All posts tagged Affordable Care Act

What the Latest Version of the AHCA Would Mean for Employers

Magazine with article about Repeal Healthcare with magnifying glass. Concept. +all text written by photographer and is copyright free+

The American Health Care Act that was passed by the House of Representatives by a small margin would repeal the employer mandate and the reporting requirements that the Affordable Care Act ushered in.

While Senate Republicans are likely to start from scratch and hammer out their own ACA replacement, for now, the only legislation in play is the controversial AHCA.

So, what’s in it for employers?

 

Eliminates the employer mandate – The ACA mandate requires that employers with 50 or more full-time or full-time-equivalent workers provide health insurance for their staff. The AHCA eliminates this requirement. This will likely not have a significant impact on a large number of organizations since they offer benefits to better compete for talent.

 

Delays the “Cadillac tax” again – Congress has already voted once to delay the implementation of an annual 40% excise tax on plans with annual premiums exceeding $10,800 for individuals or $29,500 for a family. The tax is slated to take effect in 2020, but the AHCA delays that to 2026. While the tax is supposed to be paid by insurers, it’s anticipated that they would pass it on to employers.

 

Changes tack on essential benefits – The ACA also requires that all health plans provide 10 essential benefits, including doctors’ services, inpatient and outpatient hospital care, and prescription drug coverage. The AHCA would allow states to have the final say in what health insurance plans should include.

That said, the bill would seem to allow national employers to opt out of essential benefits and offer stripped down plans that would likely be less expensive for employers and their covered workers, but also offer fewer benefits.

 

Expands health savings accounts

The measure would also greatly increase the amount of cash an individual can set aside pre-tax into their HSA. The current maximum an individual can put into an HSA is $3,400, but under the AHCA that would be increased to $6,550. For families, the HSA maximum would jump to $13,100 from the current $6,550.

The AHCA removes the cap on flexible savings accounts as well, which was set at $2,600 under the ACA.

These two changes would benefit employees who take advantage of these health care savings vehicles.

 

The takeaway
The AHCA does much more than the above, but most of the rest of the legislation is really geared toward the individual market and also tries to deal with the issue of pre-existing conditions.

The AHCA would also:

  • Eliminate the tax penalty for individuals who fail to secure coverage.
  • End funding for Medicaid expansion.
  • Replace the ACA’s cost-sharing subsidies, which are based mostly on consumers’ incomes and premium costs, with tax credits that increase for older individuals.
  • Repeal taxes on the wealthy, insurers, and drug and medical device makers.

 

To be clear, this legislation is not the end game. House Republicans were able to pass the legislation by a razor-thin margin after much wrangling, a feat that will be difficult to repeat in the Senate.

Also, it seems likely that Senate Republicans will start from scratch with their own legislation and that the AHCA may never see the light of day in the Senate.

Political stakes are also higher for senators and the GOP holds a slight 52-48 majority in the upper house. It would only take a few defectors to sink any attempt at repealing the ACA.

 

Companies Struggle with Benefits Compliance

More and more employers are being overwhelmed by all of the compliance requirements associated with managing employee benefits.

The Guardian Life Insurance Company of America’s “Benefits Balancing Act” study found that 60% of employers are feeling overwhelmed with the increased complexity of managing their benefits programs. One of the main reasons for the additional burden is the Affordable Care Act, with its myriad of compliance and reporting requirements.

The employer mandate and the documentation and new filing requirements with the IRS are high on the list of compliance issues, as are evolving Family Medical Leave Act (FMLA) and ERISA requirements.

Interestingly, larger firms with 100 or more employees are having the hardest time, with 70% saying they are especially challenged by installing new coverages, changing carriers and employee communications and enrollment.

The shackles of compliance are so great that it’s the number one benefits-related concern for nearly 30 % of employers, the study found. In fact, 70% said that their firms are not equipped to keep up with the steady changes in federal and state laws governing employee benefits.

The top areas of compliance concern are:

  • The ACA excise tax (“Cadillac tax”)
  • Changes to paid parental leave laws
  • ACA employer mandate
  • ERISA requirements
  • State and local FMLA requirements

 

In terms of administration the top concerns are:

  • Employee communications and education
  • Adding new benefits or changing plans and insurers
  • Establishing electronic data interchanges
  • Account management and service delivery
  • Claims and employee customer service
  • Enrolling employees

 

What companies are doing

As the regulatory landscape has shifted so dramatically over the last seven years, many employers have opted for outsourcing their benefits compliance.

This may be an especially smart move for smaller employers, which often do not have in-house benefits administration resources.

