Understanding The Two Reform Replacement Bills

The following Update provides an overview of two Health Care Reform Replacement Bills between the House and the Senate in comparison to the current Affordable Care Act.

Presently there are two Health Care Reform Replacement Bills circulating and pending the necessary votes for approval.

  • American Health Care Act (AHCA) – House Bill
  • Better Care Reconciliation Act (BCRA) – Senate Bill

WHAT ARE THE DIFFERENCES

The Better Care Reconciliation Act, like the American Health Care Act, radically revises Medicaid, but it is closer to the Affordable Care Act on how it approaches subsidies to buy individual insurance. Both the House and Senate bills eliminate taxes that paid the costs to cover more people through Medicaid and to subsidize individual plans.

Here is summary overview of how both the AHCA and BCRA compare to the current ACA:

SUBSIDIES

Current​ law: Available for individuals or families that earn between 138% and 400% of poverty, as long as they don’t have access to affordable plans through an employer or other source. Are based on age, income and local cost of insurance.

AHCA: Available for everyone, as long as they don’t have access to affordable plans through an employer or other source. Are age-based only, and more generous than current law to younger customers.

BCRA: Available to those below 350% of poverty, solving the glitch that occurred in non-expansion states. Based on age, income and local cost of insurance, but the sliding scale is less generous for those age 50 and older, starting at 200% of poverty. Those near the top of the subsidy eligibility who are 60 years old could only receive a subsidy if the plan costs more than 16% of annual income. Subsidies are geared to a plan with an actuarial value of 58%, just below a bronze-level plan. The current subsidies are tied to the silver plans, which cover 70% of costs for most customers

ESSENTIAL HEALTH BENEFITS, MEDICAL UNDERWRITING, PRE-EXISTING CONDITIONS

Current​ law: 10 essential health benefits are required in all insurance, including prescription drugs, maternity care and mental health care. Plans have to sell to everyone, and cannot charge sick people more.

AHCA: States may apply for waivers to drop essential benefits or the rules on charging sick people more, but those changes only apply to those who did not maintain continuous coverage.

BCRA: States may apply for waivers to essential benefits, but not for rejecting sick applicants or charging them more.

INDIVIDUAL MANDATE

Current​ law: Everyone is supposed to buy insurance or face a tax penalty. Companies with at least 50 employers are required to offer insurance.

AHCA: Those who don’t buy insurance can be charged 30% more per month for one year when they try to come back in. No employer mandate.

BCRA: No mandate.

INDIVIDUAL MARKET

Current​ law: Continue to be paid to insurers.  Age based community rating 3:1. People using healthcare marketplaces and making less than $48,000 a year receive subsidies to help them buy insurance.  The amount of the subsidy is tied to a person’s income and to the cost of the insurance in the person’s area.  The subsidies are automatically applied to the consumers’ monthly insurance bills, rather than having to wait for a rebate.

AHCA: Paid in 2019 and 2020 only. Age based community rating 5:1. Consumers would still receive subsidies which would phase out at incomes of $75,000 per year.  The amount would be tied to a person’s age, not income, so younger low-income people would get less help.  The subsidies would not vary with the cost of insurance, so people in high-cost areas would also not get as much help, proportionally. Anyone who goes without insurance for more than two months would face a six-month waiting period to get coverage when they buy a new plan

BCRA: Paid in 2019 and 2020 only. Age based community rating 5:1. Still links aid to consumers’ income, though it would stop at 350% of poverty level, compared to the 400% under the current law.  A new formula for setting the amount of subsidies would tie them to the cost of less comprehensive health plans.  That means many consumers would get substantially less assistance than under the current law.  Cost-sharing subsidies for insurers to help cover deductibles and co-payments for low-income customers would end in 2020, but could be cut off earlier. Does not include financial penalties for people who do not maintain coverage. People who haven’t been continuously covered would have to wait six months before they can purchase a new plan.

MEDICAID EXPANSION

Current​ law: Enhanced federal match for expansion population is 95% this year, 94% next year, 93% in 2019 and 90% in 2020 and beyond

AHCA: Enhanced match for expansion population maintained as described in ACA until 2020, when those who were still on receive enhanced match until they cycle out of the program.

BCRA: 90% match in 2020; 85% in 2021; 80% in 2022; 75% in 2023. No grandfathering. After 2023, federal contribution is based on general state match percentage

MEDICAID FINANCING

Current​ law: States design benefit packages, provider reimbursement levels and eligibility, within federal parameters, and the federal government’s match rate varies depending on the wealth of the state, ranging from 50% to 73%.

