This is the Employee Benefits Adviser category of the Broad REach Benefits blog. At Broad Reach Benefits, we focus on employers that have between 30 and 500 benefit eligible employees. We’re employee benefit specialists, not a big box brokerage firm or payroll company with a sales force peddling policies.
Updated December 21 to reflect that the bill has been signed into law.
On December 20, 2019, the House and Senate, with the final signature from President Trump, passed a bipartisan legislative package of spending bills to avoid a government shutdown. This package of bills is collectively referred to as the Further Consolidated Appropriations Act, 2020 (the “Act”). The Act includes a permanent repeal of three Affordable Care Act (ACA) taxes: the tax on high-cost health plans (the so-called “Cadillac Tax”), the Health Insurance Tax (HIT tax), and the medical device tax. Overall, the repeal of these ACA taxes may result in at least $300 billion in lost revenue to the government; however, the bill brings relief to employers and consumers, who may have experienced tax payments, increased health premiums and other costs. The repeal of the HIT tax is effective as of January 1, 2021, and the medical device tax is repealed as of January 1, 2020. The Cadillac Tax was already delayed until 2022, and thus will never take effect. The Patient-Centered Outcomes Research Institute (PCORI) fee has also been extended to 2029 (i.e., it will apply to plan years ending on or before September 30, 2029).
PCORI Fee Extension
The PCORI fee is now extended to plan years ending on or before September 30, 2029. PCORI fee extensions have been discussed frequently and have been included in previously introduced bills, such as the Protecting Access to Information for Effective and Necessary Treatment and Services Act (PATIENTS Act) that was approved by the House Ways and Means Committee in June 2019. The amount due per life covered under a policy will be adjusted annually, as it has been previously. Insurers of fully insured health […]
Departments Adopt Non-Enforcement Policy on Drug Manufacturer Coupons
On August 26, 2019, the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury released an FAQ that provides guidance to employers, plan sponsors and health insurance issuers regarding a recent HHS regulation that could be read to require group health plans to treat prescription drug manufacturers’ coupons as employee cost sharing for purposes of the ACA’s out-of-pocket limits, for plan years beginning in 2020. Currently, the ACA’s out-of-pocket limits for plan years beginning in 2019 are $7,900 individual / $15,800 family. The guidance in the FAQ is effective immediately, and provides that the Departments will not initiate enforcement action against a group health plan or issuer if the plan excludes the value of drug manufacturers’ coupons from the ACA’s annual limitation on cost sharing, even in circumstances in which there is no medically appropriate generic equivalent available.
The Departments have determined that HHS will address the interplay between manufacturers’ coupons and out-of-pocket limits in future guidance.
In its 2020 Notice of Benefit and Payment Parameters (2020 NBPP), HHS stated that drug manufacturers’ support to plan participants—in the form of discounts or coupons—“[is] not required to be counted” toward the cost-sharing limit of participants when a generic version is not available. Due to the strong negative inference in the rule (i.e., that coupons should count toward the participant’s out-of-pocket limit if a generic version is not available), the Departments received requests for clarification on whether group health plans and insurers are required to count the coupon or discount toward the annual cost-sharing with plan participants if a generic equivalent is not available.
If read to require a manufacturer’s coupon to count toward the out-of-pocket limit, the most significant […]
In its March 30 status report to the U.S. District Court for the District of Columbia in American Association for Retired Persons (AARP) v. EEOC, the EEOC stated that “it does not currently have plans to issue a Notice of Proposed Rulemaking addressing incentives for participation in employee wellness programs by a particular date certain, but it also has not ruled out the possibility that it may issue such a Notice in the future.”
Employers continue to face uncertainty as to wellness program incentives subject to the ADA and GINA (i.e., those with medical exams or disability-related inquiries) as the EEOC awaits confirmation of Janet Dhillon as EEOC Chair and considers “a number of policy choices available.” In other words, the EEOC may wait until the Senate confirms outstanding nominations before re-engaging in the rulemaking process, leaving wellness programs open to challenge in 2019 by employees who feel that the incentives (or penalties) are so great that they render the program involuntary.