 

Among employers outsourcing at least some benefits activities, the study found that:

  • 50% use the services of a broker
  • 25% use an insurance company
  • 25% use a third-party vendor (enrollment firm, HR services firm or a private exchange)

ACA Repeal Plan Is Dead; So What Should You Do?

A blank tombstone against a sky with fluffy clouds..

Now that the American Health Care Act has suffered a defeat in Congress and President Trump has said he’ll move on to other matters, the Affordable Care Act will stand as the law of the land.

The big question hanging over the law, however, is the executive order that Trump signed shortly after taking office in January. While that order did not abolish the legislation, it set the stage for agencies to act immediately on regulations that are deemed overly burdensome.

However, the administration has not indicated what it will do now that the AHCA has ground to a halt.

While the executive order still stands, it’s now abundantly clear that the ACA will not be repealed this year, but what’s not certain is how the agencies will enforce the law’s regulations.

They can choose, for example, not to enforce the penalties for applicable large employers who do not provide acceptable health insurance for their employees, or to enforce the penalties for individuals that do not secure health insurance if none is offered by their employer.

There are two main agencies that have enabling regulations in place for the ACA: the

Department of Treasury and the Department of Health and Human Services (HHS). There has been no indication or announcement from these agencies that they will or will not enforce the regulations currently in place or whether they are in the process of starting to write new ones.

Regardless, whatever they chose to do, rule-making takes time… often years. In fact, the regulations that enabled the ACA took four years to unfold as the agencies were busy writing them and putting them out for public comment.

And any rules would still have to be changed within the confines of the ACA, and it’s unclear how much leeway the agencies have in deviating from that law.

The executive order reads:

“…it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

It also said that the HHS secretary and other agency heads “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision… that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

Meanwhile, Trump has expressed willingness to work with the Democrats to get a new law pushed through, but the chances of that are slim if he insists on repealing the ACA. They are more likely to be open to changes to address some of the problems with the law, particularly the lack of participation by private insurers in health exchanges in some parts of the country.

 

The takeaway
So what does this mean for you, an employer? It means you should continue providing insurance for your employees if you are an applicable large employer, and continue submitting the required forms to the IRS.

For now, do what you’ve been doing.

 

GOP Releases Legislation to Gut and Replace ACA

House Republicans have filed legislation that would repeal most of the Affordable Care Act, including measures to eliminate the employer and individual mandates.

But from the get-go the legislation – backed by the House leadership – was panned by the GOP’s conservative wing, which said it doesn’t go far enough to completely get rid of the ACA, casting doubt on the prospects of it getting passed.

And Congressional Democrats immediately voiced their absolute opposition to the bill, vowing to vote ‘No’ on the legislation.

While passage in the House would be a bit easier, the slim 51-49 vote edge that Republicans hold in the Senate means it’s unclear whether the bill can pass in its present form.

But for now, this is the only piece of viable legislation that’s been floated to gut the ACA, and replace it with a scaled-down version.

The leadership is mindful that they cannot do an outright repeal, since it would affect some 20 million people who have been able to secure health insurance under the ACA.

The bill, called the American Health Care Act, would be phased in over time and would keep the ACA’s premium subsidies for policies purchased through insurance exchanges until 2020, as well as fund Medicaid expansion under the ACA for the same time.

This is just the first draft, and because of the opposition from conservatives in the Republican Party, the current version will not likely be the final one.

House Speaker Paul Ryan has said he wants to see the bill passed by Congress by the end of April. In other words, there will be a lot of work to do in very short order.

 

Here are some of the major provisions of the bill:

  • Eliminating the employer mandate that requires employers with 50 or more full-time or full-time equivalent workers to offer health insurance.
  • Eliminating the individual mandate requiring Americans to be covered either through their employment or by purchasing coverage on the open market or a health insurance exchange.
  • Ending the funding for Medicaid expansion as of 2020.
  • Converting the Medicaid to a program of capped per-capita federal grants to the states, starting in 2019.
  • Eliminating the subsidies available under the ACA and replacing them with age-based, refundable premium tax credits to help people buy insurance. Under the ACA subsidies are based on income, not age, and the proposed age-based tax credits generally would be smaller than the ACA’s.
    The tax credits proposed by House Republicans would start at $2,000 a year for a person under 30, rising to a maximum of $4,000 for a person 60 or older. A family could receive up to $14,000 in credits.
  • Removing ACA taxes and penalties (adding a premium incentive for continuous coverage and allowing insurers to tack on a 30% surcharge for people who let their policies lapse).
  • Protecting employer exclusion (tax write-off for employers and pre-tax for employees).
  • Retaining the “Cadillac tax” on high-value plans, but delaying its implementation to 2025 from 2020.
  • Eliminating the requirement that plans must offer minimum essential benefits.
  • Offering states $100 billion over nine years to establish high-risk pools or other mechanisms for stabilizing the individual insurance market.
  • Allowing insurers to charge older individuals five times higher premiums than they charge younger people. That’s compared with the 3 to 1 ratio under the ACA.
  • Expanding and promoting health savings accounts.

