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Health care reform explained: What Does the Individual Mandate Mean to Me?

Susan — Tue, 21 May 2013 08:19:02 +0000

A key provision of the Affordable Care Act (ACA) is the “individual mandate,” which requires most individuals to purchase health insurance coverage or pay a penalty.

What is the individual mandate?

Beginning in 2014, the ACA requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty.

If you are covered under a health plan offered by your employer, or if you are currently covered by a government program such as Medicare, you can continue to be covered under those programs.

How much will the individual mandate penalty cost me?

The penalty for not obtaining acceptable health insurance coverage will be phased in over a three-year period. The amount of the penalty is the greater of two amounts—the “flat dollar amount” and “percentage of income amount.”

2014: The penalty will start at $95 per person or up to 1 percent of income.

2015: The penalty increases to $325 per person or up to 2 percent of income.

2016 and after: The penalty increases to $695 per person or up to 2.5 percent of income.

“Income” for this purpose is the taxpayer’s household income minus the taxpayer’s exemption (or exemptions for a married couple) and standard deductions.

Families will pay half the penalty amount for children.

The penalty is calculated on a monthly basis, and will be assessed for each month in which an individual goes without coverage. There is no penalty for a single lapse in coverage lasting less than three months in a year.

Who is exempt from the individual mandate?

You may be exempt from the penalty for not maintaining acceptable health insurance coverage if you:

Cannot afford coverage (that is, a required contribution for coverage would cost more than 8 percent of your household income)
Have income below the federal income tax filing threshold
Are a member of certain Indian tribes
Are given a hardship exemption by the Department of Health and Human Services (HHS)
Experience a gap in coverage for less than a continuous three-month period (may only be used once per year)
Qualify as a religious conscience objector
Are a member of a health care sharing ministry
Are incarcerated
Are not a citizen, national or lawfully present in the United States

According to the IRS, if you are eligible for an exemption for any one day of a month, you will be treated as exempt for the entire month.

How do I qualify for a hardship exemption?

The hardship exemption is available through the Exchanges for individuals who face a “hardship” that prevents them from obtaining coverage. According to HHS, each of the following situations will always qualify as a hardship for purposes of the hardship exemption:

Individuals who turn down coverage because the Exchange projects it will be unaffordable (even if his or her actual income for the year turns out to be higher, so that they are not eligible for the affordability exemption)
Certain individuals who are not required to file an income tax return but who technically fall outside the statutory exemption for those with household income below the filing threshold
Individuals who would be eligible for Medicaid under the expansion, but live in a state that chooses not to expand Medicaid eligibility

Individuals who face other unexpected personal or financial hardships may be eligible for a hardship exemption. This will be determined on a case-by-case basis.

How will the penalty be collected?

Starting in 2015, everyone who files a federal tax return for the previous year will be required to report the following:

Which members of their family (including themselves) are exempt from the individual mandate
Whether each person who is not exempt had insurance coverage for that year

You will owe a penalty for each non-exempt family member who doesn’t have coverage. If you and your spouse file a joint return, you are jointly liable for the penalties that apply to either or both of you.

If you are eligible to claim a dependent, you will be responsible for reporting and paying the penalty for that dependent.

Is there financial assistance available to help me purchase health insurance coverage?

Federal subsidies in the form of premium tax credits and cost-sharing reductions will be available to low-income individuals who purchase health insurance through an Exchange. The Exchanges are scheduled to be operational in 2014, with enrollment beginning Oct. 1, 2013.

To be eligible for a premium tax credit, a taxpayer:

Must generally have household income for the year between 100 percent and 400 percent of the federal poverty line (FPL) for the taxpayer’s family size
May not be claimed as a tax dependent of another taxpayer
Must file a joint return, if married
Must enroll in one or more qualified health plans through an Exchange
Cannot be eligible for minimum essential coverage (such as coverage under a government-sponsored program or an eligible employer-sponsored plan)

The amount of the premium tax credit available varies based on the individual’s household income.

Some individuals who are enrolled in coverage through an Exchange may also be eligible for cost-sharing reductions to help them pay their medical expenses. Only those individuals with household incomes of up to 250 percent of FPL are eligible.

There are several premium subsidy calculators available online that you can use to predict your health care costs, including this one.

If you have questions about the Individual Mandate please contact Insure NW or call 253-661-0054. We can help.

2014 Affordable Care Act Compliance Checklist

Susan — Tue, 14 May 2013 08:22:50 +0000

The Affordable Care Act (ACA), which was signed into law in March 2010, put in place comprehensive health coverage reforms with effective dates spread out over a period of four years and beyond. Some of ACA’s reforms are already in effect for employers and their group health plans, such as the Form W-2 reporting requirement for large employers and the requirement for non-grandfathered health plans to cover certain preventive care services without cost-sharing.

