Voluntary Benefits: No Longer Voluntary for Employers (A White Paper)

The evolution of voluntary benefits – that is, those made available by employers but typically funded by employees – over the last five to ten years is truly significant. Once considered a burden that just wasn’t sought after enough by employees to be worth the effort, voluntary is now a critical component to many corporate benefits packages. It offers a win-win-win solution for employers, employees and vendors alike. It allows employees access to more customized products and services without the employer needing to shoulder the cost, in a time when rising healthcare costs are already keeping them up at night.Voluntary Benefits

In this white paper, we’ll take a deep dive into this market shift and uncover the advantages of voluntary programs for all stakeholders. We’ll also share tips and best practices for getting started – or maintaining – your voluntary benefits program, as well as point out potential pitfalls of voluntary plans and how to avoid them. We’ll discuss things like plan design, workforce demographics, ERISA, program communications and other factors that come into play.

Whether you’re already offering voluntary benefits or are considering starting, you’ll want to read our advice and guidelines. We’ve been helping clients navigate these tricky waters for years, and have picked up quite a few tricks of the trade along the way! Fill out the form below for your copy of the white paper, “Voluntary Benefits: No Longer Voluntary for Employers.”

 

 

Watch the Webinar: ERISA Considerations for Voluntary Plans

Once a bit of an afterthought, voluntary benefits are now quite mainstream and used as a tool for employers to provide top-notch, competitive benefits to employees while not increasing their costs. At a time when organizations are struggling to battle the rising costs of healthcare while retaining and recruiting top talent, many have recognized the value of a voluntary program in recent years. With such increased popularity, it’s important for employers to understand all the legal ramifications of their offerings.ERISA voluntary benefits

The Employee Retirement Income Act of 1974 (ERISA) is a federal law that outlines standards for certain pension and health plans. ERISA effectively guides what an employer is allowed and prohibited from doing when it comes to establishing, maintaining and publicizing these benefits. When it comes to voluntary plans, its relationship with ERISA is a bit murky:

  • which plans does ERISA apply to?
  • what is the safe harbor policy?
  • what are the consequences of violating ERISA for voluntary?

In this recorded webinar, I explain the answers to these questions and more. Failing compliance when it comes to voluntary and ERISA is likely a misunderstanding that your organization cannot afford, and it’s important to know the legal nuances that exist when talking about ERISA and voluntary benefits vs. other types. With many employers turning to voluntary programs to solve some of their benefits challenges, it’s critical that they are executed within the realms of the law.

Fill out the form below to learn all about this complex topic. I’ll outline key points and info and you’ll be able to listen to real questions asked by your peers.

 

5 Potential Pitfalls of Voluntary Benefits & How to Avoid Them

You already read that Voluntary Benefits Are No Longer Voluntary for Employers. Now it’s time to dig deeper into Voluntary Benefits best practices- program design, what constitutes success when it comes to voluntary benefits and outline tips to prevent an ineffective voluntary program.

The term voluntary benefits was coined long ago when employers fully funded (or significantly subsidized) core benefits and voluntary benefits were an add-on, paid for by the employee through payroll deductions.  As the landscape changed, core benefits evolved to be partially funded by employers and partially funded through payroll deductions. As a result, many benefits became voluntary.

For today’s employees, it’s not as simple as core and voluntary; it’s about choice.  Employees need to balance what limited disposable income they have for all benefits, regardless of what they are labeled. Even still, the concept of core and voluntary resonates with employers as an industry norm, so it’s important to identify ways to avoid common pitfalls of voluntary program implementation:

  1. Think holistically
  2. Don’t forget about ERISA
  3. Consider enrollment options as a critical component in overall design
  4. Remember that education is key
  5. Help employees get the most from their plan

Think Holistically About Voluntary BenefitsVoluntary Benefits Tips

Many employers think offering voluntary benefits is like checking a box – something that can be done quickly and without much deliberation. However, programs without thoughtful preparation are rarely successful in terms of education, enrollment and satisfaction.  Voluntary benefits should be considered an integral part of the overall benefits package.  A strong offering should take into account various factors, including but not limited to:

Current population:

Although a one-size-fits-all approach does not and should not exist, employee demographics can help you pinpoint which products would be most sensible for your collective audience.  Generally speaking,                  those that are starting out in their careers have different priorities than those nearing retirement, and employees falling somewhere in the middle of the spectrum will have their own set of benefits needs as                well.  For example, accident insurance is more popular for families than for singles or empty nesters, while student loan repayment is more relevant for those in their 20’s and 30’s than for older employees.

