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That’s the date by which average spending for people with employer-sponsored health insurance is sufficient to satisfy the average deductible, the amount they must pay out-of-pocket for most health care services before their insurance plan kicks in to help pay the bills, KFF analysts explain in a new analysis.
If you have not heard of Deductible Relief Day before, that is because we just invented it. But the issue it illuminates is real and represents a growing cost to consumers as deductibles have risen in recent years and become an increasingly prominent feature of employer health plans.
The analysis documents that:
Deductibles are rising. In 2009, the average deductible was $533 for a single person. In 2018, it was $1,350, an increase of over 150 percent.
More people have to pay them. In 2018, about 85 percent of covered workers were enrolled in an employer plan with a deductible, compared to 59 percent a decade earlier.
People are paying more. Average enrollee spending on deductibles has more than tripled from $130 in 2007 to $411 in 2017. Overall, out-of-pocket health spending among people with employer coverage has gone up from $493 in 2007 to $792 in 2017, with much of the increase taking the form of higher spending on deductibles.
As deductibles rise and become more common, it takes longer for people with employer coverage to satisfy their deductibles each year and begin benefiting more fully from the financial protection of their health plan. May 19 is Deductible Relief Day this year, but ten years ago, when deductibles were smaller and less prevalent, it fell on March 18, 2009. While health care costs have increased over time, deductibles have increased even more.
Since some enrollees do not have enough savings or discretionary income to be able to pay a typical deductible, these costs, which tend to be concentrated when an enrollee uses services, can lead people to delay care or struggle to pay medical bills. They also often face additional out-of-pocket costs even after meeting their deductible. Such costs include copays, a fixed amount patients must pay when visiting the doctor or receiving a medical service, and coinsurance, the portion of a medical bill the consumer is required to pay while the insurer pays the rest.
The Internal Revenue Services (IRS) is continuing to send 226-J letters to employers for which the agency believes an Employer Mandate penalty is due. Currently, these notices are being sent to employers for penalties that apply to the 2016 calendar year.
marketplace insurers denied nearly one out of every five claims (19%) submitted
for in-network services in 2017, and enrollees only appeal a tiny share (0.5%)
of those denied claims, a KFF analysis of
recently released claims data finds.
analysis finds a huge variation across insurers, with average denial rates as
low as 1 percent and as high as 45 percent. Denial rates also vary across
states, though individual insurers in the same state also show wide variation.
For instance, Florida’s six insurers denied 11 percent of claims, though the
denial rates among the six insurers reporting data in the state range from 2
percent to 32 percent.
Affordable Care Act requires insurers to report data about claims denials and
appeals and other metrics to encourage transparency about how insurance
coverage works in practice for enrollees. The analysis relies on data files
released by the Centers for Medicare and Medicaid Services and compiled by KFF.
It examines nearly 230 million claims submitted to 130 insurers selling
individual market major medical health plans through healthcare.gov in
The CMS data do not provide information about why a claim was denied, making it difficult to assess why denial rates vary so much across insurers. Reasons can include both administrative issues such as improperly submitted or duplicative claims and coverage issues such as denials for services that the insurer determines are not medically necessary. Transparency data may well reflect other inconsistencies in how insurers report data, such as for duplicate claims or partially denied claims. Consumers rarely appeal denied claims. In 2017, for example, the data show consumers filed appeals on about 200,000 of more than 42 million denied claims. On average, appeals resulted in a reversal of the initial denial in 14 percent of cases, though with wide variations among individual insurers, which had reversal rates ranging from 1 percent to 88 percent.
The analysis also reviews planned changes to the ACA transparency data reporting, as well as data reporting under other programs, that could address some of the current data limitations.
Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.
This does not apply to all employers.
Please read full article below for details.
that time of year where applicable large employers (ALEs) and certain other
employers need to focus on completing their reporting obligations required
under the Affordable Care Act (ACA). Here are some helpful tips and reminders.
The reporting is used by the Internal Revenue
Service (IRS) for three purposes:
Help enforce the Individual Mandate which was still in
place for the 2018 calendar year.
the Employer Mandate.
eligibility for subsidies on the Health Insurance Marketplace.
the reporting is sometimes done by the insurance carrier, employers need to be
cognizant of their reporting obligations. Employers
with fewer than 50
employees (based on the average number of employees in 2017) are
generally exempt from the reporting requirements for the 2018 reporting year.
The exception is for those employers with fewer than 50 employees who offered a
self-insured medical plan. In this case, the employer must complete Form 1095-B
for every covered employee and their covered dependents. Additionally, one copy
of Form 1094-B must be completed for the organization.
Employers with 50 or more employees (based on the average number of employees in 2017) are
subject to the reporting requirements for the 2018 reporting year. In general,
the employer must complete Form 1095-C for every full-time employee (those
working 30 hours per week or 130 hours per month) with information pertaining
to the offer of coverage. Section III of Form 1095 -C only needs to be
completed by employers with 50 or more employees who offer a self-insured
medical plan. Additionally, one copy of Form 1094-C must be completed for the
There are also three deadlines to be aware of:
of the forms must be provided to employees. Under normal circumstances, copies
of the forms must be provided to employees by January 31st,
however, the IRS has issued an extension and the forms must now be provided to
employees by March 4th.