Many of ACA’s key reforms will become effective in 2014. Key ACA reforms that will affect employers in 2014 include health plan design changes, increased wellness program incentives, a new reinsurance fee, the employer “pay or play” mandate and additional reporting requirements. To prepare for this next phase of ACA reforms, employers should review upcoming requirements and make sure they have a compliance strategy in place.

This post provides a health care reform compliance checklist for 2014. Please contact Insure NW for assistance or if you have questions about changes that were required in previous years.

Plan Design Changes

Grandfathered Plan Status

A grandfathered plan is one that was in existence when health care reform was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered. Contact Insure NW if you have questions about changes you have made, or are considering making, to your plan.

If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2014 plan year. Grandfathered plans are exempt from some of ACA’s mandates. A grandfathered plan’s status will affect its compliance obligations from year to year.
If you move to a non-grandfathered plan, confirm that the plan has all of the additional patient rights and benefits required by ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.

Annual Limits

Effective for plan years beginning on or after Jan. 1, 2014, health plans are prohibited from placing annual limits on essential health benefits. (ACA’s prohibition on annual limits was phased in over a three-year period; restricted annual limits were permitted for plan years beginning before Jan. 1, 2014.)

Confirm that no annual limit will be placed on essential health benefits for the 2014 plan year and beyond.

Pre-existing Condition Exclusions

Effective for plan years beginning on or after Jan. 1, 2014, ACA prohibits health plans from imposing pre-existing condition exclusions (PCEs) on any enrollees. PCEs for enrollees under 19 years of age were eliminated by ACA for plan years beginning on or after Sept. 23, 2010.

Confirm that PCEs will not be imposed on any enrollees for the 2014 plan year and beyond.

Dependent Coverage to Age 26

Effective for plan years beginning on or after Sept. 23, 2010, ACA requires health plans that provide dependent coverage of children to make coverage available for adult children up to age 26. However, for plan years beginning before Jan. 1, 2014, grandfathered plans were not required to cover adult children under age 26 if they were eligible for other employer-sponsored group health coverage.

If your plan is grandfathered, confirm that it will make coverage available to adult children up to age 26 regardless of whether they are eligible for other employer-sponsored group health coverage, effective for the 2014 plan year and beyond.

Excessive Waiting Periods

Effective for plan years beginning on or after Jan. 1, 2014, a health plan may not impose a waiting period that exceeds 90 days. A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll in the plan becomes effective. Other conditions for eligibility are permissible, as long as they are not designed to avoid compliance with the 90-day waiting period limit.

If your plan has a waiting period for coverage, confirm that the waiting period is 90 days or less for the 2014 plan year and beyond.

Coverage for Clinical Trial Participants

Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans cannot terminate coverage because an individual chooses to participate in a clinical trial for cancer or other life-threatening diseases or deny coverage for routine care that would otherwise be provided just because an individual is enrolled in a clinical trial.

For the 2014 plan year and beyond, confirm that plan terms and operations will not discriminate against participants who participate in clinical trials.

Limits on Cost-sharing

Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost-sharing or out-of-pocket costs. Out-of-pocket expenses may not exceed the amount applicable to coverage related to HSAs. Deductibles may not exceed $2,000 (single coverage) or $4,000 (family coverage). These amounts are indexed for subsequent years.

Final guidance on this requirement provides that the deductible requirement will apply only to plans in the insured small group market, while the out-of-pocket cost limit will apply to all non-grandfathered health plans (including self-insured plans and plans and issuers in the large group market).

Review your plan’s limits on cost-sharing to make sure they comply with ACA’s limits on cost-sharing, effective for the 2014 plan year.

Comprehensive Benefits Package

Starting in 2014, insured plans in the individual and small group market must cover each of the essential benefits categories listed under ACA. This requirement does not apply to grandfathered plans, self-funded plans or insured plans in the large group market.

If you have an insured plan subject to ACA’s comprehensive benefits package mandate, confirm with the health insurance issuer that the plan will cover the essential health benefits package, effective for the 2014 plan year.

Wellness Program Incentives

Under current law, the reward under a health-contingent wellness program is limited to 20 percent of the cost coverage. Health-contingent wellness programs require individuals to satisfy a standard related to a health factor in order to obtain a reward (for example, not smoking, attaining certain results on biometric screenings or meeting exercise targets).