 

 

The fate of the legislation remains to be seen and under the proposal, it would surely not live up to President Trump’s promise that individual plans would be better and less expensive under the GOP’s ACA replacement.

 

We will keep you posted as the legislation develops.

 

 

 

Republicans Consider Fixing ACA, Not Repealing It

Pandoras box and scull smoke

The steamroller everyone expected from President Trump and the GOP-led Congress to flatten the Affordable Care Act has been put on idle and what was a promised quick outright repeal has morphed into a plan to “repair” the law.

In particular, Republican lawmakers, huddling while trying to devise a repeal-and-replace plan, have instead found that it won’t be so easy, unless they want to cut off millions of people from the health insurance they have purchased on exchanges.

They are most concerned with the political fallout should that happen, not to mention the fact that a repeal would also do away with the Medicaid expansion that has ensured that millions more low-income earners are covered.

With everything in flux now, as we mentioned earlier, it’s best to continue complying with the ACA as it still is the law of the land and it’s looking more and more likely that the law won’t be repealed, but will be changed. And lawmakers have indicated that they may have a fix on the table by the end of the year.

Top GOP lawmakers have publically stated that some parts of the law will remain intact and others will be “fixed.”

Surprisingly, the Republican leadership’s views on the subject will now likely align more with Democrats who have acknowledged the flaws in the law and that amending the law is the best way to go.

While conservative and Tea Party Republicans say the law can’t be fixed and should be repealed, their desired outcome is looking less and less likely. Also, there is no consensus within the GOP on what should come next.

Members of the conservative House Freedom Caucus held a press conference on Feb. 7 saying that Republican legislators should not go soft on their promise to repeal the law and instead should quickly introduce new legislation that would repeal the ACA.

They want to model the bill after legislation that Congress passed but President Obama vetoed – in 2015. That legislation would have repealed the mandate that individuals have health coverage and that companies with 50 or more employees provide employees affordable insurance.

It also would have ended federal subsidies to help people afford insurance under the ACA and scrapped funding for Medicaid expansion. It also gave lawmakers two years to come up with a replacement plan.

But it’s the leadership that decides which bills move forward and out of committee.

For now, Republicans are up against a self-imposed deadline after they passed a measure in January that allowed them to begin putting together a budget process that will undo parts of Obamacare.

Under that deadline, four congressional committees were supposed to have drafted legislation repealing the law by Jan. 27, however no bill was introduced. Now pundits say that may not happen until April.

Republicans are now considering four drafts, language from which they will likely fuse into one bill.

Without Democrats, Republicans are limited in how much they can undo the law.

Congress will have to walk a delicate path and find ways to help middle-class Americans, some of who have complained about high and skyrocketing insurance premiums. Others are worried about repeal because the ACA has given them access to life-saving treatment.

Also, there are other forces at play, including stakeholders like businesses, health insurers, drug companies and the medical industry, which all have their own agendas and will be lobbying hard.

For now, continue complying with the law and cover your employees if you are an applicable large employer – and file your papers with your staff and the IRS on time.

IRS Targets Employers Who Fail to File ACA Forms

Film Noir style gangster/detective hiding behind a brick wall

The IRS has started sending letters to some employers asking them where their Affordable Care Act returns are, according to the National Association of Health Underwriters.

The letters, says the association, appear to be one of the first efforts by the IRS to enforce the employer responsibility requirements of the ACA.

Under the ACA, applicable large employers (ALEs) – those with 50 or more full-time and full-time-equivalent employees – are required to file Forms 1094-C and 1095-C with the IRS. The requirement started in 2016 when those employers for the first time had to file these forms with the IRS.

The letters are for the 2015 policy year and the IRS requires that employers respond to the letter within 30 days. These letters are being sent out because the IRS did not receive the forms from some employers it has deemed as ALEs.

 

Letter 5699

The document the IRS sends out is Letter 5699, titled “Request for Employer Reporting of Offers of Health Insurance Coverage (Forms 1094-C and 1095-C)”.

The letter, which will be signed by a tax compliance officer, is a notification that the recipient employer is non-compliant with Internal Revenue Code (IRC) Section 6056 because the IRS has not received 2015 returns.

IRC Section 6056 requires applicable large employers to file ACA information returns with the IRS and provide statements to full-time employees relating to the health insurance coverage, if any, that was offered to them.

