In an effort to revive an important promise made to the American people prior to his election in 2016, President Trump recently signed 3 executive orders aimed at bringing the cost of prescription drugs more in line with what consumers in other countries pay. One order, directed at Medicare Part D plans, would require that PBMs pass discounts or manufacturer’s rebates directly to consumers rather than to their health plans.
A second order would permit individuals to import lower cost drugs from other countries, including Canada, and re-import insulin. The third order is intended to provide uninsured or underinsured individuals with life-saving medications such as insulin and epinephrine. It is doubtful that these executive orders will yield any immediate relief to consumers since legislative bodies and federal agencies will need to follow government protocols in order to put the orders into practice.
Inflation-adjusted limits for contributions to health savings accounts and high deductible health plans for the coming year were just announced. According to the announcement, eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSA in 2021, an increase of $50 from 2020. Those with family coverage will be able to contribute $7,200 in 2021 and those who are 55 years of age or older will be able to make an additional “catch-up” contribution of $1,000 to their HSA.
While minimum deductibles for HDHPs will remain the same for 2021 plan years at $1,400 for self-only coverage and $2,800 for family coverage, the maximum limits for out-of-pocket expenses will increase to $7,000 for individual coverage and $14,000 for family coverage.
America’s Health Insurance Plans, a national trade association whose member companies provide insurance coverage and health-related services to consumers and businesses, has released a study revealing the breakdown of today’s healthcare premium dollar, as follows:
- 23.3 cents of every premium dollar is used for prescription drugs
- 22.2 cents cover the cost of physician services
- 20.2 cents are used to pay for office and clinic visits
- 16.1 cents are used to cover hospital stays
- 13.5 cents are applied to care management, administrative expenses, business expenses, provider management and other fees
- 4.7 cents of every dollar go to taxes, and…
AHIP reports that on average, 2.3 cents of every premium dollar make it to the bottom line as net profit.
As reported by The Phia Group on March 29, 2019, a federal judge in Washington, D.C. ruled that the new Department of Labor rules expanding the marketing of Association Health Plans (AHPs) violate existing law. TPAs, brokers and employers see this as a significant blow to AHPs, especially new self-funded AHPs that have been preparing to launch on April 1, 2019.
Federal Judge John Bates sided with several states that took issue with the DOL’s final rules several months ago, arguing that a broad availability of AHPs is not within the scope of ERISA, which defines an employer as having at least two or more employees. The final rules were going to allow small employers, including working business owners (employers of one), to join with others based on either common geography or industry affiliation to form an AHP. It appears that the Judge’s ruling means that both criteria, geography and industry affiliation, must be met and that qualifying employers must have a minimum of two employees.
Thus far, we are not aware of any response filed by the DOL. We will continue to monitor reactions to the ruling and other developments regarding Association Health Plans.
While plenty of folks talk about reference based pricing as though it’s a fad that has come and gone, we’re finding more interest from employers all the time. This may be because many like to brand it as another form of disruption, but regardless of how you brand it, reference based pricing is becoming a more important part of our value proposition all the time. It’s becoming more widespread because it enables a self-funded plan to limit costs to an extent that few other measures, if any, can match. This is primarily because by negotiating in advance with hospitals to accept a schedule of fixed payments for certain healthcare services, carrier-sponsored provider networks can be bypassed.
The fact is that while reference based pricing may be considered disruptive by many hospitals, it works. It is a transparent approach that can save a lot of money for self-funded health plans and their members. And finding ways to help self-funded employer plans provide high quality, high value healthcare to their members is our most important job.
In October, a bipartisan group of senators introduced a bill that would ease the ACA reporting mandates for employer-sponsored health plans. The bill would roll back the reporting requirements of Section 6056 and replace them with a voluntary reporting system. The bill would also allow payers to transmit employee notices electronically rather than having to send paper statements by mail.
While self-funded health plans must now comply with Sections 6055 and 6056, it is not yet clear how the bill would affect Section 6055 requirements. Senators Rob Portman of Ohio and Mark Warner of Virginia, sponsors of the bill, say their proposal would give the government a more effective way of applying premium tax credits to consumers who purchase insurance through an Exchange, something the administration has been trying to accomplish.
We often hear of professional athletes succeeding under pressure by staying “in the moment” and remaining focused on the things that are within their control. This challenge can be applied to the uncomfortable position all of us find ourselves in today – somewhere between complying with existing laws and anticipating the unknowns coming from Washington.
While the IRS has relaxed enforcement of the individual mandate and acknowledged problems in the ACA reporting system, it has confirmed that an applicable large employer is still subject to an employer shared responsibility payment if it fails to offer coverage to 95% of its full-time employees. We continue to help large employers offer minimum essential coverage to avoid penalties, when appropriate, and track offers of coverage to comply with reporting requirements on IRS forms 1094 and 1095.
Other matters remain up in the air as well, including the so-called Cadillac tax on high-cost health plans and any changes in maximum contributions that may be made to HSAs, which would require legislative action. While any significant ACA repeal, replace or repair efforts appear to be overshadowed by the Administration’s interest in tax reform, we continue to monitor developments in healthcare reform and keep our clients and partners informed. It’s our way of doing what we can and remaining “in the moment.”
The State of Benefits report from BenefitFocus shows that workers under the age of 26 are investing 20% more of their salary in HSAs than other generations. This is certainly due to the fact that nearly half have elected to enroll in high deductible health plans in 2017. While PPO plans remain very popular, especially among older adults, employee contributions to HSAs and FSAs are rising. A growing interest in savings among young people is another factor contributing to the increased popularity of HSAs.
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.
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.