For 2014 plan years, the maximum permissible reward increases to 30 percent of the cost of coverage. In addition, proposed regulations would increase the maximum permissible reward to 50 percent of the cost of health coverage for programs designed to prevent or reduce tobacco use. More guidance is expected on the reforms for wellness programs.

For a health-contingent wellness program, confirm the program complies with current law and consider whether to increase the reward in 2014.

Reinsurance Fees

Health insurance issuers and self-funded group health plans must pay fees to a transitional reinsurance program for the first three years of health insurance exchange operation (2014-2016). The fees will be used to help stabilize premiums for coverage in the individual market. Fully insured plan sponsors do not have to pay the fee directly.

Certain types of coverage are excluded from the reinsurance fees, including HRAs that are integrated with major medical coverage, HSAs, health FSAs and coverage that consists solely of excepted benefits under HIPAA (such as stand-alone vision and dental coverage).

The reinsurance program’s fees will be based on a national contribution rate, which HHS will announce annually. For 2014, HHS has proposed a national contribution rate of $5.25 per month ($63 per year). The reinsurance fee is calculated by multiplying the average number of covered lives by the national contribution rate. Additional guidance is expected to be issued on this fee requirement.

Review the health coverage you provide to your employees to determine the plan(s) subject to the reinsurance fees.

Employer “Pay or Play” Mandate

Effective Jan. 1, 2014, employers with 50 or more employees (including full-time and full-time equivalent employees) that do not offer health coverage to their full-time employees (and dependents) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange. The sections of the health care reform law that contain the employer penalty requirements are known as the “shared responsibility” provisions.

The penalty amount for not offering health coverage is up to $2,000 annually for each full-time employee, excluding the first 30 employees. Under proposed IRS regulations, an employer would not be liable for this penalty if it offers coverage to all but 5 percent (or, if greater, five) of its full-time employees and dependents.
Employers who offer health coverage, but whose employees receive tax credits because the coverage is unaffordable or does not provide minimum value, will be subject to a fine of up to $3,000 annually for each full-time employee receiving a tax credit, with a maximum annual fine of $2,000 per full-time employee (excluding the first 30 employees).

The IRS provided safe harbor guidance for employers on determining who is considered a full-time employee (and must be offered coverage), along with how to measure a plan’s affordability and how penalties will apply when there is a waiting period for coverage. Guidance has also been issued on ways to determine a plan’s minimum value, including a minimum value calculator. The IRS also proposed transition relief for non-calendar year plans, or fiscal year plans.

Count the number of your employees to determine if you are a large employer subject to ACA’s shared responsibility provisions.
If you are a large employer, take the following additional steps:
- Determine whether health coverage is offered to substantially all full-time employees and dependents;
- Assess the affordability of the health coverage under one of the IRS’ affordability safe harbors (Form W-2, rate of pay or federal poverty line);
- Review whether the plan provides minimum value by using one of the three available methods (minimum value calculator, safe harbor checklists or actuarial certification); and
- If you have a fiscal year plan, determine if you qualify for the transition relief for plan years beginning in 2013.

Reporting of Coverage

Effective for 2014, ACA requires health insurance issuers and sponsors of self-insured plans that provide “minimum essential coverage” to report certain health coverage information to the IRS. A separate IRS reporting requirement will apply to large employers subject to ACA’s shared responsibility rules. Large employers will have to report information on the design and cost of their plans, applicable waiting periods and employees covered by the plan.

It is expected that the IRS will use this information to verify data related to ACA’s individual and employer mandates. The first information returns under these new reporting provisions will be due in 2015. Further guidance on these new reporting requirements is anticipated.

In 2015, provide required information regarding plan coverage and participation in accordance with information return requirements.

Please contact Insure NW for assistance or if you have questions about changes that were required in previous years.

Fitness First: Exercise and Healthy Eating

admin — Tue, 07 May 2013 08:54:27 +0000

In addition to trimming your waistline, regular exercise and healthy eating will help you feel better, think more clearly and live a longer, healthier life. Here are a few tips to get you started:

Start Sensibly

Don’t begin your exercise program too ambitiously. The key to success is to start slowly and increase the difficulty of your workouts as you become more fit. Those who overdo it often experience muscle soreness, become discouraged and quit. Rather than trying to run three miles on your first day, begin by running a mile and increasing your distance as your fitness level improves. Most importantly, remember that feeling dizzy or ill is your body’s way of telling you that you are working too hard. If this happens, take a break or stop your workout for the day.

At What Pace Should I Be Exercising?

