HHS Issues Health Care Exchange Rules

March 12th, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, DOL, HHS, Health Care Reform, IRS, PPACA, State Legislation, Uncategorized

By Joyce Frieden, News Editor, MedPage Today

WASHINGTON — The Department of Health and Human Services has issued the final regulations for implementing the state health insurance exchanges mandated by the Affordable Care Act (ACA).

They allow states more flexibility in determining eligibility for the exchanges than was first given, according to Chiquita Brooks-LaSure, director of coverage policy in HHS’ Office of Health Reform. That change was made after “a lot of input from states and stakeholders,” she told reporters on a Monday afternoon conference call.

The setup of the exchanges “lets consumers easily determine their eligibility for enrollment and easily enroll in coverage that’s right for them,” said Brooks-LaSure. That includes using a single streamlined application so that consumers will get a “consistent eligibility determination” without needing to submit different information for the different plans offered.

Under the ACA, nearly everyone is required to have insurance starting in 2014, and the government will provide financial assistance to those who need it. People who earn less than 133% of the federal poverty level can enroll in Medicaid, and those who are between 133% and 400% of the poverty level will be eligible for tax credits from the federal government in order to buy insurance.

People can use the tax credit to buy health insurance through an exchange in their state. The exchanges will act as “one-stop shops” where people can compare different insurance plans.

For small employers — such as small physician practices — that want to provide health insurance for their employees, the exchanges also will offer a Small Business Health Options Program (SHOP).

SHOP will let small businesses choose among different levels of coverage, depending on what works for them and their budget. SHOP will allow these employers to offer coverage from a number of insurers, but still get one bill and write only one check, according to HHS.

The SHOP program also features tax credits to help make coverage easier for small businesses to afford.

According to HHS, starting in 2014, small employers purchasing coverage through SHOP may be eligible for a tax credit of up to 50% of their premium payments if they:
• Have no more than 25 employees
• Pay employees an average annual wage of less than $50,000
• Offer all full-time employees coverage
• Pay at least 50% of the premium
To view the final regulations, visit:

https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-06125.pdf

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HHS issues draft bulletin defining Actuarial Value for Health Plans

March 1st, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Accounts, IRS, Taxes, Uncategorized

The HHS has just issued their draft bulletin on defining the “actuarial value” methodology that will be used to calculate AV for health plans, and it is good news for HSAs and HRAs! The rules DO include the employer contributions to accounts in the calculations, which is tremendously beneficial to the attractiveness of the plans. An excerpt from HHS document is below.

The key text is below:

Treatment of Health Savings Accounts and Health Reimbursement Arrangements in Calculating Actuarial Value Section 1302(d)(2)(B) of the Affordable Care Act directs the Secretary to issue regulations under which employer contributions to a health savings account (within the meaning of section 223 of the Internal Revenue Code of 1986) may be taken into account in determining the level of coverage for a plan of the employer. Calculation of the AV of high-deductible health plans (HDHP) linked to a health savings account (HSA) or a health plan linked to a health reimbursement arrangement (HRA) poses a special challenge. Simply calculating the AV of the HDHP based on the insurance product could understate the value of coverage and some HDHPs could fall below the level of a bronze plan based on the HDHP alone. Yet accounting for the total coverage provided by the combination of the HDHP and the full value of the HSA or HRA could overstate the AV because, empirically, only a portion of these accounts are used toward health in a given year. The AV calculation should, therefore, reflect an appropriate adjustment to these contributions. We intend to propose that for purposes of calculating the AV of an employer health benefit plan, the annual employer contribution to the employee’s HSA associated with a qualifying HDHP and the amount made available for the first time in a given year under a HRA that is linked to an employer health benefit plan shall be considered part of the benefit design of the health plan. In calculating the AV of the combined HDHP and HSA or combined employer health benefit plan and HRA, the calculation would assume that the employer contribution to the HSA or HRA is used by the employee to pay for cost-sharing. Accordingly, these amounts would be credited to the numerator of the AV calculation. This means that the AV calculator would include any current year HSA contributions and amounts first made available under an HRA as an input into the calculator that can be used to determine the AV of an employer health benefit plan. For example, if a HDHP with a $3,000 deductible has an AV of 55 percent and the employer provides an HSA contribution of $1,000, that contribution would be applied towards the numerator of the AV calculation. However, because generally only a portion of an HSA is used in a year for health services, HSA contributions would be adjusted so that the employer receives the same credit for HSA contributions in the numerator of the AV calculation as it would receive for the same amount of first-dollar insurance coverage. The same rule would apply for amounts first made available under an HRA. In the individual market, we intend to propose that HSA contributions paid directly by the individual would not count towards AV. Finally, we note that the method used to evaluate the HSA or HRA impact on health plan AV has no bearing on the opportunity of employers to offer HSAs or HRAs, or the tax treatment of HSA contributions or amounts made available under an HRA.

