Small Groups Will Celebrate New HRAs

The IRS recently published finalized rules easing restrictions on health reimbursement arrangements (HRAs) to allow employers to provide their workers with tax-preferred funds to pay for the cost of health insurance coverage they buy in the individual market. The regulation is part of the Trump Administration’s commitment to deliver more health coverage choices to Americans.

The HRA rule should be extremely valuable to small businesses that have had a really hard time providing group health coverage. So hard, in fact, that the Kaiser Family Foundation Employer Health Benefits Survey recently reported that the percentage of businesses with 25 to 49 workers offering group coverage has fallen from 92% to 71% since 2010.

Two New Options Will Be Available
Effective January 1, 2020, employers will be able to help employees buy individual health insurance policies by offering two different tax free HRAs. The first is an Individual Coverage HRA, which can only be offered to similar classes of workers when a traditional group health plan is not currently available. Classes refer to groups of employees with similar circumstances, such as full-time, part-time, seasonal, salaried, temporary, etc. A class must include at least 10 employees for employers with fewer than 100 employees and 20 or more employees for employers of 200 or more workers.

The other option, an Excepted Benefits HRA, is designed to be offered with a traditional group health plan, although employees do not have to enroll in the health plan. The maximum annual benefit for an Excepted Benefits HRA is $1,800.

Tax-Preferred Benefits Can Extend to Millions
The new HRA rules will make it easier for small businesses to compete with larger organizations that provide high quality group health benefits. More importantly, the employees who buy individual health plans financed by a new HRA will receive the same tax advantages as those with traditional group coverage.

The Departments of Labor, Health and Human Services and Treasury estimate that HRA expansion will benefit as many as 800,000 employers and more than 11 million employees and family members, 800,000 of whom will have been previously uninsured. To learn more about these new HRAs as you begin your planning for 2020, contact your account representative at your convenience.

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Judge Rules Against Drug Price Disclosure

prescriptionIn a very recent decision, a federal judge ruled against Trump Administration efforts to require drug manufacturers to include the price of prescription drugs in their television commercials. Filed in federal court in mid-June, the lawsuit claimed that HHS does not have the legal power to enforce the rule and that including prices will mislead patients and discourage them from seeking treatment. In the decision rendered on July 9th, U.S. District Court Judge Amit P. Mehta agreed, adding that the administration had overstepped its authority.

A spokesman for HHS was quoted as saying “we are disappointed in the court’s decision and will be working with the Department of Justice on next steps.” While the decision is a blow to the administration’s efforts to increase cost transparency and drive down drug prices, many expect their efforts to continue.

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Can Chronic Disease Management Really Work?

healthWith the Centers for Disease Control and Prevention projecting that 83 million people will soon have three or more chronic diseases, the number of employers working to manage chronic conditions like diabetes, high blood pressure and coronary artery disease is staggering.

Not only do the average medical costs for a diabetic exceed $16,000 per year, but the loss of productivity is estimated to add an additional $1,700. How can your health plan cope?

Begin with Good Information
Reviewing claims data, diagnostic tests and prescription drug data is a critical starting point. Once plan members with chronic illnesses are identified, care managers, nurse navigators or health coaches can talk with them to learn about their lifestyle, ask about medications, nutrition, their family situation and other factors that may be impacting their condition.

Chronic disease management is not a one-step process. It involves partnering with a member’s physician and other professionals to understand the patient’s needs and develop a personalized care plan. This level of personal involvement will not only help the member receive the care they need but also help them better understand how to use their health plan to their benefit.

Experience shows that 80% of a company’s healthcare spend is often attributed to 20% of plan members. Chronic illness is likely the reason, making disease management a critical part of high-quality healthcare plans.
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Executive Order Aims to Improve Price Transparency

medical-moneyIn late June, President Trump signed an executive order directing HHS to develop rules requiring hospitals to publish clear and understandable pricing that reflects what people will actually pay for services. HHS Secretary Alex Azar added that the order should also make certain that providers and insurers provide patients with information about potential out-of-pocket costs they will face before receiving healthcare services.

While details about how the rules of the order will work are yet to be determined, hospital and health plan lobbyists criticized the order, saying it will increase prices and reduce competition. The President and CMS Administrator Seema Verma emphasized that the intention of the order is to combat the huge price variations that have long existed among healthcare facilities and make it easier for patients to find low cost, high-quality care.