Exercise should be fairly comfortable for you. Your pace should be just below the point at which you start to breathe quickly. Exercising at this pace produces two desirable results: it mobilizes fat burning and helps you develop endurance. This means that for maximum fat burning, longer, slower exercise is more beneficial than short, strenuous workouts. If you are reasonably fit and are exercising at the proper pace, you should burn between 400 and 600 calories per hour during any aerobic exercise. This includes riding a stationary bicycle, walking or running on a treadmill or using a stair climber.

Counting Calories Means Trimming the Fat

The media is full of varying reports on how to lose or maintain weight. It’s no wonder that you may be confused about what foods to eat and what to avoid. Most experts agree that eating a well-balanced diet low in fat is the key to losing weight. Since fat contains more than twice the calories of carbohydrates or protein, high-fat food equates to higher calories. While lowering your fat intake is important, it is also important to monitor your calorie intake. Your ideal caloric intake depends on your age, body size and level of activity. Generally, women ages 23 to 50 need an average of 2,000 calories per day, while men in the same age group require about 2,400 calories per day.

For more information about healthy eating, visit: www.choosemyplate.gov.

Workplace wellness programs are a great way to help employees learn about health and how to reduce their risk of future illness. If you have questions about setting up a Workplace Wellness Program contact Insure NW or call 253-661-0054. We can help.

Group Term Life Insurance Commonly Asked Questions

Susan — Tue, 30 Apr 2013 20:36:07 +0000

Many employers provide employees with employer paid group term life insurance benefits and/or allow employees to purchase group term life insurance benefits. This post answers many common questions regarding group term life insurance benefits.

Must the cost of employer paid group term life insurance be included in an employee’s gross income?

Pursuant to Internal Revenue Code Section 79, premiums paid by the employer for group term life insurance up to $50,000 are excludable from income. In addition, the employer may deduct the premiums paid as an ordinary and necessary business expense so long as the employer is neither directly nor indirectly the beneficiary under the policy.

May the employer purchase group term life insurance for its employees in excess of $50,000?

Yes. However, the “cost” of such excess coverage must be included in the employee’s gross income. “Cost” as used here does not refer to the premium paid by the employer but to the cost determined under the Uniform Premium Table contained in the IRS regulations. The “cost” of the coverage added to an employee’s gross income is commonly referred to as “imputed income.”

Example
A 32-year-old employee is covered by an employee benefit plan that provides $60,000 of employer-paid group term life insurance. Using Table I, we’ll calculate the “cost” to be added to the employee’s annual gross income.

Note: Employees will often have imputed income when employee-pay-all optional life plans include a single composite rate that covers the entire cost of the program. In such a case, younger employees would pay a relatively higher rate than the true cost of coverage while older employees pay a relatively lower rate than the true cost of coverage. In this case, older employees could have imputed income. Imputed income could also arise if the plan used fewer age brackets than the IRS table.

Can employees purchase group term life insurance benefits with pre-tax dollars?

Yes, but only under a Section 125 Cafeteria plan. Employees may purchase, with pre-tax dollars, up to $50,000 of group term life insurance without having any “cost” of that coverage included in gross income. An employee may not use this exception if the employer has already provided up to $50,000 employer paid group term life insurance benefits.

May employees purchase supplemental group term life insurance benefits in excess of $50,000?

Yes, but the employee must include in gross income the “cost” of such excess coverage. As with employer paid group term life insurance in excess of $50,000, the “cost” is determined by using the Table I rates set forth in IRS regulations.

Example
While the employer does not pay any portion of the premium, it offers its employees an opportunity to purchase group term life insurance benefits. A 39-year-old employee purchases $150,000 worth of coverage. The employee pays $2 per month with after- tax dollars. Using Table I, we’ll calculate the “cost” to be added to the employee’s annual gross income.

May employees purchase with pre-tax supplemental dollars group term life insurance benefits in excess of $50,000?

While employees that purchase, with pre-tax contributions, group term life insurance coverage of up to $50,000 realize a tax savings, this is not true when coverage in excess of $50,000 is purchased.* Employee paid contributions for the portion of group term life insurance in excess of $50,000 should be paid with post-tax dollars.

According to the IRS, when group term life insurance in excess of $50,000 is purchased with pre-tax employee contributions, imputed income is the Table I cost for the excess coverage.

Example
As stated in the example above, a 39-year-old employee purchases $150,000 worth of coverage. The employee pays $2 per month with pre-tax dollars. Using Table I, we’ll calculate the “cost” to be added to the employee’s annual gross income.

*Note: In comparing this example to the post tax example, the employer’s tax liability is greater because it must withhold FICA taxes from $108 versus $84. In addition, the employee’s imputed income is also greater when contributions are made pre-tax.

How can an employer allow its employees to purchase group term life insurance coverage in excess of $50,000 and avoid the issue of imputed income?