Current benefit offering:

When considered in tandem, voluntary benefits can serve to protect employees and reduce their risk or perceived risk for various physical or financial troubles.  For example, introducing a high deductible                   health plan offering complementary voluntary products (i.e. hospital indemnity, critical illness, accident insurance) can help decrease the financial burden on employees.

Don’t Forget About ERISA Considerations for Voluntary Benefits

Voluntary Benefits Best PracticesVoluntary benefit programs may or may not be subject to the Employee Retirement Income Security Act of 1974 (ERISA), depending on how they are structured and supported by the employer.  ERISA provides important protections but can also pose constraints for employers and employees.  Assuming you do not want your voluntary programs to be covered under ERISA, you must be careful to manage enrollment and administration separately from your core benefit programs.  If you would like your voluntary plans to be subject to ERISA, then coordinating administration and enrollment will not be problematic; however, understand the potential impacts.  ERISA compliance and your potential fiduciary duties should never be an afterthought.

Consider Enrollment Options as a Critical Component in Overall Design

Our research affirms that employees better understand the offering and have higher enrollment when they participate in group meetings or individual meetings.  In addition, vendor partners are often willing to offer more competitive pricing and waive enrollment requirements if they can meet with employees directly or send them some type of material in the mail.

While some employers welcome the “free” education and enrollment, others are concerned about aggressive selling or having employees using work hours to meet with potential vendors.  If you think of voluntary benefits as part of your holistic offering, then leveraging work hours will be less of an apprehension when voluntary is an element of your complete attraction and retention tool.

The key is to think about the enrollment process as an essential design component of your voluntary program.  Ensure that decisions surrounding enrollment fit with the overall program strategy and make sense for your population.  Providing comprehensive enrollment with core and voluntary may be a best practice for your group.  This allows employees to make coordinated decisions regarding their contributions and programs.  It also enables you to offer complementary plans for optimal plan selection.  While that structure works for some, other employers feel employees have too many decisions to make during annual enrollment and prefer to stagger voluntary enrollment to allow more time for thoughtful decision making. There’s no right or wrong answer – each company and population is different.

Remember that Education is Important

Decision support tools have continued to evolve, providing employees with strong advocacy for traditional plans and voluntary benefits alike.  Although voluntary benefits are designed to be less complex and easier to understand, for some employees the language is new.  Summarizing the program(s) and sharing scenarios to help employees understand the products is often the best way to introduce a new plan.Voluntary Benefits Enrollment

Regardless of who funds the program, as the employer it is important that you educate your employees on the available offering.  Employees should not elect a benefit they do not understand and employers should not offer benefits that are not valued by employees, or that employers themselves cannot explain effectively.  Every dollar spent on voluntary benefits is money your employees are not spending on other necessities like monthly bills, student debt, groceries, emergency savings, or even 401k contributions; make sure they are knowledgeable about what they are buying and ensure that it’s a competitive product in the market.

Education can be facilitated in many ways including traditional employee meetings, brochures, benefit fairs, and onsite sessions with vendors.  At Spring we have also assisted clients with quick videos that provide the highlights of a program and generate interest.  These videos have been well received and employees are able to retain the information from a creative video more easily than a detailed presentation.  Videos are also shareable and can be viewed by family members who may be a critical part of the decision-making process.

Help Employees Make the Most of the Plan

Voluntary Benefits Vendors

After you have implemented a voluntary program and educated your membership it’s important that you continue to monitor the program and assist your employees in optimization.  Sometimes employees forget about the benefits they have available to them and continue to make monthly contributions to plans but they neglect to file claims because they don’t remember what they have elected.  A few simple actions can help your employees make the most of the plan:

  • Send a quarterly newsletter to all employees, or just those enrolled in voluntary benefits. This will give you the opportunity to remind them of the program benefits.  It can also help facilitate changes (i.e. enrolling spouses, children) and provide an opportunity to ask questions.
  • Partner with your vendors. For example, if you have a purchase program in place, they often run specials and send postcard reminders.  Take advantage of those specials!  Perhaps you could run a joint wellness campaign linked to specials on health equipment.  Ask if they would be willing to raffle off something like a treadmill or vacation to align with your wellness strategy.
  • Remind your employees to file claims. Even if you cannot leverage actual data, you can send a reminder at the midpoint of every year for wellness visits with a link to the claim form.  For example, most critical illness and accident plans offer a wellness rider – find out how many employees use that benefit and try to increase that percentage.
  • Ensure the program remains competitive from a pricing and design standpoint. Employees should feel assured that the benefit they’re purchasing through their employer remains is top tier.

Taking the above factors into account will help you establish a voluntary benefit offering that is accessible and relevant to your employees and that is well worth the effort on your part. Today’s workforce has come to expect more than just the basics when it comes to benefits, and voluntary products allow you to diversify your benefits package, keeping you competitive with market standards without any significant cost increase.

