Author Archives: Zack Pace

May 2017 Updates

FacebookTwitterGoogle+LinkedInShare

A few updates of interest:

  1. This coming Tuesday, May 16th, my colleague Wendra Johnson, SPHR and I are hosting the CBIZ webinar event, The Business Case for Understanding Benefits and HR Trends. Start time is 2 PM EDT. We’ll survey recent developments, chart where we might be heading next, and share strategies to consider. We’re especially focused on cutting through the ACA & AHCA noise and focusing on what matters to large group employer health plans, both fully insured and self-funded.
  2. In the meantime, CBIZ HRB 128 provides the latest updates on the AHCA bill.
  3. Historically, we’ve posted brief introductions to my monthly Employee Benefit News (EBN) essays to this blog site. EBN archives these essays one week after publishing. In order to allow my clients & friends indefinite access to these essays, EBN kindly now permits me to repost the essays to LinkedIn’s publishing platform, on my author page.

Thus, we’ve ceased providing introductions, here. The essays published to date, include:

If you’d prefer to continue receiving notifications when these essays are posted, please drop me an email.

Best regards,

Zack

You can reach me on zpace@cbiz.com or via Twitter.

Which supplemental medical products disqualify HSA eligibility?

By:          Zack Pace, SVP, Benefits Consulting

If your company sponsors voluntary supplemental medical products, such as hospital indemnity, critical illness, cancer, or accident, have you received conflicting or confusing opinions, from time to time, regarding if these products disqualify an individual from contributing to a Health Savings Account (HSA)? Per IRS Publication 969, to be eligible to contribute to a HSA, an individual must be enrolled in a High Deductible Health Plan, cannot be enrolled in another health plan, cannot be enrolled in Medicare, and cannot be claimed as a dependent on someone else’s tax return.

Publication 969 then provides a listing of the “additional insurance” an HSA- eligible individual may purchase that is not considered additional health coverage. However, the publication’s language is not descriptive:

  • Liabilities incurred under workers’ compensation laws, tort liabilities, or liabilities related to ownership or use of property.
  • A specific disease or illness.
  • A fixed amount per day (or other period) of hospitalization.

You can also have coverage (whether provided through insurance or otherwise) for the following items.

  • Accidents.
  • Disability.
  • Dental care.
  • Vision care.
  • Long-term care.

To bring clarity to this topic, I asked my CBIZ colleague William M. Smith, Esquire, from our national tax office a series of questions. The result was our Q&A for Employee Benefit News Which voluntary products disqualify HSA eligibility? You may need to register with Employee Benefit News to view it.

Upon reading Bill’s concluding admonishment in the final Q&A, I remarked that his prose reminded me of Miguel De Cervantes. Bill then reminded me that Cervantes was also a tax professional – prior to writing Don Quixote, Miguel served as a tax collector. . .

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

Will 2017 be similar to 2010?

By:          Zack Pace, SVP, Benefits Consulting

Four months ago, I congratulated our readers for completing the six-year long Affordable Care Act (ACA) implementation odyssey. What began in 2010 had mostly concluded – all of the major deadlines had passed. However, given last month’s election results, one might wonder if 2017 will begin a whole new benefit compliance and administration marathon.

The morning after the election, I made a list of the ACA components that might now change, adjust, or be repealed. That list became the Employee Benefit News essay – The ACA: Where do we go from here? You may need to register with Employee Benefit News to view it. One question I didn’t consider is the future of Section 125 (i.e., the tax favored status of employer sponsored group health plans). While, the ACA did not materially change Section 125, many of the various Republican policy proposals, including Speaker Ryan’s A Better Way, propose reducing these tax benefits.

We often take for granted that employees will always be able to pay for group health insurance premiums pre-tax and that employers will enjoy the payroll tax benefit from those salary reductions. And, if you attended CBIZ’s post-election legislative update webinar, you may recall that Joel Wood from The Council of Insurance Agents & Brokers was bullish on the staying power of Section 125. Given the lack of enthusiasm for the ACA’s Cadillac Tax and our general disinterest in broad tax increases, Mr. Wood has a point. Moreover, if changes to Section 125 come in the form of tax benefits ending at a certain premium equivalent threshold, folks in my chair and your chair will simply adjust plan design to eliminate the tax increase, just as we were planning to do with the Cadillac Tax. But, as Willie Sutton might point out, as long as policymakers are looking for revenue, Section 125 will be front and center – it’s where the money is. Per slide 37 of CBIZ’s post-election webinar, in FY’14 the aggregate $164.2 Billion Section 125 tax break was the federal government’s largest tax expenditure. By comparison, the mortgage interest deduction yielded $99.8 Billion in the same time period.