An employer may avoid subjecting the supplemental group term life insurance policy to IRC Section 79 by offering two separate policies.

The first policy would include the employer paid coverage (i.e., one times the employee’s salary). This base policy would continue to be subject to IRC Section 79. The second employee-pay-all policy would allow employees to purchase additional coverage with after-tax dollars. IRC Section 79 applies to group term life insurance that is “carried directly or indirectly” by the employer. The employee-pay-all policy is not “carried directly or indirectly” if the rates are a) at or below the Table I rates, or b) at or above Table I. However, if one employee pays less than and one employee pays more than the Table I rates, this “straddling” of the Table I rates will cause the policy to be treated as a policy “carried directly or indirectly” by the employer. Hence, the employer is responsible for imputing income.

In addition, the premiums charged for the two policies must be determined independently and reserves or experience credits cannot be shifted from one policy to the other. [Priv. Ltr. Rul. 200033011 (May 12, 2000)]

Are the proceeds from an employer paid group term life insurance policy taxable to the beneficiary?

No. Pursuant to IRC Section 101(a)(1), life insurance proceeds are excluded from the beneficiary’s gross income for federal income tax purposes. However, this exclusion does not apply if the proceeds of the policy were transferred for valuable consideration.

Are the proceeds from an employer paid group term life insurance policy included in the employee’s income for federal tax purposes?

While life insurance proceeds are not included in the employee’s income for federal income tax purposes, generally the proceeds are included in the employee’s estate and subject to federal estate taxes. With proper estate planning and the assistance of a tax consultant, it may be possible to avoid inclusion of life insurance proceeds within the decedent’s/employee’s estate.

Where an employee has paid the premiums for the group term life insurance policy, the same tax treatment as stated above will apply.

If you have questions about Group Term Life Insurance contact Insure NW or call 253-661-0054. We can help.

Employee Medical Benefits: Self-Funded vs. Insured

Susan — Tue, 23 Apr 2013 08:32:27 +0000

All group medical benefit plans fall into one of two categories: self-funded or insured. The choice of one over the other should not be made arbitrarily. Each type carries its own set of administrative rules and legal constraints.

What is Self-Funding?

Under an insured health benefit plan, an insurance company assumes the financial and legal risk of loss in exchange for a fixed premium paid to the carrier by the employer. Employers with self-funded (or self-insured) plans retain the risk of paying for their employees’ health care themselves, either from a trust or directly from corporate funds.

Most employers with more than 200 employees self-insure some or all of their employee health benefits. Many employers with fewer than 200 employees also self-fund, but these employers require greater stop-loss insurance protection than larger employers (stop-loss insurance is discussed in greater detail later). As a general rule, employers with fewer than 100 employees fully insure their group medical benefits.

The risk assumed in either situation is the chance that employees will become ill and require costly treatment. When employees have few claims and few expensive illnesses, the self-funded employer realizes an immediate positive impact on overall health care costs. Conversely, if the employee group has unfavorable claims experience, a self-funded employer would incur an immediate expense beyond what may have been expected. Insured plans have a more predictable cost for the year; however, large employee claims costs from one year can affect future premium amounts.

ERISA vs. State Regulation

Self-funded health plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA preempts state insurance regulations, meaning that employers with self-funded medical benefits are not required to comply with state insurance laws that apply to medical benefit plan administrators. On the other hand, insured plans must comply with some of ERISA’s requirements, but are primarily governed by the state where covered employees reside.

The distinction between state and ERISA regulations is important when determining if self-funding is right for your organization. Multi-state companies with insured health plans must comply with the regulations of each state in which they have plans and covered employees. Multi-state self-funded plans need only comply with ERISA.

Premium vs. Unbundled Fees

The risk an insurance company takes with an insured plan can be translated into a dollar amount for the employer. That dollar amount is the premium an employer pays each month for the insured group medical benefits. The premium amount includes the following:

Current and predicted claims cost
Administrative fee
Premium tax paid to the state
Insurance company profit

Employers who self-fund their medical benefits do not pay the premium tax or insurance company profit. They do, however, assume the costs of paying for claims and administrative functions.
Typically, employers with self-funded health plans will outsource plan administration to a third party administrator (TPA) or insurance company who charges the employer a fee for performing administrative services.

Stop-Loss Insurance

Employers with self-funded health plans typically carry stop-loss insurance to reduce the risk associated with large individual claims or high claims from the entire plan. The employer self-insures up to the stop-loss attachment point, which is the dollar amount above which the stop-loss carrier will reimburse claims. Stop-loss insurance comes in two forms: individual/specific stop-loss and aggregate stop-loss.