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Are You Really Saving Money By Self Administering Your HRA?

February 23rd, 2012 | No Comments |
Category: CDHC, COBRA, Cafeteria Plans, Compliance and Regulatory, FSA, Flexible Spending, HIPAA, HRA, Health Care Reform, Health Reimbursement, Medicare, Taxes, Uncategorized
 
Posted by RENEE KUHS, Compliance Attorney

Do you think you’re saving money by administering your health reimbursement arrangement (HRA)?  In our experience, many employers that self-administer an HRA often overlook important compliance obligations that put them at financial risk.  Failure to comply with the following requirements is common and can be costly. 

 COBRA

 An HRA is a group health plan subject to COBRA.  Employees that experience a qualifying event are entitled to continue coverage under the employer’s HRA.  An employer that fails to extend COBRA coverage to HRA participants can be subject to substantial fines.  Employers can be fined up to $110 per day for failure to provide an initial notice or election notice.

 HIPAA Privacy

 An HRA is a self-funded health plan and governed by the HIPAA Privacy Rules.  Employers that offer a fully-insured health plan and sponsor an HRA often overlook their HIPAA Privacy obligations.  In order to administer an HRA, the entity processing the claims receives protected health information (PHI) which is protected by HIPAA.  Employers that offer a fully-insured health plan will rely on the insurance carrier to comply with the HIPAA Privacy Rules.  However, the HRA compliance obligations rest with the employer.  Employers that do not comply can be subject to civil penalties of up to $100 per violation.

 Medicare Reporting

 An HRA is a group health plan subject to Medicare Secondary Payer (MSP) provisions.  New reporting requirements went into effect in the fourth quarter of 2010.  Employers are required to provide HRA coverage information to the Centers for Medicare and Medicaid Services (CMS).  The information reported to CMS will allow better coordination of payer responsibilities between the group health plan and Medicare.  Failure to comply could result in fines of up to $1,000 per day.

 Plan Documents

 An HRA is an employee welfare plan under ERISA.  ERISA requires that every warfare plan be established and maintained pursuant to a written instrument.  The written instrument or plan document serves to define what expenses are eligible for reimbursement, the amount of employer contribution, and whether the funds may be rolled over from year to year.  Not only could an enforcement action be brought against an employer for failure to have a plan document, but it is difficult for the employer to prove plan terms and enforce its provisions.

If you are administering an HRA for your employees and are concerned about your compliance status, please feel free to contact support@amben.com  or rcummings@amben.com

 

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EBRI Study – HSA and HRA Accounts Continue Growth Trend

February 15th, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Accounts, IRS, PPACA, Taxes, Uncategorized

www.myhealthguide.com

MyHealthGuide Source: Employee Benefit Research Institute (EBRI), 1/2012, EBRI New Release and EBRI Full Text Brief with ChartsExecutive Summary

ASSET LEVELS GROWING

  • In 2011, there was $12.4 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 8.4 million accounts, according to data from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, sponsored by EBRI and Matthew Greenwald & Associates.
  • This is up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2010, when 5.4 million accounts held $7.3 billion in assets.