However, it is not enough merely to offer voluntary products and services – they need to be the right ones for your population, they need to be communicated effectively, they need to be readily understood, they need to account for regulations like ERISA, they need to be fully utilized and they need to be rolled out in a way that makes sense for your organization. By covering these bases you’ll be able to avoid the most common pitfalls and successfully offer a valued voluntary benefits programs.

Natural Disasters & Employee Benefits: Legal & Moral Considerations

Making Natural Disasters Less Disastrous for Your Employees

With the recent hits of Hurricanes Harvey, Irma and José as well as the 8.1 magnitude earthquake that hit Mexico and the ongoing wildfire problems in the Western United States, many are left wondering what they’re supposed to do in the face of such tragic, unprecedented damage caused by natural disasters.

This goes for everyone – if you’re a victim, how do you cope, and get back on your feet? If you’re lucky enough to be far away from destruction, how can you help? If you work in politics, what is the plan for disaster relief? However, working in the space that we do, we’d like to weigh in on the employer perspective: what benefits and leave allowances your employees are legally entitled to in the midst of a natural disaster and what employers might want to consider, while not required, in order to alleviate the burden for their employees.

natural disasters employee benefits

FMLA & ADA and Natural Disasters

What’s Required

When it comes to FMLA and/or ADA related leaves of absence, there’s essentially no real change in process in the face of a natural disaster, at least in terms of the law. There are, however, a few factors to consider, even if you’ve no plans to make a policy change:

  • A bad storm or earthquake may heighten the severity of any pre-existing conditions your employees might have. A spike in FMLA or ADA leave requests is not uncommon in the aftermath of a natural disaster; someone with an exiFMLA Accommodationssting nervous disorder may be dealing with stress-related conditions, blood pressures may be on the up-tick, people may need time to care for relatives who didn’t fare the storm well, etc.
  • It is possible for a natural disaster to spur a new condition or injury, such as backpain from home repair, stress-induced migraines, or anxiety over destroyed property.
  • Employees who are members of the National Guard and are called for disaster-related duty are not necessarily protected under USERRA, but certain states do protect such absences.
  • Even in face of a natural disaster, the FMLA does not account for absences due to things like tending to flood damage, home repair, or looking for missing relatives after a storm. For these situations, employees would need to take personal or company leave to take care of such matters.
    • Absences that are protected by the FMLA that might arise would include the onslaught of an existing condition or a new one brought about by the natural disaster (as mentioned above), as well as the need to care for a spouse, child, or parent who cannot tend to their own medical needs. For example, perhaps a relative is diabetic and they need help managing their medication, which needs to be refrigerated, as they’re now without power.
  • If your office is impacted by a natural disaster and you need to shut down business operations, or if employees are not expected to work, FMLA entitlement days should not be counted for any employee during that time.
    • If an employee is on FMLA leave at the same time that the office is shut down, you need to treat them (in terms of pay, benefits, etc.) as if they are on non-FMLA leave according to your organizational policies.
  • A natural disaster can very well be considered an “extenuating circumstance”  that might prohibit an employee from completing the requisite claim and eligibility paperwork by the original deadline. See below.

What Some Employers Are Doing, “Just Because”

As a high-category hurricane or powerful earthquake are no doubt devastating both materially and emotionally, many employers are doing their best to show empathy and support for their employees during such difficult times. A few ways they are doing so are:

  • Allow more time for claims.
    • For example, we have clients in areas affected by Hurricane Harvey who are allowing employees an additional 30 days to meet any claims requirement – whether STD, FMLA or any other kind. Keep in mind that if people have been evacuated, relocated, and/or are experiencing a power shortage, they should not be expected to meet the same deadline. They may not receive a certification form in the mail because they haven’t been at their home address, and without power and internet they might be unable to complete any such documentation online.
  • Consider those in FEMA-designated disaster areas.
    • Individuals in these areas may need unique assistance and, depending on the damage, there could be cause for a temporary process change on a case-by-case basis.
  • Expand or discount any available medical services.
    • We have a clients who, as a benefit, offer telehealth services to their employees. Some organizations, in the aftermath of a natural disaster, allow employees to access this service for doctors’ visits and consultations completely free of charge, regardless of their health insurance plan.
  • Remind employees of support services.
    • In times like these, employee assistance plans (EAPs) can be essential. Whether it’s providing updates to community situations, arranging access to local services or offering a counselor to talk to, employers are reminding employees how to contact the EAP and in many cases extending access to be 24/7, rather than restricting it to regular business hours.
  • Take your employees’ word.
    • If an employee requests FMLA leave while you suspect they might be using the time for something like assisting an elderly parent with their flooded home, it might behoove you to simply allow it and take their word for it.