Individual/Specific Stop-Loss Insurance

This protects a self-funded employer against large individual health care claims. Essentially, it limits the amount that the employer must pay for each individual. For example, an employer with a specific stop-loss attachment point of $25,000 would be responsible for the first $25,000 in claims for each individual plan participant each year. The stop-loss carrier would pay any claims exceeding $25,000 in a calendar year for a particular participant.

Aggregate Stop-Loss Insurance

This protects the employer against high total claims for the health care plan. For example, aggregate stop-loss insurance with an attachment point of $500,000 would begin paying for claims after the plan’s overall claims exceeded $500,000. Any amounts paid by a specific stop-loss policy for the same plan would not count toward the aggregate attachment point.

Non-Discrimination Rules

Non-discrimination rules require employers to offer employee benefits that do not favor certain employees. Employers with insured plans do not have non-discrimination rules for group medical benefits, provided they follow the policy requirements of the sponsoring insurance carrier. However, employers with self-funded plans are required to comply with non-discrimination rules. Generally these requirements are not difficult to meet, but failure to comply can result in some employees having their benefits treated as taxable income.

Employers with either type of group medical plan are required to comply with certain reporting and disclosure requirements, usually by providing tax and other pertinent documents to the United States Department of Labor or to their particular state.

Typically self-funded plans are required to provide copies of plan communications such as summary plan descriptions (SPDs) and summary of material modifications if the plan language changes.

Employers with insured plans that require employee contributions must file certain financial documents with the U.S. Internal Revenue Service (IRS). IRS filings are also required of self-funded plans, including Form 5500 and any accompanying documents.

If you have questions about Employee Medical Benefits contact Insure NW or call 253-661-0054. We can help.

Health Care Reform in Washington State

Susan — Tue, 16 Apr 2013 07:46:35 +0000

The Affordable Care Act is a federal law, which means that federal agencies, namely the Departments of Labor, Health and Human Services and the Treasury, are primarily responsible for the law’s overall enforcement. However, ACA also creates significant responsibilities for state governments. A number of ACA’s key health care reforms will be carried out at the state level.

This is a high-level overview of selected ACA reforms to be implemented by state governments and highlights the progress being made in Washington state.

HEALTH INSURANCE EXCHANGES

ACA requires each state to have a health insurance exchange (Exchange) to provide a competitive marketplace where individuals and small businesses will be able to purchase affordable private health insurance coverage, effective Jan. 1, 2014. According to the Department of Health and Human Services (HHS), the Exchanges will make it easier for individuals and small businesses to compare health plan options, receive answers to health coverage questions, determine eligibility for tax credits for private insurance or public health programs and enroll in suitable health coverage.

Individuals and small employers with up to 100 employees will be eligible to participate in the Exchanges. However, states may limit employers’ participation in the Exchanges to businesses with up to 50 employees until 2016. Beginning in 2017, states may allow businesses with more than 100 employees to participate in the Exchanges. Enrollment in the Exchanges is expected to begin on Oct. 1, 2013.

States have three options with respect to their Exchanges. A state may:

Establish its own state-based Exchange;
Have HHS operate a federally facilitated Exchange (FFE) for its residents; or
Partner with HHS so that some FFE Exchange functions can be performed by the state.

States that intend to pursue a state-based Exchange or a state partnership Exchange must submit a blueprint to HHS. The blueprint must contain a declaration letter signed by the state’s governor and an application describing readiness to perform Exchange activities and functions. If a state does not move forward with its Exchange or select the partnership model, HHS will operate the FFE in the state.

On May 11, 2011, Governor Christine Gregoire (D) signed a law establishing the Washington Health Benefit Exchange, which has been named the Washington Healthplanfinder. On Dec. 7, 2012, Washington received conditional approval from HHS for its state-based Exchange. HHS will provide final approval when the state can demonstrate that its Exchange will be able to perform all required operations on time and in compliance with federal regulations. More information on the Washington Healthplanfinder is available here.

TEMPORARY HIGH-RISK INSURANCE POOL

ACA established a temporary high-risk health insurance pool to provide affordable health insurance coverage to uninsured individuals with pre-existing conditions. ACA’s high-risk health insurance pool is called the Pre-Existing Condition Insurance Plan (PCIP). The PCIP will continue until Jan. 1, 2014, when individuals will be able to purchase health coverage through ACA’s health insurance exchanges.

HHS administers the PCIP in some states, while other states have requested to run their own PCIP. Washington administers its own PCIP, which is run by the Washington State Health Insurance Pool. Washington’s PCIP offers two benefit plan options with different deductibles. Both plans include coverage for preventive care, primary and specialty care, hospital care and prescription drugs. More information on Washington’s PCIP is available here.