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Bundled Payments for “Baby Bundles”

Pregnant-WorkerAnother major insurance carrier has cooperated with selected healthcare providers in two states to introduce a bundled payment program for maternity care. Like bundled payment programs used by Medicare and commercial carriers for total joint replacement, the bundled maternity program reimburses the care provider for an entire episode of care, including prenatal, delivery and postpartum services, with one overall fee. Insurers are encouraged with the positive outcomes, citing early access to care and open lines of communication as significant advantages of this approach.

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IRS Increases HSA Limits

Employees will be able to save some additional healthcare dollars in 2020 as the IRS will increase the limit on deductible contributions to an HSA by $50 for individuals and $100 for families. The limits will be $3,550 for individuals with self-only coverage and $7,100 for family coverage. The minimum deductible for a qualifying high deductible health plan will also increase, rising to $1,400 for single coverage and $2,800 for family coverage

Research shows that the number of HSAs increased by 13% over the past year, topping 25 million accounts with an anticipated increase to 30 million by 2020. Another important statistic revealed that the average employer contribution to HSAs rose from just over $600 in 2017 to $839 in 2018 – an increase of some 39%. Supporters are encouraging legislators to make HSAs even more consumer friendly by allowing adults over 65 to continue using an HSA to save for healthcare costs in retirement. We will continue to report on these efforts going forward.

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HSAs Keep Growing

HSAWhile EBRI researchers have reported slower growth rates in recent years, more than 40% of HSA enrollees opened their accounts in just the past two years. Other recent projections, in fact, expect the value of HSA accounts to grow from $54 billion in 2018 to nearly $75 billion in 2020. Proposals floating around Washington could expand the list of HSA-eligible expenses as well as the age at which seniors must stop contributing to their HSA. Proposals like these would make HSAs even more valuable in the future.

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More Bang for Your Benefits Buck!

The Centers for Medicare and Medicaid Services project that the $3.6 trillion our nation spent on healthcare in 2018 could approach $6 trillion by 2027. If that number has you wondering how your health plan (and our economy) can possibly survive such an increase, you’re certainly not alone.

Fortunately, you and your employees have an employer-sponsored health plan to depend on. And if your plan is self-funded like most, you have the freedom to determine how best to spend your healthcare dollars and the flexibility to respond to member’s needs. So rather than worrying about things that are out of your control, let’s look at steps others are taking to get more bang for their benefits buck.

Health Savings Accounts have become a must for employers pushing high deductible health plans. Contributing $500 or more to HSAs softens the impact of higher deductibles, and helps plan members cover out-of-pocket expenses and save for future healthcare expenses.

Covering the cost of Preventive Drugs at 100% is another option to consider. More and more employers are finding that waiving these copays can help speed recoveries and avoid some serious health problems that can cost everyone more down the road.

More Personalized Communication is the only way to deal with the reality that even with the availability of web portals, mobile apps and online transparency tools, health benefits are complex and confusing. Employers simply must do more to help members find out about their health benefits and understand them better. A public facing website could be a great way to not only explain your offerings to members, but also help to attract and retain qualified talent.

Direct Primary Care and requiring the use of Alternative Sites of Care for certain high-cost surgeries or second opinions are also discussed in this newsletter. TPAs have been recommending these strategies to many self-funded health plans in recent years and both are beginning to show positive results, depending on the makeup of the employee population.

Reference Based Pricing and Worksite Wellness programs are options we have discussed at length in recent years and both can be extremely effective. To learn more about these options and for other ideas you may want to place on your radar screen, contact your account representative. Spring is the perfect time to start thinking about next year!

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Is Direct Primary Care the Future?

A fee-based model that gives individuals unlimited access to a primary care physician without their insurance being billed is being heralded as the right prescription for healthcare. Most patient needs, such as consulting, tests, drugs and treatment are included, and no insurance billing is involved.

Sources estimate there are about 1,000 direct primary care practices in the continental United States. While most patients pay for the service out-of-pocket, more and more employers are choosing to offer this as a benefit and sharing in the cost.

TPAs and advisers supporting the trend caution that direct primary care is not a replacement for insurance, but rather a great supplement to an existing health plan. By removing the barrier of costly copays and deductibles, employees can forge a much closer relationship with their doctor, making them far less likely to choose a costly emergency room or urgent care clinic when the need for medical care arises. Direct primary care is an option that is growing and one we’d be happy to talk with you about at your convenience.

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