If you’re interested in reviewing a summary of the various Republican repeal and replace policy proposals, consider Republicans’ plans to replace Obamacare, explained in 500 words, by Sarah Kliff of Vox. Upon President-elect Donald Trump’s nomination of Tom Price for HHS Secretary, Ms. Kliff then drilled down into more specifics regarding Representative Price’s repeal and replace proposal.

2017 is shaping up to be an interesting year. We’ll keep you posted on the developments.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

Have group health plans outrun their logistical limits?

By:          Zack Pace, SVP, Benefits Consulting

This week, I had the privilege of attending NCQA’s 2016 Quality Talks. CBIZ was a proud sponsor of this year’s event, which featured the best and brightest minds in healthcare outlining their vision of healthcare’s future. The “TED”-style talks were visionary, inspiring, and actionable. I’m excited about converting many of the ideas shared into techniques employers can use to both improve its employees’ healthcare experience and to lower plan costs.

For example, the final speaker, Reed V. Tuckson, MD, FACP, articulated the efficiency challenges telehealth is solving and shared how this technology will further revolutionize healthcare in the years to come. The examples he shared extend far beyond an individual simply video-conferencing with a physician.

However, the trouble in incorporating many of these exciting ideas into employer sponsored health plans is that we seem to have outrun our logistical limits. It reminds of Batu’s 1241 military campaign across the Hungarian plains. Do you remember that history lesson? In 1236, Genghis Khan’s grandson, Batu, led the Mongolian army on a westward campaign. The army encountered little resistance as it swept across the vast Eurasian steppes and into Eastern Europe. But, as he came across the Hungarian plain, Batu’s horse archer cavalry encountered a new kind of resistance – fortified masonry castles.1

Perhaps, nowadays, the rapid advancement of healthcare technology and innovation is like a benevolent, lightening western campaign and ERISA, the Affordable Care Act (ACA), and existing IT limitations are the fortified masonry castles (no, I’m not arguing that Batu was benevolent).

Coincidentally, my latest essay for Employee Benefit News, Why employers need to verify compliance with new benefits, shared a story of our recent encounter with one of these fortified masonry castles. In short, an employer seeking to leverage telehealth technology to improve its employees’ mental health almost ran right into the massive ACA 4980D penalties, and, further, almost disqualified its employees’ Health Savings Accounts. Luckily, we called off the advancement just short of these fortified castles.

Here’s the full article – Why employers need to verify compliance with new benefits. You may need to register with Employee Benefit News to view it.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

  1. If you’re interested in studying Batu’s western campaign, an excellent source is the audio course The Barbarian Empires of the Steppes via the Great Courses. Professor Kenneth W. Harl, Ph.D. is superb.

Chart a course around the approaching voluntary product thunderstorm

By:          Zack Pace, SVP, Benefits Consulting

Did you glance back over your shoulder this summer at the proposed regulations the federal government issued regarding voluntary supplemental medical products (e.g., hospital indemnity, critical illness, etc.)? These regulations, as proposed, will greatly alter the voluntary product landscape. In my latest essay for Employee Benefit News, How to avoid the approaching voluntary product thunderstorm, I explore:

  • Why the regulators are concerned that individuals will confuse these products with major medical coverage
  • How the regulators’ train of thought could extend to other voluntary products
  • What employers that sponsor voluntary supplemental medical products should do now to assess and eliminate its penalty risks

I also share a sailing story that you might enjoy.

Here’s the full article – How to avoid the approaching voluntary product thunderstorm. You may need to register with Employee Benefit News to view it.

The proposed regulations are available here, CBIZ’s regulatory affairs bulletin is here, and a helpful summary of the regulations published by Alden Bianchi of the firm Mintz Levin is located here.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

A simple way to find 4% savings in 2017 group health renewals

By:          Zack Pace, SVP, Benefits Consulting

Do you remember last December when the Cadillac Tax was delayed until 2020? Do you remember reading that the same law also placed a one-year moratorium on the annual fee the Affordable Care Act (ACA) imposes on most health insurers?  Because this moratorium was for 2017, I filed this latter news in the too good to be true long-term bin, announced the Cadillac Tax delay, and turned my focus to which marinade to use for our chargrilled 2015 Christmas turkey.

Meanwhile, seven months later, this moratorium is quietly set to go live this January. Short of an act of Congress, it will. What this means, on paper, is that most employers sponsoring fully insured medical, dental and vision plans will see January 2017 renewals 3% to 4% lower than what they would have been, otherwise.

In my latest essay for Employee Benefit News, Reduce health plan premiums by leveraging the 2017 ACA health insurer fee moratorium, I explore:

  • The impact of this fee moratorium
  • The ways employers can leverage the moratorium to their financial advantage
  • What might happen when the moratorium ends in 2018

The short version is that as fully insured medical, dental, and vision renewals cross my desk, we’ll be ensuring that this 4% premium reduction becomes a windfall for our clients, not extra margin for the insurers.

