The End of the American Health Care Act (AHCA)

Instead of preparing for the changes that were expected from the American Health Care Act (AHCA), employers now need to continue or resume their efforts to maintain compliance with the ACA. As House Speaker Ryan said, “I don’t know what else to say other than Obamacare is the law of the land. It’ll remain law of the land until it’s replaced,” he said. “We’re going to be living with Obamacare for the foreseeable future.”

Determining where we go from here seems to be anyone’s guess, but after watching the industry ebb and flow for decades, our best advice is to stay calm and carry on as self-funded health plans continue to cover an estimated 75% of the U.S. workforce.

ACA The Law of the Land

Until the Republican majority decides to try again or Obamacare implodes, as President Donald Trump and others say is inevitable, individuals and employers with 50 or more full-time employees will have to live with the Affordable Care Act. Many who thought the American Health Care Act (AHCA) meant the certain loss of coverage made possible by the ACA can breathe easier. Providers and employer groups, many of which have adopted self-funding in order to better cope with the added regulations of Obamacare, can take comfort in the fact that drastic change has been avoided, at least for the foreseeable future.

EBSO will be monitoring the events on Capitol Hill and will continue to provide updates as things arise. As always, thank you for being a valued Client and/or Business Partner.

obamacare-drives-interest-in-selffunding

Plans to Repeal and Replace the Affordable Care Act

hcaa-aca-postSeveral proposals have recently circulated regarding alternatives to the ACA. But, last week the House of Republicans proposed legislation intended to repeal and replace certain elements of the Affordable Care Act, also known as Obamacare or the ACA. Their proposal has been named the American Health Care Act (AHCA).

The Health Care Administrators Association (HCAA) released an in-depth update late last week that details the changes the AHCA would impose as well as the aspects of the ACA that would remain unchanged. This overview was provided by the law firm of Quarrels & Brady LLP.


The American Health Care Act:
What It Means for Employers and Health Insurers

Employee Benefits Law Update | 03/09/17 | John L. Barlament, William J. Toman, Cristina M. Choi

After months – or maybe years – of speculation, on March 6 the House Republicans released proposed legislation intended to repeal and replace certain aspects of the Patient Protection and Affordable Care Act, known affectionately as Obamacare or the ACA. The proposal, somewhat generically named the American Health Care Act (AHCA), is trimmed down to fit into the Congressional reconciliation process to avoid a Senate filibuster. As the President tweeted the next day, there is more to come “in phase 2 & 3 of healthcare rollout.”

The AHCA proposes some major changes for the individual market and Medicaid, substantial changes in the employer market, and some minor changes to Medicare. Most prominently, the AHCA does away with the most controversial aspects of Obamacare, the individual and employer mandate. It also repeals the cost sharing and income-based premium subsidies available on the Obamacare exchanges, and replaces them with age-based tax credits designed to help individuals pay for coverage.

Almost more notable is what the AHCA does not repeal, presumably due at least in part to use of the reconciliation process. The AHCA does not repeal many of the more popular patient protections, such as the prohibition on pre-existing condition exclusions. It also doesn’t repeal many of the market reforms: the guaranteed issue and guaranteed renewal requirements, community rating rules (although there is a loosening of the age rating limitation), essential health benefit rules (other than for Medicaid), or the health insurance exchanges….

Click the image below to read the full article, which explains how this proposed legislation would impact employers, plan sponsors and health insurers.

ACA-blog-CTA

ACA Changes You Should Note

Even though 2016 was considered the year of full implementation for the Affordable Care Act (ACA) employer mandate, changes keep coming. Here are a few points you will want to stay ahead of.

medical-moneySmall Employer Group Changes

The Protecting Affordable Coverage for Employers (PACE) Act, passed last fall, defines the small employer as having one to 50 employees. States, however, are permitted to elect to extend the definition of a small employer as up to 100 employees.

Even though the way businesses are categorized will now be a state-by-state decision, most are using the PACE Act definition. A few, including California and New York, have chosen to use 100.