As with all matters relating to employee benefits, there are things that employers legally have to accommodate for, and things that are just nice for them to do. It is important to understand the difference and come to an agreement as to what kind of plan will be put in place, if any. Further, if your organization has not yet been faced with a serious a natural disaster, there’s never a better time than the present to start developing a system should the need ever arise (and we certainly hope it doesn’t).

Why Voluntary Benefits Are No Longer Voluntary for Employers

Are You Missing an Opportunity?

By Karen English, CPCU, ARM and Lai-Sahn Hackett, CPDM

Introduction to Voluntary Benefits

Gone are the days of “voluntary” being frowned upon in the workplace.  We are past the stage of employer unease with the concept and the resulting worry about “selling” to employees.  Instead, voluntary benefits have become a welcome addition – some would even say critical – yielding increasingly competitive employee benefits packages that couldn’t be offered without them.

we are at a point where employers welcome voluntary benefits, yielding increasingly competitive employee benefits packages that couldn’t have been reached without them.Voluntary Benefits Dental Insurance

Voluntary benefits are insurance products or services made available by employers, but paid for by employees.   They are typically offered at lower rates than employees can find on their own, and provide a degree of choice beyond an employer’s core benefit offering.  There are a number of insurance carriers that underwrite them with products ranging from traditional life, disability, dental and vision to emerging concepts such as critical illness, identity theft protection and student loan repayment.

Employers like voluntary benefits because they make their packages stronger and tailored to the wants and needs of their specific workforce. Employees like them because they are easily accessible, pre-vetted, discounted and more diverse than traditional benefits. Carriers, brokers and consultants like them because they are a needed extension of employer core offerings.

Employer Need

Voluntary Employee BenefitsIn today’s competitive environment, employers are striving to maintain relevant benefit offerings despite increasing costs and the continuing uncertainty of healthcare reform.  The constant need to attract and retain talent and increase productivity is even further challenged by evolving workforce demographics and degree of consumerism being applied to every interaction. Further, a recent survey found that sixty percent of employees are likely to take a job with lower pay but better benefits, emphasizing the importance of a robust benefits program made possible, in part, through voluntary products1.

However, it should not be looked at with a one-size-fits-all approach. Employers can no longer look across their employee populations and make a short list of benefits that will fulfill their collective needs.  With millennials now equaling the baby boomers in number, and generation X’ers on their way to surpassing both, employers need to think about not only age and gender, but also personas within these segments, such as what is warranted by income and lifestyle2.

Market Response

In recognition of these needs, insurance carriers have expanded their capabilities beyond what are typically core employer-paid benefits to what are often referred to as supplemental employee-paid benefits that can either be stand-alone or structured as buy-ups to core plans.  This expansion has opened up possibilities for employers, as they are no longer subject to a subset of specialty carriers and brokers with limited and often self-serving products. They instead can turn to over twenty3 of the most recognized life and health carriers to fulfill the widespread needs of their employees.Voluntary Benefits Trends

These carriers are partnering with employers, brokers and consultants to design voluntary programs that will resonate with employee populations.  Whether it is employee health, wealth, security and/or personal needs that an employer is looking to address, the products that can respond are broad, appealing and growing.  Considering the category of health, for example – accident, critical illness, dental and hospital indemnity are among the most common voluntary benefits offered4.  Within the category of wealth – optional disability, financial counseling and student loan repayment are highly popular. With respect to security, identity theft protection is projected to be the fastest growing voluntary benefit and within the personal sphere, pet insurance is following suit5.

How to Get Started

If you are grappling with how to find that happy medium for your workforce, taking the following steps will give you a start.

1. First and foremost, assess what your employees are interested in. At this point of conducting employee surveys and/or focus groups, you aren’t making any promises, just trying to listen and understand which voluntary products would be more valued than others.Voluntary Benefits Prices

2. Armed with this information, consider what your population can afford. You may find, for example, that six voluntary products are of most interest to your workforce. This doesn’t mean that employees can afford to buy all six.  In fact, we find that no matter how many are offered, employees purchase no more than three voluntary products at any given time6.

3. From here, think about resources to enroll and administer voluntary benefits. You may already have a technology platform you will want to leverage, or existing relationships with a set of carriers and enrollment firms that can help streamline the process.

Employee Benefits Communications4. Lastly and most importantly, contemplate not only how you will communicate their availability, but ultimately why employees should consider them. Employee education is critical to the reception of voluntary benefits, and the value proposition or “need” has to be clear for a benefit to even be considered7. This need should ideally be developed and communicated prior to the enrollment period, not during enrollment when the employee has likely already made up their mind and is not as open to processing new information.