AFTER LEVELING OFF, AVERAGE ACCOUNT BALANCES INCREASED

  • After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011. In 2006, account balances averaged $696.
  • They increased to $1,320 in 2007, a 90 percent increase.
  • Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively.
  • In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. In 2011, average account balances increased to $1,470, a 9 percent increase from 2010.

TOTAL AND AVERAGE ROLLOVERS INCREASE

  •  After declining to $1,029 in 2010, average rollover amounts increased to $1,208 in 2011.
  •  Total assets being rolled over increased as well: $6.7 billion was rolled over in 2011, up from $3.7 billion in 2010.
  • The percentage of individuals without a rollover remained at 13 percent in 2011.

HEALTHY BEHAVIOR DOES NOT MEAN HIGHER ACCOUNT BALANCES AND HIGHER ROLLOVERS

  • Individuals who smoke have more money in their accounts than those who do not smoke. In contrast, obese individuals have less money in their account than the non-obese.
  • There is very little difference in account balances by level of exercise. Very small differences were found in account balances and rollover amounts between individuals who used cost or quality information, compared with those who did not use such information.
  • However, next to no relationship was found between either account balance or rollover amounts and various cost-conscious behaviors. When a difference was found, those exhibiting the cost-conscious behavior were found to have lower account balances and rollover amounts.

DIFFERENCES IN ACCOUNT BALANCES

  • Men have higher account balances than women, older individuals have higher account balances than younger ones, account balances increase with household income, and education has a significant impact on account balances independent of income and other variables.

DIFFERENCES IN ROLLOVER AMOUNTS

  • Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals. Rollover amounts increase with household income and education, and individuals with single coverage rolled over a slightly higher amount than those with family coverage.

About EBRI

The Employee Benefit Research Institute is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions. Visit www.EBRI.org.

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Summary of Benefit Coverage Final Rule Released

February 13th, 2012 | 1 Comment |
Category: CDHC, Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized

 
 
The Obama administration released the final rules for the Patient Protection and Affordable Care Act’s (PPACA) Summary of Benefits and Coverage (SBC) on February 9. The requirements have been the subject of much contention between insurers, employers and consumer groups over the past two years, and the final rules have been much anticipated by the benefits community.One of the most contentious parts of the debate about the new requirements was their effective date. PPACA specified that the SBC provisions begin on March 23, 2012, but the law also specified that this final rule be issued by March 23, 2011, so it is almost a year late. To give insurers and employers time to implement the provisions, the new requirements kick in on the first day of the first open enrollment period that begins on or after September 23, 2012. “For administrative simplicity, with respect to disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), PHS Act section 2715 and these final regulations apply on the first day of the first plan year that begins on or after September 23, 2012. For disclosures to plans, and to individuals and dependents in the individual market, these requirements are applicable to health insurance issuers beginning September 23, 2012.”The final coverage summary rule also specifies that the SBC requirements apply to all health plans and insurers, not just fully insured plans. NAHU and other groups asked that large group plans be exempted, as they already provide extensive customized information to enrollees and this requirement would just create another expensive compliance requirement, but the Department of Health and Human Services (HHS) ruled that it did not have the authority under PPACA to exempt certain size groups or types of plans from the requirements. 

The final rule does remove a requirement that the benefit summaries include premium information, which was a change made in response to concerns articulated by NAHU and other groups that it would be difficult for insurers to put a single figure on a coverage package that might be offered in the small-group and individual market, for example, or not reflect employer premium contributions in the group market.

It also reduces the number of “coverage examples” that must be provided in each SBC from three to two. Under the final rule, insurers will have to illustrate what the plan would cover, and what the patient would pay, under two scenarios—having a baby and managing diabetes.

The rule specifies that it is only providing guidance on what the SBC must contain for the first year of applicability; additional guidance will be provided before January 1, 2014 about how to communicate whether the plan provides minimum essential coverage.

On a technical level, the SBC no longer has to be a standalone document, and it may be provided in color or grayscale. The new materials also create a special rule for cases in which a plan’s terms “cannot reasonably be described in a manner consistent with the template and instructions.” In those cases, plans must make an effort to describe coverage in a consistent manner.

