate wellness spending hit $8 billion in 2016, up from $1 billion in 2011, according to researchers The Harris School of Public Policy at the University of Chicago.

Researchers have also found that these efforts have aided in employee retention, but not changes in employee behavior or cuts in healthcare spending. ...
 

Bill to Improve HSAs Would Permit Pre-Deductible Coverage of Preventive Care

From: Wolters Kluwer Legal & Regulatory: 

The Bipartisan HSA Improvement Act will make HSAs more useful and effective for employers, according to the American Benefits Council. The bill was introduced recently by Representatives Mike Kelly (R-PA), Earl Blumenauer (D-OR), Erik Paulsen (R-MN) and Ron Kind (D-WI).

“Workplace-based health insurance covers more than 178 million people nationwide, compelling employers to be innovative in managing rising health care costs,” Council President James A. Klein said. “Not only will the Bipartisan HSA Improvement Act give employers more flexibility in HSA-based plan design, it will also allow HSAs to take full advantage of cost-saving innovations like chronic care management and onsite and near-site health centers.”

The bill includes provisions that would:

• Clarify that certain services and prescription drugs that prevent chronic disease progression are preventive care that will not be subject to a deductible;
• Allow employers to provide primary care, chronic disease prevention, and other high-value services at on-site and near-site medical clinics without imposing a deductible;
• Permit the use of HSA funds to pay for medical expenses for adult children up to age 26; and
• Permit HSA contributions if a spouse has a health FSA.

As Klein noted in a letter of support for the legislation, our employer-based health insurance system “is predicated on smart tax incentives and companies’ ability to design and offer plans that best suit the needs of a modern workforce. HSAs are the direct descendants of this sound public policy, allowing employees and their families to take greater control of their health care.”
​

Possible Employer Action Required - IRS Reduces HSA Limit for Family Coverage for 2018

The Tax Cuts and Jobs Act (“Tax Act”) enacted late last year has affected the 2018 calendar year maximum Health Savings Account (HSA) contribution for individuals with family coverage under a high deductible health plan (HDHP). On March 5, 2018, the Internal Revenue Service (IRS) released Revenue Procedure 2018-18 which announced that the maximum contribution for those with family coverage has been reduced from $6,900 to $6,850. This reduction was triggered by the Tax Act’s changes to the operation of the consumer price index for making annual adjustments to the HSA limits. The IRS’ other HSA and HDHP limits for 2018 remain the same.

This reduction is particularly important for any individual with family HDHP coverage who has already contributed $6,900 for 2018 and must receive a refund of the excess contribution in order to avoid an excise tax.

Action Steps:

• Employers with HDHPs should inform employees about the reduced HSA contribution limit for family HDHP coverage. Employees may need to change their HSA elections going forward to comply with the new limit. Also, any individuals with family HDHP coverage who have already contributed $6,900 for 2018 must receive a refund of the excess contribution in order to avoid an excise tax.

Our Legislative Alert contains additional information on this reduction in the maximum HSA contribution for those with family HDHP coverage.

Paying Employees to Shop Around For Better Healthcare Prices

From the Washington Post: 

Maine’s law, adopted last year, requires insurers that sell coverage to small businesses to offer financial incentives — such as gift cards, discounts on deductibles or direct payments — to encourage patients, starting in 2019, to shop around. 

A second and possibly more controversial provision also kicks in next year, requiring insurers, except HMOs, to allow patients to go out-of-network for care if they can find comparable services for less than the average price insurers pay in network. 

Similar provisions are included in a West Virginia bill now under debate. 

Touted by proponents as a way to promote health care choice, it nonetheless raises questions about how the out-of-network price would be calculated, what information would be publicly disclosed about how much insurers actually pay different hospitals, doctors or clinics for care and whether patients can find charges lower than in-network negotiated rates. 

“Mathematically, that just doesn’t work” because out-of-network charges are likely to be far higher than negotiated in-network rates, said Joe Letnaunchyn, president and CEO of the West Virginia Hospital Association. 

Not necessarily, counters the bill’s sponsor, Del. Eric Householder, who said he introduced the measure after speaking with the Foundation for Government Accountability. The Republican from the Martinsburg area said “the biggest thing lacking right now is health care choice because we’re limited to our in-network providers.” 