Conclusion

In closing, the world of voluntary benefits looks very different than it did even five years ago. This shift is a result of a variety of factors including the rising costs of healthcare, changing workforce demographics, the increasing customizability of services in general, and the growing challenges presented by recruitment and retention. We are at a moment in time where stakeholders – employers, employees, carriers, brokers/consultants and more – are aligned and where there are great options for all parties.  The opportunities are endless and can be considered as a short-term strategy for now, with a longer-term view established based on the initial roll-out results.

 

Sources:

2016 Aflac WorkForces Report, op.cit
Pew Research Center, Millennials Overtake Baby Boomers as America’s Largest Generation, April 25, 2016
3 Spring Consulting Group Voluntary Pulse Market Update, 2016
4 Spring Consulting Group Voluntary Market Pulse, 2016
5 Willis Towers Watson Voluntary Benefits Survey, 2016
6 Spring Consulting Group Voluntary Employee Pulse, 2015
7 Spring Consulting Group Voluntary Employee Pulse, 2016

Deconstructing ACA “Repeal and Replace”

The efforts to “repeal and replace” the Affordable Care Act (ACA) have occupied a good deal of recent media attention. This should not come as a surprise, since the ACA’s repeal was one of the centerpieces of Mr. Trump’s campaign, and it has also been a staple of Republican campaigns and legislation for the past eight years. The U.S. House of Representatives has voted to repeal or cripple the ACA on 60 separate occasions during that time. (For an excellent summary of these efforts, please see the November 2016 paper, prepare by Stephen Redhead, Health Policy Specialist, and Janet Kinzer, Senior Research Librarian, Congressional Research Service, entitled Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act.)

aca repeal and replace

Image credit: Phil Roeder via flickr

While the mantra “repeal and replace” has become ubiquitous with reference to the ACA, for important political, budgetary and procedural reasons, these are really two different concepts, with radically different consequences. “Repeal” has a very different political calculus than “repeal and replace.”

What an ACA Repeal Really Means:

Despite their campaign promises, Republican lawmakers lack sufficient votes to repeal the ACA outright. This would require 60 votes in the Senate; Republicans have 52. So they must instead rely on a special budget strategy—referred to as “reconciliation”—that permits them to repeal those provisions of the ACA that directly impact federal spending. Created by the Congressional Budget Act of 1974, reconciliation allows for expedited consideration of certain tax, spending, and debt limit legislation. In the Senate, reconciliation bills aren’t subject to filibuster. Because any controversial bills in the Senate tend to attract a filibuster, the Senate Parliamentarian reviews the bill and decides whether it qualifies for reconciliation. Under the so-called Byrd rule, reconciliation bills can only make legislative changes that affect the federal budget. A previous ACA repeal bill was approved for budget reconciliation, which passed by the Senate in December of 2015. The bill was vetoed by President Obama, however.

The ACA is a massive law with 10 titles and hundreds of provisions. Of these, it is the insurance reforms, the individual and employer mandates, and the exchanges/marketplaces that are the most well-known. But the ACA also includes Medicare reforms, workforce provisions, FDA approval of biosimilars, and the many other provisions.

Repeal – The Reconciliation Process

Of all of the ACA’s many provisions, the following items are those that can be addressed by reconciliation in a stand-alone “repeal” measure (i.e., that can pass be a simple majority in the Senate):

  • Individual mandate penalty reduced to zero
  • Employer mandate reduced to zero
  • 40% excise tax on so-called Cadillac plans repealed (currently delayed until 2020). The excise tax may be replaced with a cap on the amount excluded from the employee’s income for employer-sponsored health plan coverage.
  • Increase the dollar limit on flexible health spending account contributions for Section 125 cafeteria plans (currently set at $2,600 for 2017)
  • Federal government subsidies for individuals to purchase exchange coverage reduced to zero (likely to be phased in over time)
  • Federal government “risk stabilization” payments to insurance companies reduced to zero (likely to be phased in over time)
  • Federal government payments to states adopting the optional Medicaid expansion reduced to zero, with Medicaid payments as block grants

A complete list of ACA provisions that are subject to repeal under the reconciliation process can be found in Table 3 of the Congressional Research Service paper cited above.

