President-Elect Trump Considers New Plan for Veteran Medical Care

“We’re working on something to make it great for the veterans,” the president-elect commented. “People are dying. We’re going to fix it properly.”

 

Read the full article here.

Certain Health Conditions Causing Rise in U.S. Health Care Expenses

A study by Dr. Joseph L. Dieleman, PhD from the Institute for Health Metrics and Evaluation (IHME) at the University of Washington reveals that health conditions like heart disease, back pain, and diabetes are leading to an increase in U.S. health care expenses. The study, which estimates U.S. spending on personal health care and public health according to condition, revealed that, of the 155 conditions studied, diabetes had the highest health care spending in 2013 at nearly $101.4 billion. Heart disease and low back and neck pain followed at $88.1 billion and $87.6 billion, respectively.

A press release from the IHME notes that diabetes, heart disease, and back pain, as well as hypertension and injuries from falls, comprise 18% of personal health spending in the U.S., totaling nearly $437 billion in 2013.

“While it is well known that the U.S. spends more than any other nation on health care, very little is known about what diseases drive that spending,” said Dieleman in the press release. “IHME is trying to fill the information gap so that decision-makers in the public and private sectors can understand the spending landscape, and plan and allocate health resources more effectively.”

According to the study, the top ten most costly health expenses in 2013 are as follows:

  1. Diabetes – $101.4 billion
  2. Ischemic heart disease – $88.1 billion
  3. Low back and neck pain – $87.6 billion
  4. Hypertension – $83.9 billion
  5. Injuries from falls – $76.3 billion
  6. Depressive disorders – $71.1 billion
  7. Oral-related problems – $66.4 billion
  8. Vision and hearing problems – $59 billion
  9. Skin-related problems, such as cellulitis and acne – $55.7 billion
  10. Pregnancy and postpartum care – $55.6 billion

 

Resources:

U.S. Spending on Personal Health Care and Public Health, 1996–2013

Diabetes, Heart Disease, and Back Pain Dominate U.S. Health Care Spending

Heart Disease, Diabetes Lead in U.S. Health Care Spending

Looking Ahead: Potential Changes in Compliance for 2017

In a changing political climate, it’s difficult to predict how changes to legislation will effect businesses. Benefits Pro recently released a list of 6 different compliance issues to watch for in 2017.

  1. Changes to the Affordable Care Act — though they won’t happen overnight. Though the repeal and replacement of the law is unlikely to occur at this moment, it is important to be familiar with any changes with the law’s compliance, financial, and strategic standards.
  2. Revising or withdrawing changes to the EEO-1 form, a form that is required of every business to report to the U.S. Equal Employment Opportunity Commission. According to Benefits Pro, revisions to the report will require that companies include information regarding wages and hours, as well as longstanding reporting of workforce characteristics such as gender, race/ethnicity, and job category.
  3. Predictable tax reform from the new presidential administration. The article notes that there are three elements of tax reform that could effect employer-sponsored benefits: proposed caps on the tax preference for employer health benefits, limits on the tax preference for retirement plan savings and employer contributions, and expanded HSAs.
  4. Employer-sponsored retirement plans may be affected by automatic-enrollment retirement plans. Large business are instructed to prepare to comply with state and local automatic-enrollment retirement plan mandates.
  5. Employers should become familiar with the proposed FLSA changes for overtime rules and comprehensively communicate those changes with employees.
  6. Business leaders should become aware of proposed paid sick leave and family leave laws at the state and local levels.

For more information, click here.

UPDATE: President Obama Signs Cures Act into Law

In an earlier update, Cornerstone provided an overview of select portions of the anticipated 21st Century Cures Act. The president has since signed the Act into law with many provisions set to go into effect January 1, 2017.

Background

Due to previous guidance from the Department of Labor (DOL) and IRS, employers have been effectively prohibited from providing employees with funds to purchase individual health insurance policies (see IRS Notice 2013-54 and DOL Technical Release 2013-03).

