The Affordable Care Act (ACA) contains a total of 91 provisions, bringing change to the insurance market and impacting the type of coverage employers offer their employees.

“Many of the upcoming ACA provisions depend on the size of your employee population,” says Marty Hauser, CEO of SummaCare, Inc. “Employers need to understand these provisions, as they will likely determine what kind of coverage you offer your employees.”

Smart Business spoke to Hauser about how some key provisions impact employers.

What are some provisions impacting all employer groups?

Although some provisions of the ACA are based on the number of employees an employer has, others apply to all employer groups, regardless of size. These provisions include, but are not limited to, guaranteed issue and renewal of health insurance plans, no pre-existing condition exclusion, employer notification of the health insurance marketplaces and an increase to the maximum allowable reward for health-contingent wellness programs.

Beginning Oct. 1, 2013, employers will be required to notify employees of the availability of the health insurance marketplace, formerly known as exchanges. The marketplace is an online portal that will allow consumers and employers to find and compare different health insurance options. Employers must provide employees, regardless of plan enrollment status or part-time or full-time employment status, a written notice informing them of their coverage options. The Department of Labor (DOL) has created three different model notices for employers to communicate this information to employees, and these are available on the DOL’s website.

Another provision impacting all employer groups is the increase to the maximum allowable reward for health-contingent wellness programs from 20 to 30 percent of the cost of coverage. The program must meet five regulatory requirements to qualify as a health-contingent wellness program.

What are some provisions impacting small group employers?

Beginning in 2014, the marketplace will operate a Small Business Health Options Program, or SHOP, that offers choices when it comes to purchasing health insurance for small group employers — with up to 50 employees in 2014 and increasing to 100 employees in 2016 — and their employees.

Through the SHOP, employers will eventually be able to offer employees a variety of Qualified Health Plans (QHPs) from different carriers, and employees can choose the plan that fits their needs and their budget. In 2014, however, small group employers will be limited to offering only one QHP to their employees, as the provision allowing choices between multiple carriers has been delayed until 2015.

In addition to the availability of the SHOP, small group employers with fewer than 25 full-time employees, or a combination of full-time and part-time employees, may be eligible for a health insurance tax credit in 2014 if they offer insurance through the SHOP and meet other criteria, such as the average wages of employees must be less than $50,000, and the employer must pay at least half of the insurance premium.

What are some provisions impacting large group employers?

Effective Jan. 1, 2014, employers that employ an average of at least 51 full-time employees are required to offer employees and their dependents an employer-sponsored plan or the employer pays a penalty, often referred to as ‘pay or play.’

This provision has specific criteria meant to not only define and determine the number of employees in the group, but also to confirm the employer is providing affordable, minimum essential coverage. Part-time employees count toward the calculation of full-time equivalent employees, and there is no penalty if affordable coverage is offered.

If an employer doesn’t provide adequate health insurance to its employees, the employer will be required to pay a penalty if its employees receive premium tax credits to buy their own insurance. The penalties will be $2,000 per full-time employee beyond the employer’s first 30 workers. Penalties paid by the employer will be used to offset the cost of the tax credits.

Marty Hauser is CEO at SummaCare, Inc. Reach him at hauserm@summacare.co.

Website: Visit our website to learn more about health care reform or go to www.healthcare.gov.

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Published in Akron/Canton
Sunday, 30 June 2013 12:00

Health care reform: In like a lion

Depending on the source, the Patient Protection and Affordable Care Act, a recently enacted law designed to reform the health care and health insurance systems, is either a bold step toward improving health care in the U.S. or a growth-stunting nightmare that upsets 60 years of progress in employer-provided health insurance. Either way, the legislation is becoming a reality and is quickly pushing businesses closer to the administrative equivalent of the fiscal cliff.

“What I tell people is that PPACA is really the most significant health care legislation since Medicare was passed in 1965,” says Marty Hauser, CEO of SummaCare Inc.

The law is an attempt to reform the insurance industry, he says, eliminating certain practices such as refusing coverage to those with pre-existing conditions, and improving access while bringing greater transparency and accountability to health care delivery.

“These are monumental changes,” says William Hutter, founder and CEO of Sequent. “This is one of the largest government overhauls ever. It’s going to dramatically impact employers and the employer-based distribution system for health care.”

With that, employers will need to better understand the administrative requirements they’ll face, which is not simple.

“It’s a vastly complicated law,” says Joe Popp, JD, LLM, tax supervisor and affordable care act implementation specialist at Rea & Associates. To illustrate its complexity, Popp says the PPACA is being administered simultaneously by the IRS, Department of Labor, Health and Human Services and the Occupational Safety and Health Administration.