Employers can respond by attesting that they:

  • Were an ALE for calendar year 2015, and have already filed Form 1094-C and Form 1095-C.
  • Were an ALE for calendar year 2015, and include the forms with the response letter.
  • Were an ALE for calendar year 2015, and state that they will file the forms with the IRS.
  • Were not an ALE for calendar year 2015.
  • Had other circumstances (must explain).

 

If ALEs do not comply with IRC Section 6056, they can be assessed penalties.

 

The takeaway

If you have not gotten your paperwork in order and are also prepared to file the required documents for 2016, you should make sure you file on time.

The letters are an indication that the IRS is preparing to assess fines.

The IRS is monitoring non-compliance and has dedicated caseworkers (tax compliance officers) handling this process. The next step will be penalty assessments.

Finally, if you have not yet filed for 2015, you can still do so – and avoid the risk of incurring a late penalty of $530 per form.

 

What Does President Trump’s Executive Order on ACA Mean?

Worker repairing  an engine rotor winding of copper wire.

Donald Trump’s first act after assuming the presidency was to sign an executive order that authorizes federal agencies to scale back as many parts of the Affordable Care Act as possible within the confines of the law.

The executive order does not abolish the landmark legislation, but sets the stage for agencies to act immediately on regulations that are deemed overly burdensome. The agencies, particularly the Department of Treasury and the Department of Health and Human Services (HHS), will have wide latitude in making regulatory changes thanks to the broad scope of the order.

But don’t expect immediate changes in the law. Regulations cannot be rewritten, amended or replaced without going through the rule-making process, which includes notice and comment periods. That can take months, or sometimes years.

Another reason you should not expect immediate change is that the order specifically states that agencies can act only “to the maximum extent permitted by law.”

The order came on the heels of the House of Representatives approving a budget blueprint that will allow Republicans to repeal major provisions of the ACA without the threat of a Democratic filibuster in the Senate. But that action can only undo parts of the law that have an effect on the federal budget and they would need some cooperation from Democrats to repeal other parts and forge a replacement.

That means that most of the laws and regulations governing employer plans will likely stay in place for the moment, although it’s unclear for how long.

Trump has been on record saying that the repeal of the law should not take place until a replacement plan is also in place, in order to avoid creating disruptions in the market. He also said that everyone in the United States would be covered.

Here are some of the more relevant passages of the executive order:

“…it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.”

It also said the HHS secretary and other agency heads “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision… that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

As mentioned, the process for making regulations takes time. Proposed regulations have to be drawn up and they have to go out for public comment, including holding hearings so that all sides can argue for or against the changes or recommend adding more changes.

Adding more confusion and concern, Trump senior adviser Kellyanne Conway said that the president may stop enforcing the law’s tax penalty against people who don’t buy insurance. But that move alone could snowball into an ugly scenario where more healthy individuals bale out of their insurance policies, which in turn would likely lead to insurers abandoning the public insurance exchanges.

She said that he would consider repealing the employer mandate quickly, as well. But that may be not be legal as the individual and employer mandates are explicit provisions of the law passed by Congress, and they cannot be overridden by the executive branch.

Be Prepared for Changing ACA Landscape

Concept of problem in business

With president-elect Donald Trump and Congressional Republicans vowing to repeal the Affordable Care Act, employers that have spent the last few years preparing for and complying with the law have a right to be concerned about what’s in store.

While leaders in Congress have promised to swiftly put an end to the ACA, it’s not clear how fast it would happen, if at all, and what, if anything, would replace it.

Blue Cross/Blue Shield recently issued an alert about what its policy team had learned and is anticipating.

 

Administration moves

Blue Cross/Blue Shield noted that three executive actions could occur shortly after Trump is sworn into office:

  • His administration could order the Treasury Department and the IRS to stop enforcing penalties on taxpayers who do not enroll in health insurance.
  • The administration could stop defending lawsuits that challenge the legality of health insurance subsidies that are paid to insurers that insure low-income individuals who purchase coverage on public exchanges. If that happens, it could send shockwaves through the industry, financially affecting a number of insurance companies and leading to market disruptions, Blue Shield predicts.
  • The administration could prevent payments related to the transitional reinsurance program. Republicans have argued that payments from the program must go to the Treasury before health plans. The administration could redirect $5 billion owed to plans for the 2016 plan year, which would zero out payments that are expected in mid-2017.

 

Congressional action

Anything Congress will want to do in the near term will need bipartisan support because the minority-party Democrats could mount a filibuster in the Senate to keep any significant legislation from moving forward. However, Democrats’ hands would be tied if Republicans change the law during the budget reconciliation process.