However, the Cures Act will enable small employers with fewer than 50 full-time employees to fund qualified stand-alone HRAs. Employees may use the HRA to pay for qualified out-of-pocket medical expenses, including individual polices purchased through the public exchanges. The Cures Act creates an exemption from ACA group health plan requirements for qualified small employer health reimbursement arrangements (QSEHRA).

What are the general criteria for a QSEHRA?

  • Must be small employer (fewer than 50 full-time employees or equivalents)
  • Employer cannot also sponsor a group health plan
  • QSEHRAs must be offered to all full-time employees
    • Except: 90-day waiting period, individuals under 25, individuals covered under collective bargaining agreement for health benefits, along with part-time and seasonal workers.
  • Must be provided on the same terms to all eligible employees
    • Except: The Cures Act allows benefits to vary based on age and family-size market variations in the price of an insurance policy.
  • Payments and reimbursements must be funded solely by the employer and cannot exceed $4,950 for an individual or $10,000 for family
  • Notice – Employer must provide each eligible employee a written notice at least 90 days before the beginning of the year or when an employee becomes eligible including:
    • The amount of the permitted benefit under the Qualified HRA for the year;
    • A statement that if the employee is applying for advance payment of the premium tax credit for health insurance on the Marketplace, the employee must inform the Marketplace of the amount of the permitted benefit under the Qualified HRA;
    • A statement that if the employee is not covered under minimum essential coverage for any month, the employee may be subject to a tax under Code Section 5000A and reimbursements under the Qualified HRA may be taxable income.

Another important consideration for employers is that the employers’ contributions, while not taxable income to the employee, must be reported on the employee’s W-2.

Employees may not be eligible for health insurance subsidies for plans purchased through the exchange during the months they are covered under an employer’s QSEHRA. Coordination of QSEHRA benefits and a premium tax credit requires analysis of whether the coverage provided by the QSEHRA is “affordable coverage.”

Affordability is determined separately for each employee.  A QSEHRA is considered to provide affordable coverage for a month if, for a particular employee:

  • that employee’s premium for self-only coverage under the second  lowest cost silver plan offered in the relevant exchange, minus
  • 1/12th of that employee’s permitted benefit for the year,
  • is not more than 1/12th of 9.5% (indexed) of the employee’s household income for the year

While employers should alert employees of the potential impact, it appears the above calculation will remain the employees’ responsibility. In addition to creating an exemption for these arrangements going forward, the Cures Act also extends prior transition relief through detailed in IRS Notice 2015-17 through the end of 2016.

On December 20, 2016, the DOL addressed the impact of the Cures Act in ACA Implementation FAQs Part XXXV. The DOL acknowledges, “Because a QSEHRA is statutorily excluded from the definition of a group health plan, the group market reform requirements do not apply to a QSEHRA.”

FAQ Q.3 goes on to explain that, “Pursuant to the extension provided under the Cures Act, for plan years beginning on or before December 31, 2016, the excise tax under Code section 4980D will not be asserted for any failure to satisfy the market reforms by EPPs that pay, or reimburse employees for, individual health policy premiums or Medicare Part B or Part D premiums, with respect to employers otherwise eligible for the relief under Q&A 1 of Notice 2015-17. Such employers are also not required to file IRS Form 8928 solely as a result of having such an arrangement for the plan years beginning on or before December 31, 2016.” In other words, a small employer that has been reimbursing individual health insurance premiums or other medical costs from a standalone HRA before January 1, 2017 will not be subject to the $100 per day penalty under Code Section 4980D.

The previous agency guidance referenced above would still prohibit these arrangements for larger employers. Accordingly, an employer that is considered an applicable large employer as defined in Code section 4980H(c)(2) is not permitted to offer a QSEHRA.

The full text of the bill can be accessed here.

Cornerstone will continue to provide updates as provisions of this Act are implemented.