“All in, it’s going to take eight years of change,” Hutter says. “And most of the rules and the regulations that are going to govern how this is enacted aren’t even written yet.”

“It’s kind of like trying to change the tire on your car while you’re driving 70 miles per hour down the highway. Things are changing almost daily,” Hauser says.

Furthermore, business owners are going to have to cope with the increased costs.

Paul Jackson, a partner at Roetzel & Andress says there will be 21 increased taxes or fees that business owners or employers have to pick up.

“The Congressional Budget Office estimated that those will be more than $1 trillion each year — that’s trillion with a ‘T,’” he says.

Waiting for guidance

While there is some guidance on how businesses can prepare for health care reform, service providers who spoke with Smart Business said their employer clients complain about a lack of regulatory clarity. In fact, that was a concern for Sen. Max Baucus, a major contributor to the act. At a meeting of the Senate Finance Committee, he expressed concern over the gap in understanding of the PPACA by small businesses, which led him to say, now famously, of the act’s implementation, “I just see a huge train wreck coming down.”

And there certainly is reason for businesses to worry because a misstep on the side of the administration can lead to significant penalties.

“What I’m hearing most from clients is they’re concerned with compliance,” Jackson says. “They’re concerned about whether they fall within the pay or play, but also concerned about the penalties.” For example, he says employers can be fined $100 per day per individual for not providing the summary of benefits and coverage statement to employees, which is one of the new disclosure documents required by the act.

Another significant concern is confusion.

“Without clarity on how this affects them as an employer, employers are really grasping at straws,” says Kevin Cavalier, vice president of sales at SummaCare,

Still, some businesses wonder where they should begin.

“There are companies that have been on top of this for a long time, they’re ready to go and they’re waiting just like we are for guidance coming out from the IRS and HHS, and they are ready; they’ve done their implementation work,” Popp says.”But for most businesses, they haven’t really started or they’re not very far on the path.”

Cavalier says in the fall, the government will begin public service announcements and education to the employer community.

“I think then you’ll start to see advice for an employer based upon their specific situation,” he says.

However, quickly approaching is the enactment of one of the more complicated provisions, referred to as “pay or play,” which will require tough choices.

“The employer needs to make decisions on how it impacts them and what to do come 2014,” says Cavalier.

Pay or play

Most affected by the law will be employers with about 50 employees. According to the DOL, a large employer, defined as one with 50 or more full-time equivalent employees — those working an average of 30 or more hours weekly — could be assessed a tax for not offering its full-time employees the opportunity to enroll in a health insurance plan that offers minimum essential coverage.

This means employers have to make a choice whether to offer affordable coverage or pay the tax penalty, which has led some employers to question the value of providing health insurance. According to Jackson, “We have a number of clients that are seriously considering dumping their health care and just saying, ‘OK, we’re going to pay the $2,000 per year, per employee penalty because we can’t obtain health care coverage for employees for that amount of money.’”

Companies with between 40 and 60 employees have a tough decision to make.

“For those companies, some of the struggles are, is there a way you can get under 50 so that you don’t have to take on some of these other burdens,” Popp says.

Those trying to operate with fewer employees could implement lean processes, work with fewer people or outsource responsibilities such as payroll.

However, Cavalier warns of the repercussions of not offering health insurance.

“The con is if the employer chooses to do that, what does it do for employee morale?” he says. “What does it do for retention of good employees, especially if you’re in an industry that’s competitive in regards to obtaining new employees that have skill sets that you need?”

Beyond the pay or play decision, employers will also have to deal with individual market reinsurance fees, changes to W-2 reporting requirements, minimum essential coverage requirements and the implementation of health care exchanges.

“The administrative and compliance demands of ACA are very confusing and very expensive,” Hutter says.

Silver lining?

While it’s certainly easy to see the PPACA as a dark cloud, there are positive aspects to the law. Hauser says, when looking at the act broadly, it is attempting to address pressing issues. “Regardless of whether you support or oppose the health care law, I think everyone would agree that the current way we do health care in America is pretty non-sustainable, especially in a world economy.”

He says the act has brought more focus to prevention by creating incentives for employers to offer more wellness and incentive programs “so that we can move from a sick-care model to a real health care model.”

Though discussions of the costs associated with the act have been at the forefront, there are other considerations for employees.

“It’s not numbers. The numbers are going to be what the numbers are, and there’s nothing anyone can do about that,” Hutter says. “Knowing that, now you have to figure out what the best thing to do for your organization is.”

He says the most important asset companies have is the thinking and creative abilities of their employees.