Replace – Requires 60 Votes

In contrast, the following items may not be repealed using reconciliation. This means that 60 votes will be required in the Senate to proceed:

  • Coverage mandates for insured and employer self-insured group health plans:
    • Coverage of adult children to age 26
    • Prohibitions on imposing:
      • Preexisting condition coverage exclusions
      • Waiting periods exceeding 90 days
      • Annual and lifetime dollar limits on essential health benefits
      • Reporting requirements (e.g., Summary of Benefits and Coverage)
      • Other ACA insurance mandates (the full list is set out below)
    • Additional ACA Requirements for Non-Grandfathered Plans:
      • Coverage of preventive services without cost-sharing (the regulatory interpretation of “preventive services” as including contraceptive coverage is likely to be changed eventually by new regulations under a Trump Administration)
      • Limits on employee cost-sharing
      • Independent external review of denied claims for plans not already subject to IRO under state insurance laws
    • Insurance Market Reforms
      • Small employer insurance plans required to offer coverage of all ten essential health benefits
    • The requirement to report the cost of employer-sponsored health plan coverage on Form W-2 cannot be repealed via budget reconciliation

Any attempt to repeal these provisions through normal legislative channels would be subject to a filibuster. Consequently, these provisions would remain in effect even if the ACA revenue provisions were repealed under a reconciliation measure. (A complete listing of the insurance market reforms is provided in the accompanying tables.)

Ignore – No Change

There is alternative to the handling of the ACA insurance market reforms, which are enforced through an excise tax penalty imposed on the employer. The Penalty is $100 per affected individual, per day, and it applies to any employer (regardless of the size of its workforce) that offers a group health plan that fails to comply with the ACA’s market reform requirements. Congress could reduce the excise taxes to zero. Or the the Trump Administration might adopt a non-enforcement policy regarding some certain market reform violations, but still enforce other popular market reforms (e.g., coverage of adult children up to age 26).

The “state of play”

There are currently at least five separate “repeal and replace” proposals. There are no stand-alone “repeal” proposals. Among other things, there is widespread concern that the repealing the ACA without providing a replacement would destabilize the insurance markets, and even lead to the collapse of the non-group market. The reasons for this collapse are explained in compelling fashion in a study by the Urban Institute, which claims that repeal of the ACA without replacement would devastate the non-group market “causing 7.3 million . . . people to become uninsured” as a result of three factors:

  • Eliminating premium tax credits and cost-sharing assistance would make coverage unaffordable for many of the people currently enrolled, causing them to drop coverage. Those with the fewest health problems would drop their coverage fastest
  • Eliminating the individual mandate penalty would reduce the incentive to enroll for healthy people who can afford coverage
  • Insurers would remain subject to the requirement to sell coverage that meets adequacy standards to all would-be purchasers, and they would remain subject to the prohibition against charging higher premiums or offering reduced benefits to those with health care needs

While we find the Urban Institute’s analysis compelling, Congressional Republicans are almost certainly aware of this risk, and they may be prepared to appropriate funds necessary to stabilize the insurance markets pending passage of comprehensive ACA replacement legislation.

The impact of repeal and replace on Government programs (Medicare and Medicaid)

Medicare

The ACA made some valuable, and correspondingly costly, changes to Medicare. Among other things, it expanded Medicare coverage to include certain preventive services, like mammograms or colonoscopies, without charging Part B coinsurance or deductible. In addition, the ACA phased out the prescription drug “donut hole.” Finally, the law took steps to ensure the Medicare program’s long-term solvency. All of this would be rolled back in the case of a full-blown ACA repeal. But at least one of the major replacement plans proposes to leave the ACA changes to Medicare intact. Presumably, this is a nod to popularity of the phase-out of the prescription drug donut hole.

One replacement plan (proposed by Rep. Paul Ryan) does not stop here. It instead proposes “transforming the [Medicare] benefit into a fully competitive market-based model using premium support.” Under the Ryan plan, beginning in 2024, Medicare beneficiaries would be given a choice of private plans competing alongside the traditional fee-for-service Medicare program on a newly created Medicare Exchange.

Medicaid

Medicaid is another matter entirely. The ACA vastly expanded the reach of the Medicaid program. The matter of Medicaid’s regulation post-ACA was further complicated by the Supreme Court’s ruling in 2012 that states were free to reject the ACA Medicaid expansion.

Before the ACA, Medicaid provided health care for children, pregnant mothers, the elderly, the blind, and the disabled.” The ACA expanded Medicaid’s reach to all low- income individuals. The Republican members of Congress roundly criticized this expansion, noting that the program’s expansion under the ACA accounts for more than 15 percent of all health care spending in the United States. This, they claim, is unsustainable.

The “Ryan” Plan’s approach to Medicaid is representative of the various “replace” proposals. Like the other plans, it makes radical changed to Medicaid that go well beyond mere repeal. This and the other plans offer two alternative approaches that states can elect: per capita allotment and block grants.