Here’s the full article – Reduce health plan premiums by leveraging the 2017 ACA health insurer fee moratorium. You may need to register with Employee Benefit News to view it.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

10 Ways to Improve Employee Benefit Design

By:          Zack Pace, SVP, Benefits Consulting

Congratulations, after six long years, our epic journey together through the Affordable Care Act employer requirements is just about complete. Aside from the Cadillac Tax, which is delayed until at least 2020, and the seemingly stalled out nondiscrimination regulations, all of the major deadlines have passed.

In my latest essay for Employee Benefit News, I recommend fine-tuning areas of our benefits programs that were placed on the back-burner during the height of the ACA deadlines – 10 ways to fine-tune benefit design and improve ROI. I also share a quick story set in Charm City’s Inner Harbor about the now obsolete ACA knowledge I’ve accumulated. You may need to register with Employee Benefit News to view the entire article.

I hope you find these 10 questions beneficial – 10 ways to fine-tune benefit design and improve ROI. If you would like me to provide a deeper dive into any of the 10 mentioned topics, please let me know.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

Exploring the unintended consequences of spousal exclusion policies

By:          Zack Pace, SVP, Benefits Consulting

As we’ve discussed over the years, when an employer sponsored health plan features an unusually high amount of spousal enrollment, it’s usually a symptom of an imbalance in the employee contribution rates. It usually means that the employer is charging less for spousal coverage than what an average employer charges for employee only coverage. If so, an employer can easily bring balance by adding additional enrollment tiers, if necessary, and increasing the cost of employee + spouse and full family coverage. Many of you have seen firsthand how this simple, innocuous change gently leads spouses onto their own employers’ plan.

Meanwhile, in lieu of using this simple method, more and more employers are instead adding other employer spousal exclusions to their health plan policies. Under these arrangements, employers bar spouses from joining the health plan if the spouses are eligible for coverage from their own employer. These arrangements often usher in confusion and feature the hassle and risk of trying to enforce this policy via employee affidavits.

Last July, in one of my first essays for Employee Benefit News, I described the challenges of these spousal exclusions and made the case for the alternative method: The alternative to health plan spousal exclusions.

Nevertheless, one year later, the popularity of other employer spousal exclusions continues to build. Thus, I decided to share the real world story of a spouse that decided to not transition to full-time employment precisely because of her husband’s employer’s spousal exclusion policy. I believe her story is worth our careful consideration. You can read about her story here: The unintended consequences of spousal exclusions.

You may need to register with Employee Benefit News to view the entire article.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

Making sense of the Mid-Atlantic group health marketplace

By: Zack Pace, SVP, Benefits Consulting

Map of DC Graphic 2

Geographically and economically, the greater Baltimore / District of Columbia / Northern Virginia region operates as a single, integrated region. However, politically, these three sub-regions might as well be in different time zones. As a result, policies and procedures dramatically differ throughout the greater region.

Specific to group health plans, when a Mid-Atlantic client calls with a question, we must run through a quick mental check-list before answering. For example, is the employer:

  1. Based in DC, Maryland, or Virginia?
  2. Subject to ACA Shared Responsibility?
  3. Subject to ACA Fair Health Insurance Premium Rules?
  4. Fully insured? Self-funded?

Fortunately, since the advent of the PACE Act last October, much of the complexity regarding who is subject to the Fair Health Insurance Premium rules (AKA age-banded rates) has ebbed. Thus, for employers with more than 50 full-time employees + full-time equivalents, there are now more similarities and differences within the three sub-regions. However, in the small group market, stark differences remain. Here is the chart we use to keep it all straight. I thought you might find this summary helpful.

Below is a chart preview. For a PDF file with clickable links to the resources mentioned, please click here.

health exchange graphic_making sense of the mid atlantic group health marketplace

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.

Exploring the irregularities and opportunities in fully insured health plan pricing

By:          Zack Pace, SVP, Benefits Consulting

Over the last nineteen years, I’ve learned that when it comes to fully insured health plan pricing, in order to reach the best financial outcome, one often has to depart from the realm of logic, reason and actuarial principles.

In my latest Employee Benefit News essay, Why a logical approach to health plan design can be financially disastrous, I share:

  1. Why I initially didn’t understand this truth
  2. Why pricing irregularities and implicit financial incentives continue to be commonplace in the fully insured market
  3. The long term financial danger of ignoring pricing anomalies
  4. A recent case study

I hope you find this memoir and case study beneficial. The full essay is available here: Why a logical approach to health plan design can be financially disastrous.

What other benefit topics, trends, and challenges are on your mind? Please let me know, and I’ll write about them in future Employee Benefit News essays.

You can reach me on zpace@cbiz.com or via Twitter. My collection of LinkedIn essays is located here, and my Employee Benefit News articles are available here.