“Companies are going to have to think long and hard about whether they want to undermine the relationship with that most valuable asset of any company, which is its people.”

Published in Cleveland
Friday, 31 May 2013 22:57

How PPACA will impact small employers

Most news surrounding the implementation of the Patient Protection and Affordable Care Act (PPACA) pertains to the employer penalties for noncompliance with the large employers’ shared responsibility provision that begins with the 2014 plan year. However, how does PPACA apply if an employer has fewer than 50 full-time equivalent employees?

“This has been a subject of great confusion among business owners,” says Chuck Whitford, client advisor, JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Whitford about how smaller business owners need to be counting employees carefully and preparing for PPACA provisions.

How is employer size defined?

A large employer is defined as having 50 or more full-time equivalent employees during a testing period that can be from six to 12 months. Full time is defined by the government as 30 hours per week.

The term equivalent is used to account for those who work less than 30 hours per week. For example, if an employer has 30 full-time employees working 30 hours each week and three part-time employees working 20 hours each week, it has 32 full-time equivalent employees. The part-time hours per month are added, then divided by 130 to determine additional full-time equivalent employees.

There is some relief for seasonal workers.

How does PPACA apply to small employers?

The employer penalties are just one piece. All employers are subject to certain rules if providing a health insurance plan, such as:

  • Waiting periods for eligibility cannot exceed 90 days, beginning in 2014.

  • Continuing to cover dependents of employees until age 26, in most cases.

  • Providing a Summary of Benefits and Coverage to each employee at specific events, such as open enrollment.

  • Supplying 60-day notification for any plan changes, except at renewal.

What are some other considerations?

If a plan is not grandfathered — hasn’t changed since the law went into effect in 2010 — then it must continue to waive all cost sharing for preventive care services, which includes women’s preventive care for plans renewing on or after Aug. 1, 2012.

Employers also must offer employees information on the public insurance exchange whether providing health coverage or not. The law requires this notice be distributed each March; however, it has been delayed in 2013, pending Department of Labor guidance.

In 2014, all non-grandfathered small group plans will have limits on the deductibles charged in-network. The maximum deductible will be $2,000 per individual and $4,000 per family. There also will be out-of-pocket limits that apply to all non-grandfathered plans. These limits are the same as those for high deductible health plans, which this year is $6,250 for an individual and $12,500 for a family.

How will the pricing methodology change?

The biggest change for small employers will be the pricing methodology applied to group insurance plans. Insurance companies will be unable to use gender, industry, group size or medical history, and therefore are limited to family size, geography, tobacco use and age. The companies can charge the oldest ages no more than three times what they charge the youngest ages. Many insurance companies use a ratio of 7:1 or higher, so this should result in higher rates for younger, healthier groups and better rates for older, less healthy groups. In addition, there will be new taxes and fees passed through to the employer in 2014.

Where do small employers have flexibility?

A small employer, with fewer than 50 full-time employees, has more flexibility in determining how many hours an employee must work to be benefits-eligible. For example, a small employer can establish 37.5 hours as the minimum to be eligible for the company health plan, so employees regularly working less than 37.5 hours aren’t eligible. Those employees most likely are eligible for a subsidy to purchase coverage in the public insurance exchange. But, as a small employer not subject to the employer penalties, there are no financial consequences.

Because of the complexities, employers are encouraged to review their employee count and other pending health care reform legislation with a qualified advisor.

Chuck Whitford is a client advisor at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7257 or chuck.whitford@jrgadvisors.net.

Insights Employee Benefits is brought to you by ChamberChoice

Published in National

The historical benefits of self-funded health insurance — lower costs, more flexibility and control — are even more appealing when added to the ability to avoid many Patient Protection and Affordable Care Act (PPACA) rules and expected premium increases.

As a result, there’s growing interest in self-funding. A March study by Munich Health North America of 326 executives from health plans, HMOs and insurance brokerages, found 82 percent of respondents saw more interest in self-funding, with nearly one-third seeing significant interest. The survey also found nearly 70 percent of insurance organizations plan to increase self-funding offerings during the next year.

“The PPACA has shed a light on self-funding because it created several new reasons why self-funding or partial self-funding is attractive,” says Mark Haegele, director, sales and account management, at HealthLink.

Smart Business spoke with Haegele about the reasons why self-funded health insurance is getting so much employer interest.

What historical self-funding benefits remain relevant today?

Historically, self-funded employers avoid the risk charge — typically 2 to 4 percent of the total premium — that all insurers build into premiums. Self-funded plans also avoid costs from insurer profit; premium taxes, usually 1 to 3 percent, depending on the state; and the insurance company’s fixed operating costs. A fully insured plan can include fixed operating costs that are 40 to 50 percent higher than a partially self-funded plan with a third party administrator.

