House Passes Legislation Protecting Access to Affordable Health Care Options

Press Release from Education and the Workforce Committee Chairwomen Virginia Foxx on April 5, 2017.

The House today passed the Self-Insurance Protection Act (H.R. 1304), legislation that would protect access to affordable health care options for workers and families. Introduced by Rep. Phil Roe (R-TN), the legislation would reaffirm long-standing policies to ensure workers can continue to receive flexible, affordable health care coverage through self-insured plans. The bill passed by a bipartisan vote of 400 to 16.

“By protecting access to self-insurance, we can help ensure employers have the tools they need to control health care costs for working families,” Rep. Roe said. “Millions of Americans rely on flexible self-insured plans and the benefits they provide. Federal bureaucrats should never have the opportunity to limit or threaten this popular health care option. This legislation prevents bureaucratic overreach and represents an important step toward promoting choice in health care.”

“This legislation provides certainty for working families who depend on self-insured health care plans,” Chairwoman Virginia Foxx (R-NC) said. “Workers and employers are already facing limited choices in health care, and the least we can do is preserve the choices they still have. I want to thank Representative Roe for championing this commonsense bill. While there’s more we can and should do to ensure access to high-quality, affordable health care coverage, this bill is a positive step for workers and their families.”

BACKGROUND: To ensure workers and employers continue to have access to affordable, flexible health plans through self-insurance, Rep. Phil Roe (R-TN) introduced the Self-Insurance Protection Act (H.R. 1304). The legislation would amend the Employee Retirement Income Security Act, the Public Health Service Act, and the Internal Revenue Code to clarify that federal regulators cannot redefine stop-loss insurance as traditional health insurance. H.R. 1304 would preserve self-insurance and:

  • Reaffirm long-standing policies. Stop-loss insurance is not health insurance, and it has never been considered health insurance under federal law. H.R. 1304 would reaffirm this long-standing policy.
  • Protect access to affordable health care coverage. By preserving self-insurance, workers and employers will continue to benefit from a health care plan model that has proven to lower costs and provide greater flexibility.
  • Prevent bureaucratic overreach. Clarifying that regulators cannot redefine stop-loss insurance would prevent future administrations from limiting a popular health care option for workers and employers.

For a copy of the bill, click here.

For a fact sheet on the bill, click here.

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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.

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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.

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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.

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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.

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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.

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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

Self-Funding: About More Than Savings

self-fundingFor decades, employers determined to get a handle on runaway health care costs have compared self-funding to their traditional fully insured plans. Many who have made the move have discovered that the opportunity for savings is just one advantage. Others include flexibility in plan design, access to plan and utilization data and the ability to use that data to influence employee health for the better.

Plan Design Flexibility
Having control over the design of your employee health benefit plan is huge – especially in light of the Affordable Care Act (ACA) and the costly benefit mandates that came with it. Partially self-funded health plans, those with stop-loss coverage to cap claim costs, are subject to federal ERISA laws, thereby avoiding state regulations and some ACA provisions. Best of all, programs can be designed to meet the needs of your population and evolve as needs change.

Efficient Administration
With a self-funded health benefit plan, your company pays only for fixed expenses like administrative fees and stop-loss insurance premiums and claims that your covered group incurs. Profit margins, risk charges, reserves and most state premium taxes, common to fully insured plans, are avoided.

Access to Claims Data
Access to plan and utilization data enables a self-funded plan to modify far more than contribution levels. Data analysis can help identify factors driving claims. Those with chronic conditions can get the help they need when they need it. Worksite wellness measures can be designed for greater impact and costly health issues that do arise can be addressed earlier.

Just like the many aspects of our lives that can now be customized at the click of a button, the days of one-size-fits-all health insurance plans are gone forever. Subject to state regulations, an increasing number of employers of 25 or more will discover that flexibility and control in health benefits will belong to those organizations that work with an independent third party administrator to adopt partial self-funding.

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What You Need to Know About Minimum Essential Coverage (MEC) Plans

Employers with 50 or more employees are required to provide their full-time workers with access to Minimum Essential Coverage (MEC) under the Affordable Care Act (ACA). The mandate is intended to ensure that employees have the opportunity to enroll in an employer-sponsored plan that is both affordable AND comprehensive.

ebso-minimum-essential-coverageWhen the Affordable Care Act officially became law in 2010, applicable larger employers (ALEs) quickly began looking for ways to comply with Minimum Essential Coverage (MEC) requirements. MEC plans were created to gives employer an option that was both affordable and in compliance.