Health Plan Transition Relief to Expire

Transition relief for the Employer Shared Responsibility payments for large employers with fully insured plans during the prior year will expire January 1, 2017. Depending on a plan’s eligibility and start date, applicable large employers (ALEs) must be compliant at some point this year or face penalties. Starting January 1, the non-calendar year transition relief expires and all ALEs will be required to offer compliant coverage. This does not apply to self-funded plans.

Grandfathered plans are also expiring in January 1, 2017. Fifteen states required the end of remaining grandfathered, non-ACA compliant plans this year, while the other 35 states will do so in 2017.

IRS Reporting Penalties

This year when employers completed Forms 1094-C and 1095-C, they were not assessed penalties for incorrect or missing data. Employers need to identify any issues with their reporting and plan ahead since that good faith effort has not been extended. They must set aside time for testing to correct any coding or processing errors. Employers should also consider avoiding the cost of printing and mailing by enabling employees to access Form 1095-Cs online.

Cadillac Tax Delayed to 2020

The 40% excise tax on the cost of health coverage exceeding pre-determined threshold amounts, which was initially intended to take hold in 2013, was delayed to 2018. Now it has been delayed to 2020 and while some think it will eventually become law because the revenue is needed to fund the Affordable Care Act, the IRS has again issued a request for comments.

Employers have several regulations to address and implement in order to remain compliant and avoid future penalties. As always, we are prepared to help our clients remain ACA compliant as regulatory changes continue to come our way.

ebso-self-funding-works

ACA Fee Moratorium and Self-Funding

acaWhen Congress delayed the Cadillac Tax until 2020, the same law placed a one-year moratorium on the annual fee the ACA imposes on health insurance carriers. While the fee does not have a direct impact on TPAs or self-funded plans, it does sometimes impact stop loss premiums.

Since this fee applied to insurance carriers and not the majority of self-funded plan costs claims, some small group plans that moved to level funding may experience a slight cost increase in 2017. When the tax returns in 2018, the revenue targets are expected to increase. If the tax increases from its previous levels of 3% to 4%, the potential savings available to self-funded and level-funded plans will increase as well.

ebso-self-funding-works

More Individuals Visit ERs

health-screeningsAccording to a study by the Feinberg School of Medicine at Northwestern University shows that despite the Affordable Care Act taking effect, emergency room visits in Illinois increased by nearly 6% during 2014 and 2015. While the number of visits by uninsured people dropped after Obamacare took effect, the decrease was not sufficient to offset the increase in ER visits by those with Medicaid and private insurance. Some believe the increase is temporary and that it will drop as previously uninsured people learn how to use their health insurance.

ebso-self-funding-works

Should You Consider a Minimum Value Plan?

levelfundingIf you’re in an industry with significant turnover and varied work schedules, a Minimum Value Plan may be an affordable way to meet the requirements of the Affordable Care Act.

A Minimum Value Plan is one that pays at least 60% of the total allowed cost of benefits expected under the plan. And while a traditional fully insured plan might cost $300 per month for employee-only coverage, a minimum value plan may cost just over $100 while still providing ACA-mandated care and coverage for inpatient hospitalization.

Determining Minimum Value

Businesses may need help determining that their plan reaches “minimum value” under the ACA. To meet this standard, the plan must pay at least 60% of the total allowed cost of benefits, which can be a moving target. Recent regulations also require that minimum value plans must offer substantial coverage for both inpatient hospitalization and physician services.

It should also be noted that minimum value plans must still offer “minimum essential coverage” and coverage that is considered “affordable” under the ACA. Offering such a plan, without meeting these requirements, may still expose your organization to liability under ACA employer shared responsibility rules.

Though minimum value plans can be an affordable solution, future growth may be a concern, since only organizations with fewer than 50 full-time employees and full-time equivalents are exempt from ACA coverage requirements.

obamacare-drives-interest-in-selffunding

Physician-Owned Hospitals and the ACA

levelfundingEven though doctors currently have an ownership interest in just 5% of the 5,700 hospitals in the U.S., the ACA will not allow physicians to increase their ownership interest or pursue ownership in additional hospitals. The potential for conflict of interest and concerns about physician owners “cherry picking” the more profitable patients were the impetus behind Section 6001 of the Affordable Care Act that was passed in 2010.