Plan flexibility and control is the other overarching benefit of self-funding or partially self-funding. You don’t need to follow state coverage mandates for areas like autism, bariatric surgery and infertility treatments. Employers can customize plans based on member population needs.

Smaller, self-funded employers also receive detailed member data, resulting in the ability to make informed decisions. With the help of consultants and brokers, they can manage their population as much or as little as they want.

Why is health data more critical now?

The health care system is moving from a fee-for-service to a performance-based model, so transparency and information are more critical. If you expect members to make good purchasing choices, then employers and their members must know what services cost. This transparency is one of the staples of a self-funded plan. Employers know what services members partake in, the plan risk factors, what care those with chronic illnesses receive, etc.

What is drawing employers to self-funding because of the PPACA?

A number of pieces from the PPACA aren’t required under self-funding, including the:

•  $8 billion insurer tax, currently calculated to be passed onto employers as a 4- to 6-percentage point increase in premiums.

•  Medical loss ratio requirements, which force profitable insurance companies to reduce administrative expenses and ultimately lower service levels.

•  Community rating rules that group small employers by geography, age, family composition and tobacco use. Thus, healthy, younger insurance groups will pay more — estimated to be 60 to 140 percent — while older, less healthy member groups pay less.

•  Minimum essential benefits, where insurance companies are required to limit annual deductibles.

How are PPACA-driven premium increases already factoring in?

Although the PPACA’s community rating rules, insurance tax and minimum essential benefits don’t begin until Jan. 1, 2014, the repercussions have started. Some carriers are including extra 2013 premium increases. For example, rather than a 4 percent premium increase now, insurers might try to get employers to accept a 20 percent increase this year. In addition, despite state pushback, many insurance companies are considering offering an early renewal — changing the plan effective date from Jan. 1, 2014 to Dec. 1, 2013, for instance — to let employers temporarily avoid increases. However, those with a self-funded plan never have to worry about these costs.

Mark Haegele is director of sales and account management at HealthLink. Reach him at (314) 753-2100 or mark.haegele@healthlink.com.

Video: Watch our videos, “Saving Money Through Self-Funding Parts 1 & 2.”

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Published in Chicago

Many aspects of the Patient Protection and Affordable Care Act (PPACA) become effective Jan. 1, 2014, but preparing for that date is difficult for businesses because not all of the rules and regulations have been written.

“As of last month, there were still 1,200 regulations yet to be written by the end of the year. I don’t think anybody has it figured out yet — that’s the biggest problem,” says William F. Hutter, president and CEO of Sequent.

Nonetheless, there are steps businesses can take now to be ready for 2014. “The first thing to do is to understand the PPACA. Unfortunately, there is no definitive source of information on how it will impact companies because of the yet-to-be written regulations. So you need to read a variety of materials, starting in July — that’s when we should see those rules and regulations start to manifest,” says Hutter.

Smart Business spoke with Hutter about strategies small and midsize businesses can take to deal with the uncertainty surrounding health care reform.

Is there a chance that the effective date of PPACA provisions might be delayed?

Some factors already have. The Small Business Health Options Program (SHOP), an exchange for small businesses to purchase health insurance, has been delayed for a year. Also, nothing has been presented showing how the federal health care exchange, a marketplace for individuals to purchase insurance, is going to work.

Since everything is in flux, what can companies do in preparation?

A number of strategies are going to emerge, and many might have questionable structure. If someone presents an opportunity too good to be true, it probably is. Be careful about vetting companies offering creative strategies to avoid some of the impact of health care reform.

One legitimate strategy on the increase is the use of cell captives. Companies will self-insure, but with minimal exposure. There are good self-insurance options for businesses in the 60- to 70-employee range that will exempt them from certain aspects of the legislation, such as unlimited rehabilitative services. An employee can go to rehab for 30 days, come back and four months later have another drug problem that sends him or her back to rehab — there’s no limitation and it’s covered under the Family and Medical Leave Act. A company can design a plan that doesn’t allow that because it’s not required in a self-funded plan, even though it is part of the minimum essential coverage required under the PPACA in the fully insured environment.

All of these self-funded plans will become high deductible health plans with three layers of risk. The first is the employee deductible, which will pay the first layer of claims. The second layer will be an amount of self-retained insurance risk a company insures. The insurance company will pay the third layer. That setup protects insurance companies from a lot of the smaller claims. In Ohio, about 70 percent of claims are less than $8,000.

What impact will reform have on health care costs?

