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The folks at KFF (a nonprofit organization based in San Francisco, CA) have done a phenomenal job of collecting and posting over 300 FAQs pertaining to the 6th annual upcoming Affordable Care Act (ACA/ObamaCare) open enrollment period. New questions and answers have been added expanding upon the already rich library of detail pertaining to the ACA and specifically open enrollment. This set of FAQs are searchable and cover not only ACA but the health insurance marketplace in general. The details provided will be a very valuable resource to any consumer, navigator, broker and all those that have a vested interest in the marketplace.
Search the FAQs
The database of information covers topics including eligibility, requirements and general information about State ACA marketplaces. The collection also addresses the 2019 repeal of the individual mandate penalty and offers a totally new section on short-term health insurance policies.
Site visitors will be able to obtain information on situations that affect all people from young adults to retirees. Immigrant situations and folks with job-based plans will also find information to help them make the important decisions needed in this next enrollment period. We were pleased to also see that over 150 of the FAQ’s are also available in Spanish.
Please note that open enrollment for the Federal and most state marketplaces begins on Thursday November 1, 2018.
The KFF website also provides many other resources including:
As always, we are here to help you navigate these waters. Many of your questions will be answered by searching through this valuable database. However, each situation is unique. Please contact us if you would like to discuss the upcoming enrollment period or any topic related to your business’ health care solution.
Association Health Plan Updates
The Internal Revenue Service (IRS) has confirmed that an employer providing coverage through an association health plan (AHP) has no relevance to the Employer Mandate. In other words, the Employer does not have to comply with the Employer Mandate requirements simply because they provide coverage through an AHP. This change is part of the recently revised IRS frequently asked questions (FAQ) information pertaining to the Employer Mandate. This means specifically, only employers with 50 or more full-time equivalent employees in the prior calendar year will be subject to the Employer Mandate.
As defined by the IRS – an AHP is an ALE that is subject to the employer shared responsibility provisions depends on the number of full-time employees (and full-time equivalent employees) the member employer employed in the prior calendar year and is unrelated to whether the employer offers coverage through an AHP.
The Department of Labor (DOL) has also issued an ERISA Compliance Assistance guide for employers who wish to participate in an AHP.
AHPs under these new rules are effective in the marketplace as of September 1, 2018. However, insurance carriers have not been quick to offer AHPs. Most of the carriers have indicated they want to review the new rules before deciding.
Please see Question #18 from the revised IRS FAQ or contact us for more detail.
Individual Mandate Update
The Individual Mandate penalty under federal law will become $0 starting with the 2019 tax year. That means it’ s still on the books for this 2018. The maximum annualized penalty is the greater of $695 or 2.5% of income. For those that must pay the 2.5% penalty, it is capped at the national average bronze plan premium. The IRS has released Rev. Proc. 2018-43 which indicates this average is $283 per month per individual ($3,396 annualized) for 2018. The penalty applies up to five family members. The Individual Mandate penalty is applied on a monthly basis for those who were uninsured for only part of the year and where no exemption can be claimed.
Please contact us for more details on either of these two new changes.
In a recently updated article from the Kaiser Family Foundation, the authors continue to monitor insurer’s Affordable Care Act (ACA/ObamaCare) marketplace filings by State. These filings detail premiums the marketplace insurers will be charging in the areas where they plan to participate in 2019. The State or the Federal Government reviews each of these premium rates to ensure that they are both accurate and justifiable before they go into effect. There are different criteria used by State and each State varies on how much information they release.
The KFF analysis compares and contrasts various levels (bronze, silver and gold) of the ACA across the 50 States and the District of Columbia. The authors will continue to update this report as additional States release or update their reviews. It is likely that the information will change over the remainder of 2018.
The authors note:
“The second lowest-cost silver plan serves as the benchmark for premium tax credits (which subsidize premiums for low and modest income exchange enrollees) and is the only plan that offers reduced cost sharing for lower-income enrollees. About 63% of marketplace enrollees are in silver plans this year, and 29% are enrolled in bronze plans.”