For more information, contact your Cornerstone representative.

Medicare Advantage Special Needs Plan

Greg Campbell, Director, Medicare and Individual

Greg Campbell, Director, Medicare and Individual

We have all seen and heard a lot about Medicare Advantage plans during this Annual Election Period (AEP). We have been inundated with TV ads, radio commercials, mailers and more regarding different Medicare Advantage plans that can be purchased during AEP, which ended December 7th. But what do you know about Medicare Advantage Special Needs Plans (SNP)?

Growth of Medicare Advantage SNP continues at a steady pace. SNP programs (sometimes commonly referred to as “snip”) provide additional or enhanced benefits to qualified beneficiaries while affording the insurance broker a year-round selling opportunity. SNP can be broken down into two categories: dual eligible plans and chronic condition plans.

Dual eligible plans are designed for low-income individuals who are entitled to benefits from both the Federal Medicare and state-run Medicaid programs. Medicare always pays first and covers acute care services while Medicaid is used for premium, cost-sharing assistance, coverage for supplemental benefits and payment for services not covered by Medicare.

Additional or enhanced benefits of a dual eligible SNP can include an increased transportation benefit, nurse outreach, a more robust prescription drug plan, over the counter credits (for non-Rx supplies), and dental, vision and hearing benefits.

There are currently 13 million Americans who qualify for a dual eligible plan. Agent commissions are the same as Medicare Advantage plans sold during AEP with the added advantage of being able to sell SNP year round. This provides an excellent opportunity to assist members who would benefit from a dual eligible plan while providing the agent with sales opportunities outside of AEP. Numerous insurance carriers are devoting resources to this market and will assist agents with marketing and retention strategies.

Chronic needs plans are designed for Medicare eligible beneficiaries with ongoing medical conditions, such as chronic heart failure, cardiovascular disease, diabetes and COPD. Chronic needs plans feature benefits that are designed to fill the gaps that a person with a chronic disease may encounter. Examples of additional or improved benefits include enhanced meal programs, transportation, a more robust formulary, nurse outreach, over-the-counter benefit, smoking cessation program, telemedicine, counseling services and nutrition counseling.

The insurance broker plays a vital role by assisting the member in sorting through plan options, understanding the qualification rules and explaining the value of a special needs plan. A qualified beneficiary may enroll in a SNP year round without being limited to an election period such as AEP.
Cornerstone will be conducting extensive SNP training shortly after AEP ends. Watch for upcoming invitations. And if you are not currently working with Cornerstone, please contact us so you can take part in this valuable opportunity.


For more information, contact Cornerstone today.

GOP Must Take a Few Steps Before Repealing Obamacare

Politico reports that, in order for the GOP to repeal Obamacare, they must take the necessary steps to stabilize premiums and fleeing insurers before agreeing on a replacement plan.

“It’s not going to be politically possible to throw 20 million people out on the street without health insurance,” said right-leaning health care policy analyst John Goodman.

To read the full story, click here.

Cures Act Sent to President Obama to Provide HRA Relief for Small Businesses

The 21st Century Cures Act is headed to President Obama’s desk and is expected to be signed into law effective January 1, 2017.

While the Act addresses a number of items, of particular significance to brokers is a provision that removes qualified small employer (fewer than 50 full-time employees) health reimbursement arrangements (HRAs) from the definition of a “group health plan.” Following IRS guidance in 2014 and 2015, brokers had been limited in their ability to assist employers who wished to reimburse employees for the purchase of individual health insurance.

Under the Act, qualified HRAs may be used to assist employees in purchasing coverage on the individual market. However, arrangements must meet a number of criteria to be considered a qualified reimbursement arrangement.

For example, annual benefits under qualified HRAs cannot exceed an indexed maximum of $4,950 per year ($10,000 if family members are covered), must be employer-funded, and can only be used for qualified medical expenses. Also, the HRA benefits must also be offered on the same terms to all “eligible employees.”