AHCA: Starting in 2020, the federal contribution would be a dollar figure for various groups within Medicaid, which would only be allowed to grow by either the medical component of the Consumer Price Index or medical CPI plus 1 percentage point. The aged and disabled adults would be under the more generous per capita cap. Each state’s base figure would be based on historic per enrollee spending.

BCRA: Starting in 2020, the House version of the per capita cap would take effect, excluding children who are on disability. Instead, they would be under the old match. Starting in 2025, the per capita cap would grow at standard inflation, which is substantially lower than medical CPI. States would have more flexibility on how to set the base rate.

The HHS secretary would be required to even out the base rates for states by increasing low-spending states’ contributions by at least 0.5% but not more than 2%. The secretary would also be required to penalize states that spend 25% or more above the average spending limit, within the same parameters. However, “low density states,” which are Alaska, the Dakotas, Montana and Wyoming, would be exempt. Current per enrollee spending for seniors, for example, has 21 states that spend at least 25% above the national average, including those five, but also near the top are Connecticut, Delaware, Indiana and New Mexico.

TAXES

Current​ law: Insurers, hospitals, medical-device manufacturers, rich employer-based plans and investment income, among others, were tapped to pay for the expansion. Some of those taxes, especially the Cadillac tax on rich employer plans, were so unpopular they were never implemented. The investment income tax is the biggest funder.

AHCA: The taxes are repealed, though not all immediately.

BCRA: The taxes are repealed, some retroactively, such as the investment tax, and some in 2018 and 2023. The Cadillac tax is temporarily repealed, but returns in 2026.

BOTTOM LINE

The Senate’s (BCRA) and the House’s (AHCA) might bring premium costs down for some, but offers less assistance and less on healthcare coverage which means hospitals, the sick, poor, and elderly may see new hurdles while (business, large employers, high earners) will see tax breaks.

As changes to our health care system make their way through the legislative process, CBIS will make sure you’re up-to-date

 

 

 

 

 

 

ADDITIONAL INFORMATION

Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at service@cbis-lc.com.

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Creative Benefits & Insurance Solutions Receives 2017 Best of Utica Award

Utica Award Program Honors the Achievement

UTICA May 2, 2017 — Creative Benefits & Insurance Solutions has been selected for the 2017 Best of Utica Award in the Insurance, Risk Management & Group Benefits category by the Utica Award Program.

Each year, the Utica Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Utica area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2017 Utica Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Utica Award Program and data provided by third parties.

About Utica Award Program

The Utica Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Utica area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Utica Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

SOURCE: Utica Award Program
CONTACT:
Utica Award Program
URL: http://www.onlineawarded.org

Individual Market Stabilization

CBIS Logo New wout address

The following Update provides an overview of the final regulations to stabilize the individual and small group markets issued on April 13, 2017.

Final Regulations

The Department of Health and Human Services (HHS) issued final regulations on April 13, 2017 regarding the stabilization of the individual and small group markets.

The final regulations are effective on June 19, 2017 and do not vary significantly from the proposed regulations issued earlier this year in February.  The regulations do not impact large groups, rather they are intended to provide greater flexibility to both states and insurance carriers as well as give enrolling individuals more coverage choices and options.

The Final Regulations Include:

Shorter Open Enrollment Period

The new 2018 Open Enrollment Period for individuals enrolling will be from November 1, 2017 through December 15, 2017 to align more so with open enrollment period for Medicare and the private market.

More Choice

Beginning with 2018 plans, insurance carriers will have greater flexibility to offer more low-cost choices and to continue to offer their existing plan design options for individuals.

Premium Collection

Insurance carriers will be allowed to collect unpaid premiums for past coverage within the year before allowing individuals to re-enroll in order to promote Continuous Coverage.

Special Enrollment Period Control

The final regulations expand verification of eligibility for Special Enrollment Periods in the Marketplace.  This limits the ability of Marketplace individual enrollees to be able to change plan metal levels during the coverage year.  In addition, it adjusts requirements for Special Enrollment Periods due to marriage.

Network and Plan Design

CMS will pass oversight of network access and health plan certification to the states that have adequate review processes to determine network access for their residents.

To learn more about the final regulations, please click on the final regulations or the CMS news article for more details.

ADDITIONAL INFORMATION

Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at service@cbis-lc.com.