The insurers that participate in the various States are mostly taking into account the repeal of the individual mandate (associated with the tax cut in December 2017) that goes into effect this coming year. It is also anticipated that there will be an increase in non-compliant, short-term, limited duration health plan (STDL). Without the penalty, it is expected that relatively healthy individuals will leave the regulated insurance marketplace and thereby cause an increase in the 2019 premiums. It is unsure if all the providers have fully included this information in their 2019 estimates.
The authors also include:
“Additionally, the Trump administration decision to stop making cost-sharing reduction payments to insurers had an upward effect on 2018 premiums, but some insurers may adjust premiums in 2019 up or down if their 2018 adjustments proved to be inaccurate. Some insurers may be changing which plans are subject to increased premiums to compensate for the loss of cost-sharing reduction payments. In 2018 many insurers increased premiums just on silver marketplace plans – which are the only plans in which consumers can receive cost-sharing reductions — but a small number of states directed insurers to increase individual market premiums across the board.”
How was the data collected?
The authors collected data from health insure filings to the various States released by the State’s Insurance Departments. The submissions were public and available for the States they investigated. The data focuses on major cities and larger communities where insurance providers participate. Some of the plans may not be available in all cities or counties within the individual rating areas. Rating areas are defined as groups of adjacent counties and the analysis chose a represented sample within each area.
As always, if you have any questions or comments with what this means for your business, please contact us.
Source: Kaiser Family Foundation
HRB Solutions has joined the Lake Zurich, IL Chamber of Commerce and we are having our Ribbon Cutting Ceremony tomorrow. We don’t like to use this space to talk about us but we just could not help it this time! If you happen to be anywhere near our offices, please plan to stop by and enjoy some great conversation, meet some wonderful people and enjoy tasty food supplied by Panara Bread!
Contact us for more details – hope to see you at the event!
Details are being released regarding the number of individuals that signed up for medical coverage under the Affordable Care Act (ACA) Marketplace. The numbers show that there is an overall reduction of 3.7% in 2018 over 2017. This a combination of a slight increase (0.2%) in the state-based marketplace offset by a reduction at Healthcare.gov. There were 15 states that showed an increase over 2017 with the majority of these being state-based services.
This is a larger enrollment than many expected because funding for outreach informing those potentially in need of the program was dramatically reduced and the enrollment period was cut in half. There were also a few political factors including the government’s termination of the cost-sharing provision and uncertainty whether the law would be in effect at all.
Outreach, as outlined in the ACA, was provide through Navigator programs. These programs helped inform and guide potential enrollees in the 34 states using Healthcare.gov about enrollment periods and what they specifically had to do to comply with the ACA. In august of last year, the Center for Medicare and Medicaid Services significantly reduced their spending on Navigator. Because it was so close to the actual enrollment period, many thought that it would have a major impact on enrollment in general.
The elimination of the cost-sharing provision for insurers prior to the open enrollment period led to an increase in the premiums that many would have to pay. It also increased the premium subsidies for some of those enrolled that qualified leading to reductions in what they had to pay.
In Illinois, 334, 979 enrolled this year down 6% from the 356,403 that enrolled in 2017.
There are still many changes on the horizon with regards to the ACA and its components. While Congress did not fully repeal and replace the ACA, they did remove the individual mandate as part of the most recent tax bill. The full impact of this will be realized over the next few months and years.
We will continue to monitor progress in the provisions of the ACA and how it will impact your business. Please contact us if you would like to discuss how this changing environment will impact your business and what steps you can take to make sure that you are compliant while still saving as much on the expense side as possible.
Sources for this blog include:
Kaiser Family Foundation
What is happening in Health Care Insurance?
There is always something happening in the Health Care Insurance Industry. We do our best to keep you informed with these Blog posts. What follows are a few of the happenings in Health Care this month along with a few links that are of real interest to us and maybe you as well. Please feel free to contact us if you have any questions or comments about these highlights.
This is for groups of 1-50 and follows recent announcements by the Centers for Medicare and Medicaid Services (CMS)
Beginning June 5th BCBS will start collecting data related to the Medicare Secondary Payer information required by the Centers for Medicare and Medicaid Services. You will be impacted if you are fully insured and ASO employer groups with 1-150 employees and have not completed the 2018 Employer Acknowledgment form prior to June 5th.