It will not bring down the cost of insurance because there’s nothing health care reform can fix relative to the aging demographics of the workforce. There’s been a dramatic increase in recent years in the use of medication and cost of defensive medicine. As baby boomers continue to age, those costs will only increase. There are not enough 20-somethings coming into the workforce to compensate for the aging demographic in the state of Ohio.

If anything, the cost of regulation just keeps increasing. A recent study stated that fines and penalties are expected to total $88 billion. All kinds of alternative strategies are being considered, not to avoid the intent of providing good coverage for employees, but because of uncertainty with the legislation. If you can create certainty by having a new health care plan design, that’s good for business. At least you know what you have.

We’re not going to see the conclusion of how health care reform is going to be implemented for a decade. It’s going to be a really long time.

William F. Hutter is president and CEO at Sequent. Reach him at (888) 456-3627 or bhutter@sequent.biz.

Website: Understand your legal obligations when sponsoring a health plan for your employees. Download a checklist.

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Published in Akron/Canton

As we approach next year’s continued implementation of the Patient Protection and Affordable Care Act (PPACA), which affects how and what type of health insurance employers will offer, many employers are beginning to explore the best plan for them.

One popular topic of discussion is wellness programs. The PPACA provision on wellness programs that rewards positive health outcomes is being expanded. Next year, employers will be able to provide even more incentives for employees participating in wellness programs, with the reward percentage changing from 20 to 30 percent of the cost of coverage.

“It’s not surprising that a significant change under the PPACA is one that encourages employers to promote and reward employees for healthy behaviors,” says Marty Hauser, CEO of SummaCare, Inc. “Employer-sponsored wellness programs are popular, and incentivizing employees to make better overall lifestyle and wellness choices can help to lower long-term health care costs. It is reasonable at a time when we are trying to make health care available to more consumers and also drive down overall health care costs.”

Smart Business spoke to Hauser about the new wellness aspect of the PPACA and what employers should consider to help encourage and promote a healthier workforce next year.

What types of wellness programs are eligible for the 30 percent reward?

Wellness programs are currently and will continue to be divided into two categories — participatory wellness programs and health-contingent wellness programs. Participatory wellness programs are not eligible for the 30 percent reward, while qualified health-contingent wellness programs are.

In general, participatory wellness programs account for the majority of wellness programs offered by employers. They are made available to most employees and do not offer a reward or request that the individual satisfy a health standard to receive a reward. Examples include a full- or partial-reimbursement to employees for fitness center membership and/or a program that rewards employees for attending free health education seminars or lectures.

Health-contingent wellness programs require the participant meet certain health measures to receive a reward. These rewards can include incentives such as a discount or rebate on monthly health insurance premiums; partial- to full-waiver of cost-sharing benefits, such as deductibles or copays; and/or other monetary or non-monetary incentives. An example could include a program where participants’ biometrics are measured regularly and rewards are based on meeting a health measure. Participants who don’t meet the health measure must take additional steps to get the reward.

What are the requirements of a health-contingent wellness program?

A qualifying health-contingent wellness program must meet five regulatory requirements. These requirements include:

• Frequency of opportunity to qualify. The program is offered to all similarly situated employees.

• Size of reward. This could be as high as 30 percent of the cost of health coverage and up to as much as 50 percent for programs meant to prevent/reduce tobacco use.

• Uniform availability and reasonable alternative standards. The program is designed to be available for everyone, with a reasonable alternative for those whose medical conditions don’t allow them to participate to the full health standard.

• Reasonable design. The program is designed with an overall goal to promote health and prevent disease.

• Notice of other means of qualifying for the reward. Those who qualify for a different means of obtaining a reward have the opportunity to do so.

These requirements are meant to protect the consumer and safeguard against unfair practices.

What should interested employers do?

Discuss your options with your health insurer, benefits consultant or broker to determine what type of program makes the most sense for your employee population, time, wellness staff and budget.

Marty Hauser is CEO at SummaCare, Inc. Reach him at hauserm@summacare.com

Website: To learn more about health care reform, visit www.summacare.com/healthcarereform or www.healthcare.gov.

Insights Health Care is brought to you by SummaCare, Inc.

Published in Akron/Canton

Under the Patient Protection and Accountable Care Act (PPACA), large employers may know that to avoid penalties, they need to offer coverage that is affordable and qualified to full-time staff. But how do you treat a new hire to fold him or her into full-time staff so the employer shared responsibility rule can be applied?

Smart Business spoke with Tobias Kennedy, vice president of Sales and Service at Montage Insurance Solutions, about how to handle new hires, in the final of a three-part series on the employer shared responsibility provision.