Employees covered under a qualified HRA will be ineligible for subsidies for policies purchased through the health insurance exchanges.

The Act also contains significant changes for Medicare Open Enrollment beginning in 2019. The Act provides that Medicare-eligible individuals may make a one-time change during the first three months of any year to another Medicare Advantage plan, elect original Medicare fee-for-service program, or to elect coverage under Part D.

The full text of the bill can be accessed here.

Cornerstone will continue to provide updates as provisions of this Act are implemented.


For more information, contact your Cornerstone representative.

 

UPDATE:

2017 Inflation-Adjusted Limits for Health Savings Accounts (HSAs)

By Bill Mauch, Chief Financial Officer

The Internal Revenue Service (IRS) has set the 2017 inflation-adjusted limits for health savings accounts (HSAs), including the maximum annual HSA contribution, the minimum annual deductible for a high-deductible health plan (HDHP) and the maximum annual out-of-pocket expense for an HDHP.

For 2017, the maximum annual HSA contribution for individuals with self-only coverage will increase from $3,350 to $3,400, but the limit will remain $6,750 for individuals with family coverage. The minimum annual deductible and maximum annual out-of-pocket expense limits for HDHPs will remain the same for both self-only and family coverage. These amounts are updated annually to reflect cost-of-living adjustments.

The 2017 HSA catch-up contribution limit (fixed by statute) for participants who are 55 or older on December 31, 2017, remains at $1,000.

Limits have also been set for Flexible Spending Accounts, Transportation Fringe Benefits and Retirement Plans.

The table below outlines these benefit limitations for your reference and 2017 planning, and includes pertinent payroll tax amounts. These limits will need to be incorporated in relevant benefit plan communications for 2017.

BENEFIT LIMITATIONS

2017

2016

Annual HSA Contribution Amounts

Individual

$3,400

$3,350

Family

$6,750

$6,750

Catch-Up (Age 55 or older)

$1,000

$1,000

Annual Maximum Out-Of-Pocket Limits for HDHP

Individual

$6,550

$6,550

Family

$13,100

$13,100

Annual Minimum Deductible Amounts for HDHPs

Individual

$1,300

$1,300

Family

$2,600

$2,600

Flexible Spending Account Limits

Health Care FSA

$2,600

$2,550

Dependent Care FSA

$5,000

$5,000

Transportation Fringe Benefit

Parking

$255/mo

$255/mo

Mass Transit

$255/mo

$255/mo

Retirement Plans Limits

Annual Benefit under a Defined Benefit Plan

$215,000

$210,000

Annual Benefit under a Defined Contribution Plan

$54,000

$53,000

401(k) Elective Deferrals (excludes catch-up)

$18,000

$18,000

401(k) Catch-Up Deferrals

$6,000

$6,000

Key Employee Limit, Officer Test

$175,000

$170,000

Highly Compensated Employees

$120,000

$120,000

IRA Contributions: 49 and below

$5,500

$5,500

IRA Contributions: 50 and above

$6,500

$6,500

Taxes

FICA Tax for Employers

7.65%

7.65%

FICA Tax for Employees

7.65%

7.65%

Income Subject to Social Security Tax

$127,200

$118,500

Social Security Tax for Employers

6.20%

6.20%

Social Security Tax for Employees

6.20%

6.20%

Medicare Tax for Employers and Employees

1.45%

1.45%


For more information, contact Cornerstone today.

Repeal of the ACA May Not Benefit Employer-Sponsored Health Plans

Benefits Pro reported that employer-sponsored health plans may not benefit from the repeal of the ACA. A Bloomberg report by Greta E. Cowart notes that employers may have to return money received from retiree reinsurance program and other government-sponsored initiatives, and that many of the mandates on what should be included in these plans that weren’t exempted nor grandfathered will be difficult to take out of the plans.

 

For more information, click here.