- For calendar year 2019, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,500.
- For calendar year 2019, the annual limitation on deductions under for an individual with family coverage under a high deductible health plan is $7,000.
- High deductible health plan. For calendar year 2019, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,750 for self-only coverage or $13,500 for family coverage.
Type 2018 2019
HDHP Min.Deductible – Single $1,350 $1,350
HDHP Min. Deductible – Family $2,700 $2,700
HDHP Max. Out-of-Pocket – Single $6,650 $6,750
HDHP Max. Out-of-Pocket – Family $13,300 $13,500
HSA Contribution Limit – Single $3,450 $3,500
HSA Contribution Limit – Family $6,900 $7,000
HSA Catch-Up Contribution – 55+ $1,000 $1,000
Chart Source: Flex
The most recent tax cut approved by the US Congress late last year know as the Tax Cuts and Jobs Act removed the federal penalty for not having health insurance – the individual mandate. Since then, officials from many states have been concerned that the elimination of the penalty might have a destabilizing impact on their local health insurance marketplaces. To combat this some States have and others are looking at instituting their own individual mandate programs.
States with Mandates:
Massachusetts was the first state and actually had an individual mandate in place before the Affordable Care Act when into law. The penalty amount varies by income with a maximum penalty of just under $1,500 per year.
New Jersey recently passed a new law which goes into effect in 2019. Their penalty is based on per adult+child amount (695/347.50) or 2.5% of household income whichever is the greater. The total is capped at the premiums of the lowest rate plan in their marketplace
Vermont also passed a new law, but it will not go into effect until 2020. The details of this new law are not known yet as the State Legislature will be working out the details durin 2019.
Several states are considering instituting some form of the mandate. These include California, Connecticut, Maryland, Hawaii, Rode Island, Washington, Minnesota and the District of Columbia. Other states are unknown at this time but all the signs point to additional states climbing on board in the very near future.
If you have any questions or would like to discuss this impact on your business, please do not hesitate to contact us. Please also stay tuned to our blog posts and we will update you as soon as we know of changes in this changing landscape.
In a recent executive order, the Trump Administration has proposed new regulations to encourage a much wider use of short-term health plans. These plans have limited duration and are generally a cheaper alternative to individual market, ACA compliant plans. However, cheaper does not always translate to better. A recent analysis from the Kaiser Family Foundation found that these plans have gaps and offer less or limited services.
The Foundation’s analysis examined specific short-term insurance products that are available in 45 states and the District of Columbia through two insurance partners – eHealth or Agile Health Insurance.
In general, the Kaiser Foundation analysis found:
- 43 percent do not cover mental health services;
- 62 percent do not cover substance abuse treatment;
- 71 percent do not cover outpatient prescription drugs; and
- None of the plans cover maternity care.
The study found that these short-term health plans have premiums that are up to 20% lower than the lowest ACA compliant individual marketplace plans (bronze) within each of the states analyzed.
There are concerns that healthier people may move to these shorter, cheaper plans leaving those with more complicated health conditions in the ACA plans. This would have the knock-on effect of raising the premiums for those that remain in the ACA plans. While qualified low income people may be able to take advantage of tax credits to help offset the higher premiums, most middle-income families would not be entitled to any tax relief. This would most likely result in higher premiums for this group.
It is also expected that the repeal of the individual mandate that was voted in as a rider on the 2017 Holiday Tax Cut will boost enrollment in these short-term plans as the penalty will no longer apply.
There is a tremendous amount of activity in the marketplace these days where a change in one component of health care has huge impacts on other areas. Please contact us if you have any questions about this change. We will help walk you through the changes and what impact it may have on your business.
Additional Resources on Short-term Health Care Plans:
Kaiser Family Foundation
The Cadillac Tax imposes a 40% excise tax on coverage in excess of certain thresholds. When originally enacted with a 2018 effective date, the thresholds were $10,200 for self-only and $27,500 for family coverage. The tax has since been delayed twice (including this delay), and the thresholds will be updated prior to the new Jan. 1, 2022 effective date.