IRS Address Taxation of Fixed Indemnity Benefits

DOL Issues Fixed Indemnity Taxation Memorandum
According to this guidance, if an employee is not taxed on the premiums for fixed indemnity health coverage (the premiums are paid by the employer or by employees on a pre-tax basis through a cafeteria plan), any payments from the coverage must be included in the employee’s gross income and wages. These same rules also apply to wellness programs that provide fixed indemnity benefits for engaging in wellness activities.

ACTION STEPS

The IRS’ memorandum does not address how employers should administer fixed indemnity payments that are taxable to employees. When employees are not taxed on the premiums for fixed indemnity coverage, employers should work with their carriers to implement a process for tax withholding and reporting.

To avoid these tax issues, employers should consider requiring that employees pay for their fixed indemnity coverage on an after-tax basis outside of their cafeteria plans.

Fixed Indemnity Health Coverage

Fixed indemnity health coverage pays a fixed dollar amount for certain health-related events (for example, $100 for each medical office visit and $200 for each day in the hospital), policies pay regardless of the amount of medical expenses that the individual actually incurs. Employers sometimes offer fixed indemnity health coverage to their employees in addition to their group medical plan.

Section 105(b) of the Internal Revenue Code (Code) states that the amounts that an employee receives through employer-provided accident or health insurance are not taxable if the amounts are paid to reimburse medical care expenses that were actually incurred. Because benefits under a fixed indemnity plan are not related to medical expenses that were actually incurred, there has been some confusion regarding the tax treatment of these payments.

According to the IRS’ memorandum, the tax status of the payments under fixed indemnity health coverage depends on how the premiums are paid.

  • The payments are not taxable if the coverage is paid by employees on an after-tax basis. For example, if a fixed indemnity plan with premiums paid on an after-tax basis paid $200 for an office visit and the covered individual’s unreimbursed medical costs for the visit were $30, the $200 would be excluded from income.
  • However, if the coverage is paid by the employer tax-free or if employees pay for the coverage on a pre-tax basis through a cafeteria plan, any payments from the plan are taxable and must be included in employees’ gross income and wages (regardless of the amount of medical expenses actually incurred).
Payment Method Premiums Taxed? Payments Taxed?
Employee paid, after tax (or employer paid and imputed as taxable income to employees) Yes No
Employee paid, pre-tax (through a Section 125 plan) No Yes
Employer paid (without imputing payment as taxable income to employees) No Yes

When payments from fixed indemnity health coverage are taxable, they are subject to income tax and employment tax withholding. This may raise administrative issues for employers because the payments under fixed indemnity coverage are usually controlled by the insurance carrier, not the employer.

Thus, when fixed indemnity payments are taxable, employers may need to work with the carriers to determine a process for tax withholding.

Wellness Programs

The IRS’ memorandum also addresses wellness programs where employees pay a pre-tax premium to participate. Because this type of wellness program design is uncommon, the IRS’ guidance appears to be targeted at fixed indemnity plans that label themselves as wellness programs. These wellness programs pay fixed indemnity benefits for participating in the program (for example, $100 for completing a health risk assessment), without regard to the amount of medical expenses incurred by the employee. The IRS concluded that these fixed indemnity benefits are taxable and should be included in employees’ gross income and wages.

Guidance: Five Scenarios

To provide guidance on this issue, the Office of Chief Counsel (OCC) considered five different scenarios in which an employee receives cash payout benefits from a fixed-indemnity plan. The Memorandum makes clear that its conclusion in each of the five scenarios derives from the fact that a fixed-indemnity plan, unlike traditional insurance, pays a benefit that bears no relationship to the amount of health care expenditures incurred by the employee. Whether the benefits are taxable ultimately depends on whether or not the premiums were paid from an amount included in the employee’s compensation. If not, then the benefits are taxable.

Scenario One – 1

Under the first scenario proposed by the OCC, an employer gives all employees the opportunity to participate in a fixed-indemnity plan. Employees pay premiums for the plan with after-tax dollars: the employer withholds the premiums from the employee’s salary, but the amount of the premiums are included in the employee’s compensation. The plan pays employees $100 per medical office visit and $200 for each day in the hospital. The OCC concludes that these payments from the plan are excludible from income because the premiums had been included in the employee’s compensation.

Scenario Two – 2

Scenario two is the same as scenario one, except that the employee’s premiums are paid by the employer at no cost to the employee. This factor changes the analysis. Under this scenario, the OCC concludes that any payments from the plan are included in the employee’s gross income.