When must health coverage be offered to new hires?

Per the PPACA, new hires must be offered coverage within 90 days if you reasonably expect the person to be full time. However, if, at the time of hire, you cannot reasonably predict whether the person will be full or part time, you can submit the employee to a similar set of measurement/stability periods as the full-time ongoing staff. (For more information on ongoing staff measurement/stability periods, see the second article in this series.) The term ‘standard measurement’ was created to distinguish ongoing staff from what you can use for new hires, which is called an initial measurement period.

How does the initial measurement period work?

Like the standard measurement, the initial measurement period must be continuous months of between three and 12 months. Also, you have an administration period and an associated stability period where, as long as the person remains employed, you treat him or her according to the results of the hourly average from the measurement period.

What administration period rules need to be satisfied for new hires?

First, the period is no longer than 90 days — same as for ongoing staff. However, there is a caveat that the 90 days actually starts counting upon date of hire, keeps counting until you start your initial measurement period, where it pauses, and begins counting again for the period from the close of the measurement period through to the start of coverage. This is pertinent if you don’t measure from date of hire, such as beginning to measure the first of the month following date of hire, so some days between hire date and measurement beginning are deducted from the total 90-day allotment.

Also, the administration period when added to the initial measurement period cannot exceed the first of the month following 30 days of an employee’s anniversary. The longest an employee can possibly go from date of hire to coverage effective is 13 months and some change.

How does the stability period operate for new hires?

Like the ongoing staff, if a 12-month measurement period is chosen, then a 12-month stability period must be chosen. So, if an employee were hired on May 15, 2014, the employer would use a 12-month initial measurement period beginning the first of the month following date of hire, June 1, 2014, to May 31, 2015. Because the employee’s anniversary is May 15, 2015, the first of the month following 30 days of that is July 1, and the employer’s only option for administration is the month of June. If the new hire was deemed full time, he or she is offered coverage for a 12-month stability period beginning July 1, 2015, through June 30, 2016.

So, in this example, what happens with the employee on June 30, 2016?

The employee’s timeline runs from May 15, 2014, to June 30, 2016, so there is enough time for him or her to have eclipsed whatever time frame the employer uses as the standard measurement period for ongoing staff. If this new hire worked for an employer who measures ongoing employees from Nov. 1 to Oct. 31 every year, what happens to benefits on June 30 would be contingent upon the average hours worked from Nov. 1, 2014, to Oct. 31, 2015.

If the employee were full time during this time frame, the benefits would continue to the end of the year, per a 2016 stability period associated with that standard measurement period. If the employee was not full time in the standard measurement period but was during his or her initial measurement, benefits will continue through to June 30, 2016. And if the employee was not full time in either measurement period, benefits don’t have to be offered through the end of 2016.

It’s important to note that if an employee was not full time during the initial measurement but was full time during the standard measurement, you will need to add him or her to the benefits. So, in the running example, if an employee didn’t qualify based on June 1, 2014, to May 31, 2015, hours worked, but you re-measure according to your ongoing rules and find the person was full time during the Nov. 1, 2014, to Oct. 31, 2015 period, then the 12-month new hire stability period of not having benefits is clipped short. It’s replaced by the guarantee of benefits for the full 2016 plan year with an effective date of coverage of Jan. 1, 2016.

This can be complicated, but you should be fine as long as you work with a good consultant and utilize the tools your payroll vendor provides.

Tobias Kennedy is vice president of Sales and Service at Montage Insurance Solutions. Reach him at (818) 676-0044 or toby@montageinsurance.com.

Insights Business Insurance is brought to you by Montage Insurance Solutions

Published in Los Angeles

The Patient Protection and Accountable Care Act (PPACA) has a number of employer provisions generally called the “employer shared responsibility.” So, with this responsibility, who, exactly, do you have to offer coverage to as full-time employees?

“It’s not always as easy as 100 percent of your staff sitting in a chair from 8 a.m. to noon, then again from 1 to 5 p.m.,” says Tobias Kennedy, vice president of Sales and Service at Montage Insurance Solutions. “The reality is employers will have project-based staff, variable-hour employees and other factors that make figuring out ‘full time’ slightly tricky.”

Smart Business spoke with Kennedy about the PPACA’s look back/stability safe harbor, in this second of a three-part series on the employer shared responsibility provision. The first article discussed how the penalties are triggered under employer shared responsibility.

How does the look back/stability safe harbor work?