INSURANCE RATE REVIEW

To help hold insurance companies accountable for their proposed rate hikes, ACA required HHS to establish a process to review the reasonableness of certain premium increases.

Effective Sept. 1, 2011, insurers seeking rate increases of 10 percent or more for non-grandfathered plans in the individual and small group markets must publicly disclose the proposed increases, along with justification for the increases. After 2011, states may work with HHS to set state-specific thresholds for disclosure of rate increases, using data and trends that reflect cost trends particular to a state.

The proposed increases must be reviewed by either state or federal experts to determine whether they are reasonable. States with effective rate review systems will conduct their own reviews, but if a state does not have the resources or authority to conduct rate reviews, HHS will conduct them.

According to HHS, Washington has an effective system for reviewing rate increases in the individual and small group markets. The Washington State Office of the Insurance Commissioner conducts rate reviews for these markets. However, HHS conducts reviews for individual and small group association products because Washington does not have an effective rate review system for these products.

HEALTH INSURANCE REFORMS

ACA requires sponsors of self-funded and insured group health plans to make changes to their plans’ design and administration over the next several years. For example, effective for plan years beginning on or after Sept. 23, 2010, ACA requires:

Group health plans to extend dependent coverage up to age 26; and
Non-grandfathered group health plans to follow minimum requirements for external review of claims appeals.

Dependent Coverage Requirements

Although ACA creates federal standards, the health insurance market is primarily regulated at the state level. Some states may have laws that go beyond the federal minimums established by ACA. For example, some states extend dependent coverage beyond age 26. Washington law does not require insured health plans to maintain dependent coverage beyond age 26, but it does require insured health plans to continue coverage past the limiting age for disabled dependents.

External Review Requirements

In addition, ACA requires insured plans to comply with their state’s external review process if it includes certain minimum consumer protections. If a state’s external review process does not include the required minimum consumer protections, health insurers in the state must comply with a federal process for conducting external reviews, effective Jan. 1, 2012.

HHS has concluded that the Washington external review process includes the minimum consumer protections. Thus, insured health plans in Washington must conduct external appeals in accordance with the state’s external review process.

If you have questions about Healthcare Reform in Washington contact Insure NW or call 253-661-0054. We can help.

Understanding a Health Savings Accounts

Susan — Tue, 09 Apr 2013 09:30:33 +0000

Otherwise known as an HSA, a health savings account can be funded with your tax-exempt dollars, by your employer, by a family member or by anyone else on your behalf. Dollars from the account can help pay for eligible medical expenses not covered by an insurance plan, including the deductible, coinsurance, and even health insurance premiums, in some cases.

We’ve prepared a document to help you better the answers to the following questions about HSAs:

Who is eligible for an HSA?
What is a high-deductible health plan (HDHP)?
How does an HSA work?
When do I use my HSA?
What is a deductible?
How much can I contribute to an HSA?
What is the difference betwen an HSA and an FSA

Read the answers to these and more questions here: Understanding a Health Savings Accounts

If you have questions about HSAs, or are interested in enrolling, contact Insure NW or call 253-661-0054. We can help.

Financial and Physical Wellness Go Hand in Hand

Susan — Tue, 02 Apr 2013 11:25:43 +0000

You have probably heard of the significant benefits associated with workplace wellness programs; perhaps you have even implemented one in your organization. What many employers (and others) don’t realize is that financial wellness is just as important as physical wellness. In fact, employees who struggle from financial trouble are often more likely to have less focus at work, an unhealthier lifestyle and higher medical costs. Incorporating a financial component to your wellness program can be a strategic move that both your budget and your employees will appreciate.

The Connection between Finances and Health

Financial problems are consistently rated among the highest source of stress for people, and can cause anxiety, frustration and feelings of hopelessness. The financial stress that many endure can lead to health problems. Stress is a known contributor to high blood pressure, cardiovascular disease and stomach disorders, among other conditions. Part of this may be due to the fact that many people engage in unhealthy behaviors to cope with stress, such as drinking, smoking and overeating. In fact, a 2001 study published in the British Journal of Psychology found that drinking, smoking and obesity were all associated with debt and financial problems.

Financial trouble can be overwhelming and consuming, leading to trouble sleeping, less focus, moodiness and generally feeling run-down. The combination of stress, anxiety and lack of sleep can cause more colds and minor illnesses, and can also exacerbate existing medical conditions. In addition, those with financial problems are more likely to neglect their own health care, such as not spending money on preventive care or not adhering properly to medication and treatment regimens for chronic conditions. All of the above factors can contribute greatly to an increasingly unhealthy lifestyle and higher medical bills.