As background, under the ADA, wellness programs that involve a disability-related inquiry or a medical examination must be “voluntary.” Similar requirements exist under GINA when there are requests for an employee’s family medical history (typically as part of a health risk assessment). For years, the EEOC had declined to provide specific guidance on the level of incentive that may be provided under the ADA, and their informal guidance suggested that any incentive could render a program “involuntary.” In 2016, after years of uncertainty on the issue, the agency released rules on wellness incentives that resemble, but do not mirror, the 30% limit established under U.S. Department of Labor (DOL) regulations applicable to health-contingent employer-sponsored wellness programs. While the regulations appeared to be […]
An updated version of the Better Care Reconciliation Act of 2017 was released on July 13th by the U.S. Senate Committee.
Senate Majority Leader Mitch McConnell of Kentucky released a healthcare “Discussion Draft” of legislation, called the Better Care Reconciliation Act of 2017 (BCRA) on Thursday, June 22, 2017, which is the Senate version of the Affordable Care Act (ACA) “repeal-and-replace” legislation American Health Care Act (AHCA) passed by the U.S. House of Representatives last month. An updated “Discussion Draft” of the BCRA was released on June 26, 2017 with the intention of calling for a vote on the bill before the Fourth of July recess. […]
Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2017 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI). As background, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury. Under the ACA, most employer sponsors and insurers will be required to pay PCORI fees until 2019.
The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.
- For plan years that ended between January 1, 2016 and September 30, 2016, the fee is $2.17 per covered life and is due by July 31, 2017.
- For plan years that ended between October 1, 2016 and December 31, 2016, the fee is $2.26 per covered life and is due by July 31, 2017.
For example, a plan year that ran from October 1, 2015 through September 30, 2016 will pay a fee of $2.17 per covered life. Calendar year 2016 plans will pay a fee of $2.26 per covered life.
NOTE: The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. In general, health FSAs are not subject to the PCORI fee.
Employers that sponsor self-insured group health plans must report and pay PCORI fees using IRS Form 720, Quarterly Federal Excise Tax Return.
Legal Alert: House Republicans Pass American Health Care Act; Bill Heads to Senate for Further Consideration
On Thursday, May 4, by a vote of 217 to 213 (with 20 Republicans voting against the bill), the U.S. House of Representatives passed an amended version of the American Health Care Act (AHCA), which repeals and replaces significant portions of the Affordable Care Act (ACA).
This bill comes several weeks after U.S. House of Representatives’ Speaker Paul Ryan pulled the AHCA […]
On February 23, 2017, the White House announced a one-year extension to the transition policy (originally announced November 14, 2013 and extended several times since) for individual and small group health plans that allows issuers to continue policies that do not meet ACA standards. […]
One Question Makes a Big Difference: Is your broker simply shopping your medical program, or utilizing actuarial analysis?
The real issue is how do you know if you are over paying for your medical plan? When we hear that companies are not using an actuary we ask another simply question: How do you know you are not overpaying? Where’s the analysis? We’ve yet to hear a convincing explanation. How can you or your broker possibly know, because they aren’t trained or qualified to interpret incurral factors, group specific trend and expected large claims versus actual as an actuary is, so they can’t know if there is an argument to be made. […]
So what’s a narrow network? Narrow networks are health plans that offer their subscribers a limited choice in health care providers compared to their larger national or regional network. These plans contract with a smaller group of doctors, specialists and hospitals, and those entities are then considered in-network.
Because all plan participants are directed toward certain facilities and physicians, these providers can then reduce the cost for each visit and service—operating under the idea of “buying in bulk.” This, in turn, results in lower premiums for the consumer and cost savings for insurers.
In recent years, narrow networks have gained popularity. Many unsuspecting consumers have purchased health plans in the market and were unaware that the plan they purchased had one of these narrow networks.
On the employer side do these narrow network options makes sense? They can in the right situations such as using a narrow network plan as a low-cost employee option alongside your other medical plan offerings. And of course, you absolutely need to effectively educate your employees.
Why are narrow networks becoming more popular?
Narrow networks have been around long before the Affordable Care Act (ACA). In fact, 23 percent of employer-sponsored health plans offered narrow networks in 2012. However, their popularity has accelerated since the ACA was signed into law and the Health Insurance Marketplace was created.
Since insurers can no longer compete to cover the healthiest group of individuals or raise deductibles past the ACA’s limits, some have turned to narrow networks as a way to manage expenses. According to a study by McKinsey & Co., a consulting firm, 70 percent of the plans sold on the Marketplace in 2014 featured a limited network. Premiums for those plans were 17 percent cheaper than those with […]