This provision allows an employer to look at ongoing staff and make a technical calculation on whether or not a person is supposed to be offered benefits under the PPACA. The legislation applies month-to-month, but because the government realizes that a monthly application would be administratively crippling, an optional safe harbor exists where you can extend the length of time used to measure employee hours, and then that data determines which employees qualify.

For ongoing staff, you get three new time frames to calculate with: a measurement period, an administration period and a stability period.

What is a measurement period?

The measurement period is a time frame you get to select — it has to be continuous months and can last anywhere from three to 12 months. Obviously, the shorter the period, the more likely to have irregular spikes; the longer the period, the more it’s a true measure of an employee’s average.

Essentially, you simply define the period of time, and those are the months that an employer uses to calculate employee hours worked. For example, the employer might select a 12-month measurement period and choose to run it from Nov. 1 to Oct. 31 every year. In this case, the employer would look at the hours worked over this period of time to determine each employee’s average hours worked to see if it is more or less than the PPACA-mandated 30 hours — thus qualifying, or not qualifying, for benefits.

What’s involved during the administration period?

The administration period is where you, the employer, have time to evaluate the results of your measurement period, and take care of logistics. This period cannot be longer than 90 days. For practical purposes, this would be used to see who is benefit eligible, plan your open enrollment meetings, distribute benefit information and then collect/process all of the applications for the upcoming plan year.

Using the previous example’s time frame, an employer might have this period run from the end of the measurement period to the end of the year, e.g., Nov. 1 to Dec. 31.

Once an employer moves on to the stability period, what happens?

In the stability period, as long as an employee remains employed, employers must treat him or her according to whatever average the measurement period deemed them — either full time or part time — regardless of the hours worked. So, if an employee measured as full time during the measurement period, you have to continue to offer him or her benefits through the entire stability period even if hours dip lower, as long as the person is still employed.

The stability period has to be at least six months and also no shorter than the time chosen as the measurement period. So, in the example from before, because the measurement was 12 months, the stability period also needs to be 12 months. If employees were measured from Nov. 1, 2014, through to Oct. 31, 2015, the employer would enroll employees throughout the end of 2015 for their 2016 plan year.

Then, the measurement, administration and stability periods continue to go on, overlapping such that every plan year occurs back to back without a break, and each plan year’s eligibility is associated with the hourly performance of employees during the preceding associated measurement period.

In the final of this three-part series, we’ll discuss how to treat a new hire to eventually fold him or her into your employee hourly average calculations.

Tobias Kennedy is vice president of Sales and Service at Montage Insurance Solutions. Reach him at (818) 676-0044 or toby@montageinsurance.com.

Insights Business Insurance is brought to you by Montage Insurance Solutions

Published in Los Angeles

In 2014, new entities will be part of the health insurance world — health insurance marketplaces.

Health insurance marketplaces are key components of the Patient Protection and Affordable Care Act (PPACA). They are designed to make buying health coverage simpler by providing easy-to-understand information that allows consumers to make apples-to-apples comparisons of a wide variety of products. Marketplaces are intended to make health coverage more affordable by promoting increased competition among health insurers under new market and product standards. In addition, certain consumers may be eligible for premium tax credits and cost-sharing reductions that will further reduce health insurance costs. Qualifying small employers also may be eligible for a tax credit.

“Health insurance marketplaces have the potential to increase consumerism in health insurance,” says Sheryl Kashuba, vice president, Health Policy and Government Relations, and chief legal officer for UPMC Health Plan. “However, employers need to understand how they will operate and who they will serve.”

Smart Business spoke with Kashuba about what employers need to know about health insurance marketplaces.

What is a public health insurance marketplace?

The public health insurance marketplace, sometimes referred to as an exchange, will comprise two new marketplaces where consumers and employers will be able to purchase health insurance. Coverage will be available to individuals via the Health Benefit Marketplace and to small businesses via the Small Business Health Options Program (SHOP) Marketplace.

In Pennsylvania, companies with 50 or fewer employees will be eligible to purchase on the SHOP in 2014 and 2015; in 2016 and beyond, employers with 100 or fewer employees may purchase on the SHOP.

In some states, the state itself will operate these public exchanges. In other states, including Pennsylvania, the federal government will operate federally facilitated marketplaces. In order to sell coverage on public exchanges, including on the federally facilitated marketplace, insurers must receive certification that their plans meet the requirements established by the PPACA for qualified health plans (QHP).

How does an insurer earn qualified health plan status?

A qualified health plan is a health insurance plan that has been certified by a marketplace as meeting certain standards; plans must receive QHP certification in order to be sold through a public marketplace. The certification standards include coverage of all essential health benefits, adherence to established limits on cost sharing such as deductibles, copayments and out-of-pocket maximum amounts, establishment of quality standards and a host of other requirements.