Shopping for health care faces other challenges. For one thing, much of medical care is not “shoppable,” meaning it falls in the category of emergency services. But things such as blood tests, imaging exams, cancer screening tests and some drugs that are administered in doctor’s offices are fair game.

Full story.
 

Budget Deal Boosts Healthcare Programs, Owners in HRAs, COBRA & HRAs, and Top Issues with Medical Management Carve-Outs

Health Care Reform News: 

House passes deal to end shutdown
February 9, 2018 – The Hill
Excerpt: “The House approved a sweeping budget deal early Friday morning that would fund the government through March 23, sending legislation to President Trump that would end a brief shutdown of the government that began at midnight.”

Bipartisan Senate Budget Deal Boosts Health Programs
February 7, 2018 – Kaiser Health News
Excerpt: “In a rare show of bipartisanship for the mostly polarized 115th Congress, Republican and Democratic Senate leaders announced a two-year budget deal that would increase federal spending for defense as well as key domestic priorities, including many health programs.”

Questions and Answers about Information Reporting by Employers on Form 1094-C and Form 1095-C
February 6, 2018 – The Internal Revenue Service
Excerpt: “These Q&As provide additional information about completing Form 1094-C and Form 1095-C for calendar year 2017 that are to be filed in 2018. The Q&As may be used in conjunction with the Instructions for Forms 1094-C and 1095-C, which provide detailed information about completing the forms.”

In Other News:

Information Letter Addresses Calculation of COBRA Premium for HRA
February 8, 2018 – Thomson Reuters
Excerpt: “The information letter explains generally that an employer may charge the “applicable premium” for COBRA coverage, which is the cost to the plan of coverage for similarly situated beneficiaries for whom a qualifying event has not occurred, plus a 2% administrative fee.”

Can a Company’s Owners Participate in Its HRA?
February 8, 2018 – Thomson Reuters
Excerpt: “While self-employed individuals cannot participate in HRAs, they can have HSAs, although they cannot receive tax-free contributions to their HSAs through a cafeteria plan.”

AI mines EHR data to predict diabetic patients at risk for kidney damage, study finds
February 5, 2018 – Healthcare IT News
Excerpt: “By isolating less than 5 percent of the 400,000 diabetic population selected among the company's database of 15 million patients, the algorithm was able to identify 45 percent of patients who would progress to significant kidney damage within a year, prior to becoming symptomatic, the start-up reported. This represents 25 percent more patients than would have been identified by commonly used clinical tools and judgment, the company contended.”

Top 10 Questions re: Management Carve Outs in Group Health Plans
February 2, 2018 – E is for ERISA
Excerpt: “One issue that remains perpetually murky, in this regard, is the legality of management carve-outs, whereby an employer offers certain group health insurance options or classes of coverage only to management or other highly paid groups. The following true or false discusses some of the rules that come into play.”

Medicare Part D Disclosures due by March 1, 2018 for Calendar Year Plans
February 1, 2018 – BB&T Insurance Services
Excerpt: “The plan sponsor must complete the online disclosure within 60 days after the beginning of the plan year. For calendar year health plans, the deadline for the annual online disclosure is March 1.”

Changes to ERISA’s Disability Claims Regulations Coming April 1
January 31, 2018 – Jackson Lewis P.C.
Excerpt: “Employers who offer short-term and long-term disability plans governed by ERISA (and their plan administrators) need to prepare for the approaching deadline. This article provides background on the flux of the regulations and offers steps to take now to ensure timely compliance.”
 

Provisions in the New Tax Reform Law Affecting Employee Benefits

As compiled by the fine folks over at BenefitsLink. Newest publications are first.

Tax Reform Provisions Affecting Employer-Provided Compensation and Benefits (PDF)
Trucker Huss
Dec. 28, 2017
"[1] Repeal of performance-based compensation exception to $1,000,000 deduction limit ... [2] Excessive compensation of non-profit covered employees subject to a 21% tax penalty ... [3] Limits and phase-out on deduction for employer-operated eating facilities ... [4] Elimination of employer deduction for certain transportation fringe benefits ... [5] Suspension of income exclusion for qualified bicycle commuting reimbursement fringe benefit ... [6] Suspension of income exclusion and employer deduction for qualified moving expense reimbursement ... [7] Extension of rollover period for plan loan offsets ... [8] Employer credit for paid family and medical leave."