If filing the reporting to the IRS manually, the forms
must be submitted by February 28th.
If filing the reporting to the IRS electronically, the
forms must be submitted by April 1st. Employers who have to submit 250 or more
forms must file electronically.
has put together a free, 60-minute webinar to provide a thorough overview of
the reporting requirements to help ease some of the confusion that many
employers feel this time year.
A new interactive tool from KFF estimates total household health spending for individuals and families in the U.S., including costs that are often less visible to consumers.
Users can generate scenarios based on family size, income level, insurance source, and health status. In addition to estimating direct costs like deductibles and copayments, the tool highlights indirect spending on health care, such as state and federal taxes paid to fund public programs like Medicare and Medicaid, as well as employer contributions toward health insurance premiums and Medicare payroll taxes.
The typical non-elderly family in the U.S. spends $8,200 per year, or 11% of their income, on health care – not including employer contributions – but this can vary substantially by income, type of insurance, and health status.
For example, a person with employer coverage earning $50,000 annually spends on average $5,250, or roughly 11% of her income, on health care. This includes $800 per year in out-of-pocket costs, a $1,400 premium contribution, and $3,050 in state and federal taxes to fund health programs.
Her employer contributes even more, including an additional $5,500 toward her annual premium and $750 in Medicare payroll tax. Economists generally believe that employer spending on health benefits and payroll taxes depresses wages, but workers do not directly observe that cost.
calculator also demonstrates the variability of health spending by insurance
source. If the aforementioned single person earning $50,000 annually obtains
coverage on the individual market instead of through her employer, she can
expect to spend 20% of her income on health care.
Household health spending also increases significantly when health status
worsens, largely due to the additional out-of-pocket costs associated with
greater use of health care services. A family of four in good health with
employer-sponsored coverage and earning $100,000 per year spends about 12% of
their income on health care. If at least one member of the family reports worse
health, household health spending increases to 15% of their income.
The Household Health Spending Calculator is available on the Peterson-Kaiser Health System Tracker, a
partnership between the Peterson Center on Healthcare and KFF that monitors the
U.S. health system’s performance on key quality and cost measures.
the need for trusted information on national health issues, the
Kaiser Family Foundation is a nonprofit organization based in San Francisco,
Recently, the IRS issued Revenue Procedure 2018-34, which increases the affordability threshold for the Affordable Care Act (ACA) employer mandate pay or play purposes to 9.86% for plan years beginning in 2019. This is a bit more of a jump than we’ve seen in recent years. These are the rates since 2015:
This latest jump is definitely noteworthy, but what does it all really mean?
The first thing we should mention here is that depending on what happens in the near future in terms of the government offering or regulating health care, all of this may become a moot point really quickly. But for now, the ACA is still intact and operating strongly in many parts of the country. So for the purposes of simplification, we’re going to break this all down as if the ACA is indeed here to stay. One detail that’s important to note here is that all this applies only to businesses with 50 or more employees.
First, it’s important to understand what this percentage actually signifies and how it’s used as a guideline for employers. The percentage most simply breaks down to a measure of affordability. The whole premise of the ACA is that health care be within financial reach of the millions of Americans that need coverage. The percentage is actually used to determine whether or not the coverage offered by the employer is indeed affordable and can be obtained without having to sacrifice too much otherwise.
When determining the affordability of coverage, that number is used as a baseline. Using the newest number for 2019, the employer mandate states that the lowest priced self-only plan offered to full-time employees cannot exceed 9.86% of those employees’ household income. This sets a threshold so that theoretically any full-time employee working in the United States should be able to find adequate health care no matter where he or she works.
When trying to understand the jump for 2019 after operating within a narrower range of fluctuation for the first few years, there are many things that people could suggest to explain the difference. Some may tell you that the allowance for higher cost health care may reflect a necessary raise to cover money lost when the employee mandate to cover insurance was dropped. Others may tell you that it reflects the tax cut that so many people got this year and may cancel itself out depending on where you work and how much you made. Depending on where you turn, there are a number of explanations that will sound plausible and figures that may seem likely to be accurate.
The important thing to most people is the impact that they may feel from day to day. So to help illustrate that we’ll apply the 2018 and 2019 rates to a fictitious example. We’ll say that John Doe makes $100,000 annually in salary and is somehow the lowest paid person at his company. In 2018, his company had to make sure that its lowest price single person plan cost no more than $9,560. In 2019, that company can now has a plan that cost up to $9,860. So from 2018 to 2019, John Doe’s employer could offer a plan that costs over $300 more a year.
In reality, most people make less than half of that. As a result, the average impact of this number changing could mean about $150 a year, or about $12 a month. When you look at it this way, it doesn’t really have a profound impact upon single employees. However, for companies with hundreds or thousands of employees, the small number could translate to big savings when it’s all added up. In the end, this new affordability percentage could make things easier on many businesses, and for the most part isn’t going to take a huge toll on employees. The only thing left to really wonder about at this point is the fate of the ACA and the future of health care in our country. Once we have that all figured out, we’ll know if these numbers are even going to matter any more.
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.
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:
The Health Insurance Marketplace Calculator is a handy tool that will help consumers figure out the cost of various programs and offerings and will shortly be updated with 2019 premium data as soon as it is available.
There is also a general set of resources that is kept up-to-date with late breaking information.
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.
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.
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.