The government has established two tests to determine if MEC requirements are met:

Test One: Minimum Value – To pass this test, at least 60% of medical costs must be paid by the plan, based on the average costs for the standard population. This calculation can be tricky when applied to complex self-funded plans, and a safe harbor checklist is available for plans to use to aid the process. In most self-funded cases, however, this test is easily passed.

Test Two: Affordability – Affordability is determined by examining each unique employee and comparing coverage payments against employee wages earned. Employee premiums cannot exceed 9.5% of their household income or the plan is deemed not affordable. For employees offered multiple plan options by the employer, the calculation is based on the least costly plan option available and not the option selected by the employee, as they may elect higher cost coverage.

With the introduction of MEC plans, many workers who were previously without access to employer sponsored coverage are now able to enjoy preventive care programs and additional benefits that encourage health and wellness. MEC plans also enable ALEs to avoid costly tax penalties associated with the ACA. MEC plans can vary in cost from as little as $400 per employee, per year, depending on the levels of coverage the employer chooses to provide.

Many of the benefits typically included in MEC plans are as follows:

  • Doctor visits
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Prescription drugs
  • Laboratory services
  • Preventive and wellness services
  • Mental health services
  • Habilitative services (to help a person keep, learn or improve skills needed in daily living)
  • Dental care

A Word of Caution For Employers and Enrollees

When enrolling in any health coverage, it is very common for individuals to think they will have a full medical plan. This is not the case with a Minimum Essential Coverage (MEC) plan. While MEC plans absolve covered employees of the individual mandate and employers from the sledge-hammer penalty, they do not include full medical benefits such as hospitalization. In-hospital care is a part of what the ACA describes as Essential Health Benefits, which are required of Minimum Value Plans, however Minimum Essential Coverage plans and Minimum Value Plans (MVPs) are not the same.

While MEC plans provide great preventative care, one of the reasons that MEC plans are so affordable is that while they include a minimum of the 67 preventive benefits required by the ACA, most do not cover a hospital stay or an in-hospital procedure being done. As long as this is communicated clearly and understood fully by enrollees, MEC plans are great solutions for employers who do not currently offer coverage.

A number of Minimum Essential Coverage (MEC) plans are now available. Contact EBSO for more information as you begin your 2016 business planning.

Level Funding Lets Your Plan Retain The Savings

levelfundingAfter integrating a new health plan strategy and reducing overall claim costs, you discover that the company managing your health plan has kept half of your savings!

While it’s always encouraging to achieve a savings, especially when it’s so difficult to trim health care costs to any significant extent, it’s pretty disappointing to see half of the windfall disappear.

EBSO offers a Level Funded alternative that truly gives qualifying employer groups the best of all worlds. Monthly costs are established in advance, much like a premium for a fully insured plan. In contrast to a fully insured plan, however, your plan retains up to 100% of the savings when claims are lower than anticipated levels. Best of all, ongoing claims data is provided to keep you aware of how your healthcare dollars are being spent.

Avoid Surprises

Employers love the Level Funding approach because overall plan costs are predictable. Monthly costs are established in advance and consist of two parts; one part including fixed costs such as stop loss insurance premiums and administrative fees – the other part including an estimate of claims expenses. If claim costs are greater than anticipated during any one month, stop loss insurance covers the excess expense, limiting risk and capping the employer’s overall financial exposure.

Other benefits of Level Funding include plan design flexibility, access to claims data and ACA compliance. Since a Level Funded plan is a hybrid plan, your organization will not be subject to the Health Insurance Tax (HIT), associated with the Affordable Care Act (ACA).

Enjoy Greater Flexibility

Because a Level Funded plan is a partially self-funded plan, you gain the flexibility needed to tailor plan designs that meet your organization’s benefit objectives and the needs of your employees. As monthly reports identify factors impacting claim costs, plan designs can be modified and strategies such as employee education, wellness and preventive care can be implemented.

Look Before You Leap

While Level Funding is certainly an option to consider, all Third Party Administrators and all administrative agreements are not alike. The administrative services agreement should identify not only the services to be provided but also how any savings that may result from lower claim costs will be allocated. EBSO has built a long-standing reputation for cost transparency among clients and brokers.

Whether you choose EBSO for Level Funding or another self-funded option, you’ll work with an experienced partner known throughout the industry for helping employer groups manage the risks and future costs of employee health care.