Challenges to the law continue to come along, including a House bill sponsored by Representative Sam Johnson of Texas that would suspend the moratorium on expansion of physician-owned hospitals (POHs) for 3 years and grandfather in several POHs that were under development when the Affordable Care Act was passed. The legislation is based on a recent study that reviewed patient populations, quality of care, costs and payments in 2,186 hospitals, 219 of which were partly physician-owned. The study showed little difference in patient care between POHs and non-POHs, in fact 7 of the top 10 hospitals receiving quality bonuses in the new Hospital Value-Based Purchasing Program were physician-owned hospitals.

One study by the Centers for Medicare and Medicaid Services showed that a majority of physician owners have less than a 2% interest in their institution. As healthcare continues to evolve from fee-for-service to more value-based, there is no doubt that the debate over physician-owned hospitals will continue.

ebso-self-funding-works

Cadillac Tax Delayed Until 2020

When President Obama signed the new Consolidated Appropriations Act of 2016 into law in late December, he delayed both the Cadillac and Medical Device taxes by two years, from 2018 to 2020. The legislation also provided for the deductibility of the Cadillac Tax, which is an excise tax of 40% on the “excess benefit” of high cost employer-sponsored coverage, regardless of whether the health plan is fully insured or self-funded.

The cost thresholds associated with “high cost” coverage were initially indexed annually from a base value of $10,200 for individual coverage and $27,500 for other than self-only coverage, adjusted to reflect the age and gender composition of the employee population. The Cadillac Tax was originally intended to take effect in 2013, but in 2010, was postponed from 2013 to 2018.

obamacare-drives-interest-in-selffunding

Obamacare Driving More Companies to Self-Funded Healthcare Plans

The Affordable Care Act (ACA) has sparked a renewed interest and growth in self-funding as more organizations look for ways to continue to offer quality healthcare benefits to their employees, but also create opportunities for savings. Self-funded health plans are not new. In fact, they have been around for decades. However, many businesses have simply been unaware of their advantages and the differences between self-funded and fully insured plan options.

Organizations of many sizes have turned to third party administrators, such as EBSO, to help design, administer and manage a self-funded plan that manages risk and promotes wellness while keeping costs in line.

As Obamacare gives employees even more reason to identify and manage plan costs, TPAs can provide greater access to health plan data and work closely with you and your plan participants to build individualized programs that manage both cost and quality.

In this FREE whitepaper we examine “5 Reasons Why It’s Time to Consider Self-Funding Your Employee Healthcare Plan.”

obamacare-drives-interest-in-selffunding

Still Still trying to get a handle on the differences between a self-funded and fully-insured plan? Click to watch our short video, Discover the Benefits of Self-Funding and in less than 2 minutes we will explore those differences, give you the advantages of self insured health benefit plan and help you understand how self-funding works.

Can a MEC Plan Help Your Company?

Under the Affordable Care Act (ACA), Applicable Large Employers (ALEs) can avoid paying the $2,000 per employee penalty for failing to offer qualifying health coverage by offering full-time employees a Minimum Essential Coverage (MEC) plan.

Offering the most basic benefits – MEC plans offer only the most basic level of benefits required under ERISA and while some may view them unfavorably, others view MECs as a viable alternative to paying costly penalties and sending employees to public Marketplaces.

MECs are extremely affordable – Since MEC plans cover only certain wellness and preventive services, many employers fund the entire cost even though this is not required. Simply offering a MEC satisfies the ALE’s obligation to offer coverage, as well as the individual mandate that can penalize employees who do not have coverage.

Some prefer a combined approach – Employers wishing to furnish more coverage may supplement a MEC with a Limited Medical Benefit plan. This can provide additional, restricted coverage for routine doctor visits and hospitalization, while still costing far less than a traditional health plan. Since employers can also be assessed $3,000 for each employee qualifying for a federal subsidy, some may pursue a combined option to keep workers from accessing a public Marketplace.

As we help companies weigh their options, MEC or a combination MEC/Limited Medical Benefit plan should be considered. If the costs associated with ACA present challenges to your organization, let us help you determine the best way to proceed