Per capita allotment

Under the per capita allotment approach a total federal Medicaid allotment would be available for each state to draw down on. The amount of the federal allotment would be the product of the state’s per capita allotment for the four major beneficiary categories—aged, blind and disabled, children, and adults—and the number of enrollees in each of those four categories. The per capita allotment for each category would be determined by each state’s average medical assistance and non-benefit expenditures per full-year-equivalent enrollee during the base year (2016), adjusted for inflation. The per capita allotment would be designed to grow at a rate slower than under current law.

Block Grants

Under the block grant option, a state that opts out of the per capita allotment could automatically receive a block grant of federal funds to finance their Medicaid program. States would then be free to manage eligibility and benefits generally as they see fit without the need to apply to the Department of Health and Human Services for waivers.

Individual and Group Market Reforms*

Provision Effective Date Section Title/Heading
(1) PPACA §1201§10103(e); PHSA §2704 Plan years beginning on or after September 23, 2010 Prohibition on preexisting condition exclusions for enrollees who are under 19 years of age.
(2) PPACA §1001§10101(a)HCERA §2301(a); PHSA §2711 Plan years beginning on or after September 23, 2010 Ban on annual and lifetime dollar limits on essential health benefits. Applies to group and individual insurance markets, and group health plans, including grandfathered group and individual plans. Annual or lifetime limits are permitted for items and services that are not part of the essential health benefits.
(3) PPACA §1001HCERA §2301(a); PHSA §2712 Plan years beginning on or after September 23, 2010 Rescissions permitted only for fraud or intentional misrepresentation of material fact and with prior notice to the enrollee. Applies to group and individual insurance markets, and group health plans, including grandfathered group and individual plans.
(4) PPACA §1001; PHSA §2713 Plan years beginning on or after September 23, 2010 Group and individual insurance contracts and group health plans (other than grandfathered plans) must cover the following preventive health services with no cost-sharing:
• Evidence-based items/services with a rating of “A” or “B” in the current recommendations of the U.S. Preventive Services Task Force (USPSTF).
• Immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention (CDC).
• Evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA) for infants, children and adolescents.
• With respect to women, additional preventive care and screenings provided for in guidelines supported by HRSA.
(5) PPACA §1001HCERA §2301(a)§2301(b); PHSA §2714 Plan years beginning on or after September 23, 2010 Group health plans that provide dependent coverage must make coverage available to age 26. Grandfathered group health plans may delay to plan years commencing on and after January 1, 2014, for adult children eligible to enroll in an employer-sponsored plan.
(6) PPACA §1001§10101; PHSA §2715 Plan years beginning on or after September 23, 2010 Group health plans must provide summaries of benefits and coverage (SBC) explanation that meets standards developed by HHS.
(7) PPACA §1001§10101(d); PHSA §2716 Plan years beginning on or after September 23, 2010, but enforcement suspended (Notice 2011-1, 2011-2 I.R.B. 259) Insured group health plans (other than grandfathered plans) must satisfy benefits-related non-discrimination rules under §105(h)(2) prohibiting discrimination in favor of highly compensated individuals in terms of eligibility and benefits.
(8) PPACA §1001; PHSA §2717 Plan years beginning on or after September 23, 2010 Group and individual market policies and group health plan (other than grandfathered plans) must establish quality programs and report quality data to HHS and to enrollees during each open enrollment period. Required elements of a quality program include:
• Improve health outcomes through activities such as quality reporting, effective case management, care coordination, case management and medication and care compliance initiatives, including through the use of the medical home model.
• Implement activities to prevent hospital readmissions through a hospital discharge program that includes patient-centered education and counseling, comprehensive discharge planning and post-discharge reinforcement by an appropriate individual.
(9) PPACA §1001; PHSA §2718 Plan years beginning on or after September 23, 2010 Bringing down the cost of health care coverage: Health insurance issuers provide an annual accounting for coverage offered (including grandfathered health plans) and rebates to enrollees if medical loss ratios are not met.
(10) PPACA §1001§10101(g); PHSA §2719 Plan years beginning on or after September 23, 2010 Internal appeals/external review:
• Issuers in the group market and group health plans must have an internal claims and appeals process based on existing DOL claims and appeals procedures, updated by standards established by HHS.
• Non-group plans must have an internal claims and appeals process based on existing law, updated by standards established by HHS.External Review: Issuers in the group market and group health plans must comply with applicable state or federal external review requirements.
(11) PPACA §10101(h); PHSA §2719A Plan years beginning on or after September 23, 2010 Group health plans must provide patient protections, including more choice of health care professionals, coverage of emergency services, and access to pediatric care and obstetrical or gynecological care.