Many employers, unions, insurers and industry groups have opposed the tax based on concerns around administrative and financial burdens for employers and adverse outcomes for employees. Cigna is a founding member and on the executive committee of The Alliance to Fight the 40, a coalition of public and private sector stakeholders that seeks a full repeal of the Cadillac Tax. To learn more about these efforts, visit www.fightthe40.com.
Health Insurance Industry Fee (a.k.a. Health Insurer Tax)
The short-term spending bill also suspends the Health Insurance Industry Fee for 2019. This fee began in 2014 and only affects insured health plans. It was previously suspended for 2017 but went back into effect on Jan. 1, 2018.
If you have any questions or would like to find out more about how these changes impact your business, please contact us.
Observations on the New Tax Law
In our continuing effort to scan the business environment and surface important information (such as the new tax law) that we feel our clients and site visitors may need to help them make better decisions regarding their Employee Benefits Programs, we discovered this document from Guardian Life Insurance Company.
The Guardian document authored by Vice President, Government Affairs Jonathan Renfrew outlines a few key changes related to the Tax Cuts and Jobs Act of 2017. In case that title is not familiar to you, it is the official name of the recent tax cut voted in by the US Congress in December 2017 that went into effect January 1, 2018. Mr. Renfrew does a nice job of outlining a few of the major employee benefits changes that have been brought about because of the passing of this new law.
Here is a section from that document which we feel directly impacts many of our clients:
Pass-Through Tax Provisions:
About 75% of small business employers organize as pass-through entities, according to the National Federation of Independent Businesses (NFIB). The new law includes a deduction for owners of sole proprietorships, partnerships, and S-corporations generally equal to 20% of qualified business income, subject to additional exceptions. For a service business, the deduction phases out for taxpayers with income above $157,000 or $315,000 for joint returns.
Major Employee Benefit Changes:
- The new law would generally disallow any deduction for entertainment, amusement, recreation activities, or facilities, even if the expenses are directly related to or associated with the active conduct of trade or business. This includes meals, food, or beverages to the extent the expenses are related to entertainment, amusement or recreation.
- Deductions for qualified transportation fringe benefits are also generally disallowed. • There are new restrictions on the deduction of employee achievement awards.
- The deduction for qualified moving expenses and reimbursements is repealed through the end of 2025.
- The law creates a new tax credit for employers (subject to certain rules) that pay employees while on family and medical leave covered under the Family and Medical Leave Act (FMLA).
- Employer-sponsored dependent care, flexible spending arrangements, and tuition reimbursement programs remain unchanged under the new law.
The document also discusses Retirement and Educational Savings, Estate and Gift Tax Exclusion and Non-Qualified Deferred Compensation. The later has no impact as no changes were made in the new tax law in this component.
In this document, Mr. Renfrew also makes some key observations. Amongst these is the suggestion that right now might be the right time to take another look at your business’ overall benefit portfolio. We could not agree more with Mr. Renfrew. With many of the benefits business have enjoyed for many years going away and being exchanged with new provisions such as percentage rate deductions of qualified business income, there may be some opportunity to fine tune your employee benefit programs. As noted in the document, these include some of the more traditional benefits you are currently providing or are contemplating to provide in the future in order to retain or attract employees.
As you filter through the elements of the new law and work internally with your HR team to seek potential enhancements or cost savings to your benefits package, we here at HRB Solutions will work with you to outline a new plan that makes sense under the new tax law structure. It might mean a tweak to your existing configuration or perhaps it might make sense to move to a plan that is comprehensive, able to grow with your business and allows for the introduction of just the right mix of benefits for your industry and your employee retention.
There are new days ahead as we all begin to wrap our collective heads around the new tax law and what it means specifically for your business. Please contact us to start the process of determining if a change is needed to your Employee Benefits Program while we are still early in the new tax year. If you are seeking tax advice, we recommend that you contact your Tax Advisor and Attorney, our focus is on your benefits portfolio.
Here are a few additional resources that may also be of help to you:
Summary on Wikipedia