Additional Information:
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Health savings accounts surpass $12.4 billion

February 8th, 2012 | No Comments |
Category: CDHC, COBRA, Compliance and Regulatory, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Accounts, IRS, Taxes, Uncategorized

By

February 1, 2012

By year-end 2011, health savings accounts surpassed $12.4 billion in nearly 6.8 million accounts, according to market research from broker/dealer firm Devenir.

The company surveyed the top 50 HSA providers in the health savings account market, and predicts the HSA market will reach $27.6 billion in assets by the end of 2015.

“We continue to see strong growth in the HSA marketplace as well as steady increases in average balances”, said Eric Remjeske, president and co-founder, in a a statement.

Key findings from the Devenir December 2011 survey and research report:

  • Steady growth. HSAs continue to see consistent growth as the total number of HSA accounts rose to almost 6.8 million with assets totaling $12.4 billion, a year over year increase of almost 20 percent for accounts and a nearly 26 percent increase in assets for the period from December 31st, 2010 to December 31st, 2011.
  • Average account balances at the end of 2011 grew to $1,841 from $1,751 at the end 2010, a 5.1 percent increase. When you eliminate identified zero balance accounts that average rises to $2,179.
  • Existing accounts average balances have grown at an average of 31 percent each year from the year they were opened since 2005.
  • Contributions and withdrawals. HSA accountholders carried forward 24 percent of their contributions over the past year into 2012.
  • HSA investment dollars continue to grow.  HSA investment assets reached an estimated $960 million in December, a 34 percent year over year increase and are projected to reach $4.7 billion by end of 2015.

 

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Are employers able to waive or opt out of all health care reform?

January 31st, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized

We keep hearing about the government issuing waivers, is it possible for employers to opt out of health care reform?  No, there is no waiver from all of health care reform. Employers may be thinking of the term “grandfathered plans,” which refers to plans in existence on March 23, 2010, which have made minimal changes, defined under regulations, and are therefore exempt from some, but not all, of health care reform’s mandates.

More abundant in the news, however, have been references to the “annual limit waivers,” which have been granted to many prominent restaurant chains and labor unions. The annual limit waiver was brought about due to the fact that health care reform first restricts, and then later prohibits (in 2014), annual dollar limits on the value of “essential health benefits.” Until 2014, restricted annual limits on essential health benefits are permissible under a three-year phased approach.

  • $750,000 for plan years beginning on or after Sept. 23, 2010, but before Sept. 23, 2011
  • $1.25 million for plan years beginning on or after Sept. 23, 2011, but before Sept. 23, 2012
  • $2 million for plan years beginning on or after Sept. 23, 2012, and Jan. 1, 2014

For plans issued or renewed beginning Jan. 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited.

A class of group health plans and health insurance coverage generally known as “limited benefit” plans or “mini-med” plans often has annual limits well below the restricted annual limits set out in the interim final regulations. Because this is often the only type of private insurance available to some workers, temporary waivers from the restricted annual limit requirements were previously available. For plan years beginning before Jan. 1, 2014, the interim final regulations allowed HHS to establish a program under which the requirements relating to restricted annual limits may be waived for plans that were offered prior to Sept. 23, 2010 — if compliance would result in a significant decrease in access to benefits or a significant increase in premiums.

However, in June 2011, HHS issued guidance to revise the waiver program to establish new procedures and impose an application cutoff of Sept. 22, 2011, for all waiver extensions and new waiver requests. This means that the waiver process has now concluded, and no waivers will be granted for new waiver applications received after Sept. 22, 2011. Applications received after Sept. 22, 2011, will not be accepted, which means that any plan or policy that did not receive a waiver must be in compliance with the annual dollar limits on essential health benefits described above.

If a plan was granted a waiver by Sept. 22, 2011, that plan will be required to submit an Annual Limit Update in order to retain eligibility for the annual limit waiver through 2014. The first Annual Limit Update must be submitted by Dec. 31, 2012, and the second by Dec. 31, 2013.

Click here for additional information about the waiver process.

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