 

Health Insurance Market Reforms*

Provision Effective Date Section Title/Heading
(1) PPACA §1201; PHSA §2704 Plan years beginning on or after January 1, 2014 Prohibition on preexisting condition exclusions or other discrimination based on health status.
(2) PPACA §1201; PHSA §2701 Plan years beginning on or after January 1, 2014 Fair health insurance premiums.
(3) PPACA §1201; PHSA §2702 Plan years beginning on or after January 1, 2014 Guaranteed availability of coverage.
(4) PPACA §1201; PHSA §2703 Plan years beginning on or after January 1, 2014 Guaranteed renewability of coverage.
(5) PPACA §1201; PHSA §2705 Plan years beginning on or after January 1, 2014 Prohibiting discrimination against individual participants and beneficiaries based on health status.
(6) PPACA §1201; PHSA §2706 Plan years beginning on or after January 1, 2014 Nondiscrimination in health care.
(7) PPACA §1201; PHSA §2707 Plan years beginning on or after January 1, 2014 Comprehensive health insurance coverage.
(8) PPACA §1201HCERA §2301(a); PHSA §2708 Plan years beginning on or after January 1, 2014 Prohibition on excessive waiting periods.
(9) PPACA §10103(c); PHSA §2709 Plan years beginning on or after January 1, 2014 Prohibition on denial of participation in approved clinical trials.

Tables used with permission. © 2017 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com2017.

How Business Might Change Under Trump: Maternity Leave

trump maternity leave

Image credit: Diego Cambiaso via flickr

Note: There are many unknowns for employers as Donald Trump takes office in two months. While many policy specifics are not crystal clear, we do know that a Trump presidency will be significantly different than our last eight years under President Obama. This is the first in a series of posts we will be writing that are aimed at letting you know what this regime change might mean to you as an employer.

One of the most developed policy announcement of the Trump presidential campaign came midway through the summer and was presented by his daughter Ivanka. Within Trump’s childcare reform plan was a program for ensuring paid maternity leave for all mothers in the United States. Here is how it would work conceptually:

The proposed Trump maternity leave plan would offer mothers six weeks of partial pay while they are out on leave. This maternity pay applies to women that work at companies that don’t already pay for maternity leaves and would be handled through unemployment insurance, which according to Trump represents 1.4 million women annually.

It should be noted that Trump’s maternity leave proposal, as we understand it, does not include any additional leave benefits for men or parents that adopt and there are conflicting views on whether it covers unwed mothers.

It is also worth noting that some have called the funding source of this initiative into question. Trump’s program calls for paying this new entitlement, which he estimates at $2.5 billion annually, through savings the Federal Government will realize by cleaning up unemployment fraud. Trump pegs “improper payments” of unemployment insurance at $5.6 billion, which covers the maternity leave program and then some, if his estimate is accurate.

It is unclear if this plan will garner enough support from Congress to be enacted, and frankly, it is unclear if Trump would send it to Congress as proposed. We will be monitoring this as the transition proceeds and will provide updates here if anything materializes.

You can read the entire Trump Childcare Reform position paper here.

New Limitations on Short-Term Healthcare Policies: What You Need to Know

Short-Term Healthcare

Image credit: Michael Havens via flickr

On October 31st, the US Departments of Labor, Health and Human Services and Treasury (the Departments) issued a Final Rule pertaining to short-term healthcare policies. Here are the details:

Short-term health policies are exactly as they sound: healthcare policies, limited in duration, that are meant to function to fill a gap in coverage some individuals may face during their lives if they transition between jobs or group health plans. They are currently limited to twelve months of coverage.

What the Departments have found is there is a growing practice of individuals purchasing short-term policies (which are generally cheaper than exchange policies) and then paying the IRS penalty (short-term policies are not considered Minimum Essential Coverage), which has become a cheaper option. In some cases, individuals are even allowed to renew their short-term policy past the twelve month period, further solidifying the policy as their primary coverage.

It is speculated those opting to go this route are healthier individuals that just want to ensure they have some coverage. These healthier individuals are exactly what the Affordable Care Act needs in the exchange risk pool to balance things out. This is why there was such a concerted effort to close the door on this practice and push these individuals to the exchanges.

To combat this practice and further diversify the exchange risk pool, the Departments have issues a Final Rule, which changes the twelve month maximum for short-term policy coverage to three months. This will be effective for any policies with policy years beginning January 1, 2017. It should be noted that the limit will not be enforced on any 2017 policies, sold before April 1, 2017, in states with existing approved 12 month limits providing the policy expires in the 2017 calendar year.

The full ruling can be found here.

This change won’t cause a seismic shift in the exchange risk pool, but with some of the projected rate increases being reported for 2017 and beyond, even small steps certainly help in chipping away.

Of course, in light of last night’s election results, much of the Affordable Care Act will be under a cloud of uncertainty for the foreseeable future, so stay tuned…