Webinar Recap: Employers Monitor Plan Changes, Await More Guidance
Twin Cities Business’ October 23 webinar called back experts from Bloomington-based HealthPartners and Edina-based Doherty Employer Services to explore recent changes under the Affordable Care Act (ACA). The three key takeaways: employers are counting their workers, waiting for more direction on reporting requirements, and making sure the plans they offer meet new requirements.
Changes to Plans and Employer Reporting
Greg Thurston of Doherty opened the webinar by discussing recent IRS guidance regarding health reimbursement accounts (HRAs) and employee assistance programs (EAPs).
HRAs are considered group medical plans—but the question today is whether they can be designed in a way that is compliant with the new ACA requirements, which prohibit group health plans from placing annual limits on essential health benefits and requires plans to cover preventive care at 100 percent, Thurston said.
In addition, the IRS recently said that those types of “account-based plans” will not provide the tax advantages of employer-sponsored plans, which allow for premiums to be paid pre-tax. While some employers are considering giving workers money to go procure individual coverage from the MNsure health exchange, the IRS said businesses cannot use HRAs to reimburse employees tax-free for the purpose of buying individual coverage. Only employer-sponsored plans offer that pre-tax advantage.
Meanwhile, the federal government recently stated that most EAPs, which typically include limited benefits such as short-term counseling, will not preclude people from being eligible for a subsidy on MNsure. In other words, employees may be able to receive both EAPs from their employer and federal subsidies.
The IRS recently provided guidance as to how employers will report information so the government knows which employees, if any, will be eligible for a tax subsidy, or whether a large employer may be subject to penalties, come 2015, for not offering coverage. But Thurston pointed out that the guidance is a “proposed rule.” The comment period on the proposed rules over employer reporting ended November 8, and the IRS will issue final rules at a later date.
Meanwhile, employers need to provide an updated Summary of Benefits and Coverage that denotes whether the plans they offer constitute minimum essential coverage and “minimum value,” which requires businesses to provide a plan that pays at least 60 percent of the total allowed cost of benefits. The document must also inform employees of the existence of the MNsure health exchange.
And employers must report their 2015 employee counts to the IRS by the end of 2016, Thurston said. They will also need to provide information to each employee by the end of January 2016 about their coverage and will need to provide the same information to the IRS in February.
All employers that are subject to the Fair Labor Standards Act (and the vast majority are) should send out the notices to all of their existing employees new hires within two weeks of hiring them after that date.
Even though the Department of Labor won’t penalize employers for failing to provide notices to employees of the existence of the exchange, Thurston suggested businesses still provide them. If an employee doesn’t receive the notice, and he or she then falls ill and racks up a “catastrophic” medical expense, that employee may go back to the employer and expect them to pay for it. He urged employers to make sending out notices a part of their hiring practice.
MNsure, Essential Health Benefits, and Public Perception
Since MNsure, Minnesota’s new health insurance exchange, debuted in October, the state’s employers and employees have been monitoring the rates offered there.
On MNsure, shoppers are given the option to choose between four levels of coverage, and coverage begins January 1. The “bronze” plan, the cheapest option on the exchange, must cover 60 percent of the benefit costs for the average individual. The plans become more expensive the more coverage they offer: The “silver” plan must cover 70 percent, “gold” covers 80 percent, and “platinum” covers 90 percent.
Just before MNsure’s launch, a federal study was released that said Minnesota had the lowest premium rates in the nation. That's “good news,” said HealthPartners' Julie Bunde. “Prices are very competitive compared to other states.” Most of the variations for premiums will be seen in the individual market, she said.
Contributing factors that will determine one’s premiums on the exchange include location, age, previous coverage history, and whether or not the individual is a smoker.
Thurston and Bunde pointed out that public opinion varied significantly in the months leading up to October. In a Kaiser Foundation “health tracking poll,” more than half of respondents said they believe media coverage and ads about the ACA is focused on politics and controversy, leaving only 6 percent who believe the messaging is mostly focused on how the ACA actually affects people.
Covered employees and seniors don’t need to worry about buying on the exchanges, which are generally for public program recipients, individuals, and families who qualify for ACA subsidies, Bunde said. And there are no penalties for small employers, those with fewer than 50 full-time or full-time equivalent employees, that don't offer plans.
However, in 2015, large employers must pay a penalty if they don’t offer affordable coverage of minimum value to full-time employees. Individual and small-group plans must cover “essential health benefits,” while large group plans don’t have to cover them. If they do, though, they can’t impose annual or lifetime dollar limits on such benefits, Bunde said. When determining their size for 2015—and whether they'll be subject to penalties for not offering insurance—companies must use their 2014 headcount.
One major change stemming from the ACA's “essential health benefits” is the required coverage of pediatric dental care off the exchange for those under 19 years old, according to Bunde. If insurers choose to sell medical-only plans, they must be “reasonably assured” that all members have purchased pediatric dental care.
However, standalone pediatric dental is waived on the exchange and becomes an optional purchase. Employers and employees will not be penalized if they purchase traditional dental plans off the exchange, Bunde said.
Many employers have reviewed their employee numbers, Thurston said, and data suggests that the majority of employers plan to offer health insurance. “Especially for large group employers, they realized the penalties are too great,” he said, adding that large employers that choose not to offer coverage would end up paying a non-deductible tax of $2,000 per employee.
If you’re a small employer and don’t offer a plan, Thurston said the reality is some of your employees may still not be eligible for subsidies when obtaining insurance from MNsure. Such workers may expect to be compensated in some other way, such as a raise, he said.
Bunde pointed out that a couple of minor provisions were made to the ACA following October's federal government shutdown. For example, the Health and Human Services Secretary will need to ensure that exchanges are verifying that individuals who receive ACA subsidies are in fact eligible for them, Bunde said.
As for what to expect in 2014, Bunde said employer reporting is going to be a key focus as the requirements become final at a later date. Furthermore, the “play or pay” mandate that will penalize large employers in 2015 that don't offer coverage is back in the spotlight, she said, and employers will be seeking a clear understanding of their full-time employee headcount and what some of their strategies surrounding coverage and penalties will be.
It is still difficult to gauge how well the new marketplace is performing and it’s going to take a few years for a normal state to occur where it will be easy to predict marketplace is rolling, Bunde added. “We said this in the past: January 2014 is not the end of health care reform implementation,” she said. “The reform rules will continue to evolve as will the market itself as we continue to work on health care affordability, quality improvement, and member experience.”