Scenario Three – 3

Scenario three is also identical to scenario one, except that the premiums are paid through a salary reduction arrangement under a section 125 cafeteria plan (and, as a result, the premiums are excludible from the employee’s income). The OCC concludes that, as is the case with scenario two, any payments from the plan are includible in the employee’s income.

Scenarios Four and Five

Scenarios four and five address employee wellness plans. In both scenarios, as is the case with scenario three, employees who elect to participate in the plans do so by paying premiums through a salary reduction arrangement under a section 125 cafeteria plan. Under scenario four, the employee receives a cash payment of $100 for completing a health risk assessment; $100 for participating in prescribed health screenings; and $100 for participating in prescribed preventative activities. Under scenario five, the employee simply receives a cash payment each pay period for participating in the wellness plan. In both scenarios, the OCC concludes that the payment from the plans is taxable income.

The Memorandum also addresses the treatment of the payments from the indemnity plans for purposes of employment taxes: Social Security (FICA), unemployment and withholding taxes. The IRS concludes that, in scenarios two, three, four, and five, the benefits paid are subject to FICA and unemployment taxes, and are also subject to withholding.

Conclusion

While this guidance coheres with previous analysis on the status of fixed-benefit health plans and does not disturb the larger question of the exclusions from income under sections 104, 105 and 106 of the Internal Revenue Code regarding employer contributions, it is notable because for the first time, the IRS has addressed the tax treatment of payments under an indemnity plan. Employers should review the Memorandum closely as they design their benefit plans for 2018.

ADDITIONAL INFORMATION

Information contained in this Important Updates—Health-Benefits – Fixed Indemnity Benefits is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at service@cbis-lc.com.

DMC Now Out-of-Network With Humana

In the Know & How It Applies |   OCTOBER |  2016

As of October 1, 2016 all of the DMC’s doctors, hospitals, ambulatory surgery centers, urgent care centers, imaging centers, laboratories and home health centers nationwide, are now Out-of-Network for all patients with Humana.  This includes:

  • Humana Commercial
  • Humana Medicare Advantage
  • Humana Medicaid
  • Humana on the Exchange
  • Humana TRICARE

 What DMC centers are affected? 

  • DMC Children’s Hospital of Michigan
  • DMC Detroit Receiving Hospital
  • DMC Harper University Hospital
  • DMC Heart Hospital
  • DMC Huron Valley- Sinai Hospital
  • DMC Hutzel Women’s Hospital
  • DMC Rehabilitation Institute of Michigan
  • DMC Sinai-Grace Hospital

The DMC announce earlier this month that after repeated efforts to find common group, they were unable to reach an agreement on a new contract.

Are any other carrier impacted by this change?

The DMC currently participated with many major health insurance plans other than Humana such as (to name a few):

  • Aetna
  • Blue Care Network
  • Blue Cross Blue Shield of Michigan
  • Cofinity PPO
  • HAP
  • Priority Health
  • United Health Care

For a complete listing of participating insurance plans, please visit the DMC’s website or click on the link below:

DMC Participating Insurance Plans

What this means for clients/members: 

  • Emergency Care: Emergency access is NOT impacted. Clients/Members can continue to receive emergency care at the DMC Emergency Rooms, regardless of the network status with Humana
  • Continuity of Care: Certain patients may be eligible to receive “Continuity of Care” benefits with Humana for a period of time if they need ongoing treatment or already have a procedure scheduled. For questions about ongoing care or benefit coverage, less advise members insured with Humana to call the phone number on the back of their Humana Insurance Card.
  • Out-of-Network Care: Members with Humana PPO may still access the DMC health care provider and hospitals for health care services using their out-of-network benefits.

 

ADDITIONAL INFORMATION

Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at cbis@cbis-lc.com.

Affordable Care Act – Reinsurance Fee

The following Update addresses Section 1341 of the Affordable Care Act established a transitional reinsurance program to stabilize premiums in the individual market inside and outside of the Marketplaces. The transitional reinsurance program will collect contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered, Affordable Care Act-compliant reinsurance-eligible individual market plans, the administrative costs of operating the reinsurance program, and the General Fund of the U.S. Treasury for the 2014, 2015 and 2016 benefit years. 

How it Applies

 This fee on health plans totals $25 billion, which will be collected over the three-year period from 2014 through 2016. The majority of the money will be used to fund a reinsurance program, which is intended to lessen the impact of adverse selection in the individual market. The fee applies to both insured and self-funded commercial major medical plans effective January 1, 2014 and ends with the last fee payment on January 1, 2016.