Who can purchase coverage through a public marketplace?

Most U.S. citizens and lawful residents will be eligible to purchase coverage on the health insurance marketplace. Any small employer meeting the employee limits established in its state may purchase coverage via the SHOP.

What is a private health insurance marketplace?

A private health insurance marketplace is run by a private sector entity, such as an insurer or broker. Private marketplaces may be designed to allow employers to control costs through defined contribution models and to allow employees expanded coverage options. These marketplaces also may offer a broad range of retail products, such as life insurance and even non-insurance products.

Must every employer purchase insurance from a marketplace?

No. While both the SHOP and private marketplaces will be designed to offer a variety of coverage options, some individuals and employers may prefer to continue to purchase coverage outside these new distribution channels. Employers will continue to have the option to do so. However, premium tax credits and cost-sharing reductions for individual market coverage and tax credits for qualifying small group plans will only be available through the public Health Benefit and SHOP marketplaces, respectively.

Sheryl Kashuba is vice president of Health Policy and Government Relations and chief legal officer at UPMC Health Plan. Reach her (412) 454-7706 or kashubasa@upmc.edu.

Insights Health Care is brought to you by UPMC Health Plan

 

Published in National

The Patient Protection and Accountable Care Act (PPACA) has a number of employer provisions that all seem to fall, generally speaking, under an umbrella called “employer shared responsibility.”

Briefly, the PPACA mandates that large employers, those more than 50 employees including full-time equivalents, offer affordable coverage, which is that the lowest cost option for an employee is less than 9.5 percent of income. The coverage also must carry a minimum robustness — an actuarial value of at least 60 percent — to all eligible employees. If the employer doesn’t follow this, it must pay some kind of penalty.

Smart Business spoke with Tobias Kennedy, vice president of Sales and Service at Montage Insurance Solutions, about how these penalties are triggered, in the first of a three-part series on the employer shared responsibility provision.

How can the employer shared responsibility penalties be triggered?

The penalties are only triggered by an employee of yours receiving a subsidy to purchase an individual policy through the coming exchanges. And, employees are only eligible for a subsidy if they earn less than 400 percent of the federal poverty level and are not eligible for another qualifying coverage like Medicare, Medicaid (Medi-Cal) or a qualified employer plan.

How does the penalty for not offering enough coverage impact employers?

The way this fine is triggered is you, the employer, do not offer insurance coverage to at least 95 percent of your staff. The key words are ‘offer’ and ‘95 percent.’ If they decline, you are not at fault, and at 95 percent there is some minimal leeway. So if you fail to offer coverage to at least 95 percent of your people, and one of them goes to the exchange and gets a subsidy, you are fined. It’s important to note this penalty, like all PPACA penalties, is a non-deductible tax penalty — so finance teams really need to factor that in when evaluating costs.

This penalty’s costs are — pro-rated monthly for each violating month — $2,000 per year multiplied by every single full-time employee you have, which obviously can add up. The bill has a provision where you can, for the purposes of calculating the penalty dollar amount, deduct 30 employees from your full-time equivalent count. In other words, if you have 530 full-time employees, you’re fined on only 500 at $2,000 per person, per year for an annual fine of $1 million.

How does the affordability penalty work?

The second penalty, also non-deductible, centers on affordability. In this case, while you are still fined an annual amount that is pro-rated monthly, the fine is actually $3,000 annually but only assessed on people affected. It also is only up to a maximum of what you would have paid for not offering coverage at all.

It’s important to note that the employer is only going to be penalized on the people for which coverage is unaffordable. In other words, there are going to be times where you want to be strategic about this. You may have a situation where your employee/employer premium split is in compliance for most of your staff — where the dollar amount you ask the employees to pay for premium is less than 9.5 percent of most employees’ incomes. But, a couple of employees actually earn a smaller salary, so they are outside of the 9.5 percent. In this case, the employer needs to know it has a choice: Either raise your employer contribution or pay a fine on those couple of employees. Again, the penalty is only $3,000 per person affected, so it may be less expensive to pay those couple of fines than to completely restructure the way you split premiums.

Next, we’ll address how you know which employees qualify for coverage. A lot of employers have part timers, variable-hour people and project-based staff. So with all of these fines, it’s important to know exactly how you find the safe harbor of which employees qualify and don’t qualify for benefits.

Tobias Kennedy is vice president of Sales and Service at Montage Insurance Solutions. Reach him at (818) 676-0044 or toby@montageinsurance.com.

Insights Business Insurance is brought to you by Montage Insurance Solutions

Published in Los Angeles
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