How Reconciliation Can Change ACA

acaWhile it will take support from Republicans and Democrats to fully replace Obamacare, a simple majority of Republican senators could repeal parts of the law through reconciliation. Here are just a few:

  • The individual and employer mandates can be reduced to zero
  • The Cadillac tax, currently delayed to 2020, could be repealed
  • Individual subsidies to purchase exchange coverage can be reduced to zero

Another welcome step requiring only a simple majority in the Senate would be increasing the limits on FSA and HSA contributions.

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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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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.

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Self-Funding: A Solution to Rising Healthcare Costs

Nearly two-thirds of employers have made the switch, discovering the many benefits of a self-funded healthcare plan. With Obamacare driving healthcare cost increases, employers need to know they have options in providing quality healthcare benefits – with options that can increase flexibility and expand the services offered, all while offering an opportunity to reduce administrative costs.

Self-funded plans allow your organization to keep any savings that may result from lower claim costs, all while giving you access to better claims reporting and data. As a leading third party administrator, EBSO can help design and administer a self insured plan that works best for your company and your employees and complies with healthcare reform.

Knowing if self-funding is right for your organization can be difficult, but this short video will help you better understand how self-funding works. Let EBSO get you started on the path to a better healthcare plan today!

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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.