Fully-Insured employers will have this fee included in either their monthly fixed premium rates from the carrier or included as a separate line item on their carrier invoices.  The carriers submit on behalf of their fully-insured clients.

Self-Funded employers are required to report a count of lives covered to the Health and Human Services during the fourth quarter of the respective filing year.  The ACA enrollment and contributions submission form is provided online only through www.pay.gov.

What is the fee?

For the 2014 benefit year, HHS offered contributing entities the option to pay:

  • the entire 2014 benefit year contribution in one payment no later than January 15, 2015 reflecting $63.00 per covered life; or in two separate payments for the 2014 benefit year, with the first remittance due by January 15, 2015 reflecting $52.50 per covered life, and the second remittance due by November 15, 2015 reflecting $10.50 per covered life.


For the 2015 benefit year, HHS will offer contributing entities the option to pay:

  • the entire 2015 benefit year contribution in one payment no later than January 15, 2016 reflecting $44.00 per covered life; or
  • in two separate payments for the 2015 benefit year, with the first remittance due by January 15, 2016 reflecting $33.00 per covered life, and the second remittance due by November 15, 2016 reflecting $11.00 per covered life.

 For the 2016 benefit year, HHS will offer contributing entities the option to pay:

  • the entire 2016 benefit year contribution in one payment no later than January 17, 2017 reflecting $27.00 per covered life; or
  • in two separate payments for the 2016 benefit year, with the first remittance due by January 17, 2017 reflecting $21.60 per covered life, and the second remittance due by November 15, 2017 reflecting $5.40 per covered life.

2016 is the last year self-funded employer plans will be required to submit the Reinsurance Fee in accordance to the three year benefit filing fee requiring under the Affordable Care Act.

How does CBIS assist clients?

For those Self-Funded clients that would like assistance from CBIS, as in the past year’s reporting and payments, CBIS will provide the Average Number of Covered Lives enrolled and calculate the Reinsurance Fee.

 

What are Covered Lives?

Covered lives are all covered individuals, both employees and their dependents. For example, an employee who has family coverage including a spouse and two children would be counted as four covered lives.

What is the process self-funded employers must follow to pay the reinsurance fee?

There is a streamlined membership and contribution process through http://www.pay.gov. Pay.gov is a secure, web-based application that serves as the portal where employers can report and submit the required membership data elements. Registration on pay.gov is required in order to complete the reinsurance process.

As part of the membership and contribution process, a contributing entity, e.g. the employer or insurer making the contribution, can begin to collect the data, calculate their annual enrollment count and prepare the supporting documentation.

Additionally, a reporting entity will need to complete the following steps:

  • Register on pay.gov
  • Access and complete the form on pay.gov, titled “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.” A copy of this form has been included in the email communication for client’s reference and use.
  • Upload the supporting documentation (this would be the same .CSV format file from last year with the updated numbers).
  • Enter payment information (e.g. payment date and banking information).
  • Self-funded employers should also contact their bank to have the ALC+2 value added to allow for automatic debits

 

What if after receiving the snapshot report clients have questions?

Please feel free to contact your dedicated CBIS Account Representative and they will assist with any questions as well as provide additional guidance and clarification if needed.

ADDITIONAL INFORMATION

Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at cbis@cbis-lc.com.

 

 

Are you ready for Open Enrollment?

FRAUD WARNING:
When shopping for health insurance on the Marketplace (Exchange) be sure to ask for their Federal Facility or Start Partnership Marketplace Unique ID. All licensed professional are required by law to complete training including a federal background check in order to assist individuals with their health care options on the Marketplace.

CBIS Marketplace ID: CBISEXCHANGE
National Producer Number: 976408
Producer Name: Patricia A. Shall

What to Know:

The 2017 annual Open Enrollment for the Health Insurance Marketplace is vastly approaching. November 1, 2016 starts the beginning of annual open enrollment where uninsured individuals may again review available plan options and make decisions as to the best plan to meet their personal and/or family health care needs.

How CBIS can assist:

CBIS can help assist you in finding the right coverage and right budget that fits your household needs.

CBIS has the tools, technology and the access to all the major carriers participating in the Health Insurance Exchange. Let CBIS take the worry out of reviewing the fine print of each available plan design.

Whether you are looking for coverage ON the Marketplace through Healthcare.gov or OFF the Marketplace through several carriers offering Individual plan, CBIS can help.

Give us a call at (586) 992-0404 or email us at cbis@cbis-lc.com to get started TODAY!