The Impact of the 2017 Tax Reforms on Employment-Based Benefits and Executive Compensation (PDF)
BakerHostetler
Dec. 26, 2017
"[A] new 'Qualified Equity Grant' ... to allow employees of nonpublicly traded companies to elect to defer taxation of stock options and restricted stock units (RSUs) for up to five years after the exercise of such stock options or the vesting of RSUs.... Repeal of 'recharacterization' of Roth IRA conversions ... Extended rollover periods for deemed distributions of retirement plan loans ... Tax relief for retirement plan distributions to relieve 2016 major disasters ... New credit for paid family and medical leave."

Tax Legislation Includes Significant Executive Comp and Employee Benefits Provisions (PDF)
EY
Dec. 22, 2017
27 pages. "The Conference Report confirms that compensation paid pursuant to a plan qualifies for the exception under the transition rule, but only if the right to participate in the plan is part of a written binding contract with the covered employee in effect on November 2, 2017.... Additional questions may arise regarding plans or agreements that may be terminated prospectively and what portion of the deferred compensation accrued under the plan or agreement after the effective date is grandfathered.... The new Section 4960 21% excise tax would add a significant financial and administrative burden on tax-exempt organizations with highly compensated employees."

What the New Tax Law Likely Will and Won't Do to the Nation's Health Care
Association of Health Care Journalists
Dec. 22, 2017
"As many of us have speculated about what insurers will do regarding future exchange participation, Jeff Young from the Huffington Post actually called a bunch of them. None have said they were running straight for the exits, but many sound very cautious about the 'big mess' ahead sans mandate."

Tax Reform Law Includes Paid Leave Provisions
Fisher Phillips
Dec. 22, 2017
"Section 13403 of the Act offers businesses a tax credit if they offer up to 12 weeks of paid family leave to certain eligible workers. Eligible employers must have a written policy that provides not less than two weeks of annual paid family and medical leave for full-time employees, and a pro-rata amount provided at the same ratio for part-time employees. The policy must provide payment at a rate not less than 50 percent of the wages normally paid to employees on leave."

Paid Leave, Other Job-Related Measures Stay in Tax Bill
Bloomberg BNA
Dec. 19, 2017
"Incentives for companies to offer their workers paid leave, in addition to prohibiting deductions related to confidential settlements related to sexual misconduct, are part of the final version of a Republican tax reform bill ... That includes offering businesses a credit for offering up to 12 weeks of paid family leave. The measure, plucked from a stand-alone bill (S. 344) by Sen. Deb Fischer (R-Neb.), also includes incentives for offering medical leave."

Tax Bill: How Four Healthcare Measures Weathered Reconciliation
HealthLeaders Media
Dec. 19, 2017
"[1] Individual mandate repeal included ... [2] Medical expense deduction expansion ... [3] Orphan drug tax credit reduction ... [4] Private activity bonds preserved."

New Deadline for Furnishing Form 1095-C to Employees

1095–C Filing Requirements



Under Section 6056 of the Affordable Care Act, Applicable Large Employers (ALEs) must file information returns with the IRS and furnish statements to full-time employees . Forms are due in the year after the calendar year to which the forms relate. 

IRS Announces Extension of Deadline to Furnish Form 1095-C to Employees

On Dec. 22, 2017, the Internal Revenue Service (IRS) issued Notice 2018-06 which extended the deadline to furnish Forms 1095-C and 1095-B to full-time employees and covered individuals by thirty days. The deadline for furnishing these Forms is now March 2, 2018.  This Notice also extended good faith transition relief for reporting penalties for employers that make a good faith and timely effort to report. 

Notice 2018-06 does not extend the due date for filing forms with the IRS for 2017 and those dates remain February 28, 2018 or April 2, 2018, if filing electronically.  

• Furnishing Deadline Delayed for 2017 ACA Reporting

• Special Edition Benefits News Clips

Penalties An ALE may face penalties if it fails to satisfy its Section 6056 reporting obligations.  These penalties are separate from the ACA’s employer shared responsibility penalties. For returns required to be filed in 2016 and later, the base penalty amounts under  Sections 6721 and 6722 were increased. In addition, these amounts are indexed to  increase with inflation each year. The adjusted penalty amounts are as follows:

Remember, for those employers that use the W-2 safe harbor for affordability, you will need to know an employee’s 2017 W-2 box 1 compensation in order to complete Form 1095-C for that employee.