Republicans could:

  • Move to repeal parts of the ACA that have implications for the federal budget, such as eliminating:
  • ACA tax credits
  • The Medicaid expansion
  • The individual and employer mandate penalties
  • Various ACA taxes used to pay for health reform.

 

That said, parts of the law that don’t affect the budget, like the ban on insurers from refusing coverage based on pre-existing conditions and dependent coverage to age 26, would need legislation.

  • Introduce legislation to kill the ACA and replace it with provisions they espouse, such as:
  • High-risk pools
  • Allowing individuals and businesses to buy insurance across state lines
  • Overhauling the Medicaid program.

 

For now though, the only thing employers can do is to watch what’s going on in Congress and follow developments with us. We’ll keep you posted on what’s happening.

Change could come suddenly, or it may be drawn out for years as repealing the law without a strong replacement would leave millions of Americans in a bind – and many of them would include the same people that voted for Trump as president and Republicans in Congress.

 

 

Republicans Unveil Two Proposals to Replace/Augment the ACA

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Republicans in June introduced two sweeping proposals for replacing or augmenting the Affordable Care Act, as they seek to blaze a trail they say will be better for both employers and individual Americans.

Rep. Pete Sessions, (R-Texas) and Sen. Bill Cassidy, (R-Louisiana), introduced H.R. 5284, which they call an “alternative” health care bill which will not repeal the ACA, but work alongside it and modify various parts of the system.

The so-called “Health Empowerment Liberty Plan” (HELP) includes conditions for helping Americans purchase health insurance, but also keeps in place ACA provisions that bar health insurers from discriminating against people with pre-existing medical conditions.

And later in June, a Republican task force convened by House Speaker Paul Ryan introduced a proposal that was not in bill form that would completely eliminate the ACA.

 

HELP!

Here are the major provisions of the proposed HELP Act:

Individual mandate out – It would eliminate the individual mandate to be covered for insurance either through your job or by purchasing a health plan through a public insurance exchange.

Employer mandate out – It would eliminate the employer mandate, which is the requirement that employers with 50 or more full-time workers purchase affordable coverage for them.

Exchanges still okay – The bill would also allow states to decide if they want to opt in or out of the Affordable Care Act. States that elect to remain part of the ACA would be able to keep their marketplace exchanges and Medicaid expansion programs in place.

For states that decide to opt out, U.S. citizens, including Medicaid beneficiaries, would be eligible for a $2,500 per individual, $1,500 per child tax credit, to be used towards the cost of employer-sponsored health insurance, invested in a Roth Health Savings Account or received as an annual payment.

New tax – The HELP Act would limit the tax exclusion for employer health plans to $2,500 per employee, exposing companies and workers to taxes for insurance benefits above that threshold.

Oddly, Republicans have heavily criticized the ACA’s “Cadillac tax,” which seeks to tax at 40% the portion of any employer-provided health plan that costs more than $10,200 a year.

Small employer purchasing power – The measure would also allow small employers to band together to purchase health insurance. Small employers should be able to “offer health care coverage at lower prices through improved bargaining power at the negotiating table with insurers just as corporations and labor unions do,” according to the proposal.

Minimum essential benefits out – The bill would abolish federal minimum essential benefits – a hallmark of the ACA – though it would allow states to regulate coverage.

People could buy cheaper limited-benefit plans with an annual cap on benefits. Those who buy such plans would receive asset and wage protection if their medical bills exceeded certain thresholds.

Competition and transparency – It would also limit how much insurers could charge for out-of-network services, require providers and plans to disclose prices, and deregulate physician-owned facilities, freestanding surgery centers, and retail clinics.

 

The task force proposal

The health care reform proposal released by the House Republican task force convened by Speaker Ryan would entail a full repeal of the ACA.

The proposal, which is broad in scope and short on specifics, would include a transition period out of the ACA and into a new plan. It would eliminate the individual and employer mandate and instead encourage people to have insurance coverage with the help of refundable tax credits that would be adjusted for the recipient’s age.

It would encourage small group health plans and provide $25 billion in incentives to states to set up high-risk insurance pools.

In place of the ACA’s individual mandate, the plan would prohibit insurance companies from denying patients coverage or charging them more because of pre-existing conditions – but only if they keep continuous insurance coverage, although they could switch plans or carriers.

It would also allow young adults to stay on their parents’ health plans until age 26, which is one of the most popular pieces of the ACA.

Under the proposal, insurers would be allowed to sell across state lines and medical liability laws would be reformed.

 

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++

Government Shutdown with magnifying glass. ++All text written by photographer. Image in page was taken by photographer ++