Problems at Work

Like any stressful personal problem, financial burdens can cause an employee to have a poor attitude at work, less focus, lower productivity and generally more carelessness in their work. Financial stress can increase absenteeism rates due to increased health problems, along with higher turnover as some employees search for higher paying jobs.

How to Get Started

As an employer, you can help your employees cope with their financial problems and improve their financial situations. Consider offering financial benefits, including educational materials, resources for those needing advice or assistance, and classes to teach basic to advanced financial wellness. Many employees have surprisingly little knowledge about managing finances, so simply offering education can be a huge benefit. If you have a wellness program, work to incorporate the financial component with the overall program.

You may have two different vendors providing financial and physical wellness services – make sure they communicate so they offer your employees a consistent message. Or, you may already have financial services available as part of your Employee Assistance Program; if this is the case, work to increase awareness so you can boost utilization and ensure employees are taking advantage of the benefit. Instead of focusing on simply physical wellness, emphasize lifestyle management to help employees strive for wellness in all aspects of their life.

Benefits of Financial Wellness

Because finances are on the forefront of so many people’s minds, especially in this economy, employees will appreciate any financial benefits offered by their employer, and it will likely raise employee morale and satisfaction. In addition, a good financial wellness initiative can go far to reduce health care costs. For example, a smoker may be unwilling to quit until they learn the financial burden of smoking and realize all the money they could save by quitting.

Financial education should also be integrated with discussions about health care to encourage more savvy health care consumers. Once employees learn ways to save money, they will be more likely to be prudent in their health care expenditures, participate in consumer-directed health plans, consider mail-order prescriptions and take advantage of preventive care. This education will save both employees and the company significant money on health care.

Plus, having financial peace of mind, or even a feeling of controlling one’s finances, will significantly reduce an employee’s stress level, which will improve his or her overall health, along with improving focus, attitude and performance at work. Financial wellness can support your overall wellness initiatives by promoting healthier behaviors and attitudes in all aspects of life – yielding happier, healthier employees.

If you have questions about setting up a Workplace Wellness Program contact Insure NW or call 253-661-0054. We can help.

Healthcare Reform: Large Employers Toolkit

Susan — Tue, 26 Mar 2013 10:14:09 +0000

The health care reform law—the Affordable Care Act (ACA)—has many complex requirements for employers and health plans. Many employers are starting to focus more attention on the ACA’s rules and, as a result, have more questions than ever.

This Health Care Reform Toolkit is your one-stop guide for upcoming health care reform concerns. It is designed to help you address health care reform issues, topic-by-topic, step-by-step. Each section of the toolkit focuses on a single subject and includes:

An executive summary;
An action checklist to help you take the appropriate actions to achieve compliance; and
A list of supporting documents that Insure NW can provide upon request.

As new regulations and guidance are released, the Health Care Reform Toolkit will continue to expand and be updated. Please contact Insure NW as new regulations are released to request an updated copy.

If you are unsure whether your business is considered large or small you can read definitions of Large Employer and Small Employer here. For this Toolkit, a large employer is one that has 50 or more employees. Most of the sections in this guide apply to employers of this size. However, certain provisions apply only to larger employers.

Download the toolkit: Health Care Reform Toolkit Large Employers

If you have questions about this toolkit please contact Insure NW or call 253-661-0054. We can help.

Healthcare Reform: Small Employers Toolkit

Susan — Tue, 19 Mar 2013 08:09:41 +0000

The health care reform law, the Affordable Care Act (ACA), has many complex requirements for employers and health plans. Many employers are starting to focus more attention on the ACA’s rules and, as a result, have more questions than ever.
This Health Care Reform Toolkit is your one-stop guide for upcoming health care reform concerns. The Toolkit is designed to help you address health care reform issues, topic by topic, step by step. Each section of the Toolkit focuses on a single subject and includes:

An executive summary;
An action checklist to help you take the appropriate actions to achieve compliance; and
A list of supporting documents that Insure NW can provide upon request.

The Health Care Reform Toolkit will continue to expand and be updated as new regulations are released. As these changes are announced, please contact Insure NW to request an updated copy.

If you are unsure whether your business is considered large or small you can read definitions of Large Employer and Small Employer here. For this Toolkit, a small employer is one that has fewer than 50 employees. Most of the sections in this guide apply to these small employers.

Download the toolkit: Health Care Reform Toolkit Small Employers

If you have questions about this toolkit please contact Insure NW or call 253-661-0054. We can help.