Category Archives: Affordable Care Act

May 2017 Updates

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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.

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The morning after the election, I made a list of the ACA components that might now change, adjust, or be repealed.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.

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.

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.

The Easy Button Approach to ACA Shared Responsibility

By:          Zack Pace, SVP, Benefits Consulting

Historically, the best practice in employee benefit design has been to offer benefits employees desire at a price the employer can afford. The initial mistake I made upon the advent of the Affordable Care Act (ACA) was viewing ACA Employer Shared Responsibility through this best practice lens. It was a local ERISA attorney that corrected my vision. At a regional meeting of human resources professionals, he provided this advice to the attendees: “Look, all of this is really easy – all you need to do is introduce a plan that meets minimum value that you can afford to offer at the FPL safe harbor rate. You can keep your current plans. If no one enrolls in the new plan, who cares?”

In my latest essay for Employee Benefit News, A simple approach to eliminating ACA shared responsibility penalty risks, I make the case for implementing this attorney’s advice and share a quick case study. When I saw the image EBN selected for this post, I couldn’t help but chuckle – while I’m delighted to share what I’ve learned about ACA penalty risk elimination techniques, I probably won’t be found leading a rally to promote this easy button approach. . .

The full article is available here: A simple approach to eliminating ACA shared responsibility penalty risks.

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.

My 2016 ACA To Do List

By:          Zack Pace, SVP, Benefits Consulting

As we’ve discussed, the federal government made sweeping legislative and regulatory changes to the Affordable Care Act (ACA) during the fourth quarter of 2015. In early January, I began making a list of the key items that have been repealed or delayed and those that we should continue to keep a keen eye on. Realizing that others might find this list of value, it became my latest essay for Employee Benefit News: The ACA: What’s been repealed, delayed or retained.

With the Cadillac Tax delayed until at least 2020, ACA reporting almost complete, and ACA Shared Responsibility penalty elimination strategies in place, dare I say that we can see the light at the end of the ACA compliance tunnel? Hope springs eternal.

The full article is available here: The ACA: What’s been repealed, delayed or retained.

What other ACA and benefit topics 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.

The Latest ACA Happenings: Myths, Repeals, PACE act

By: Zack Pace, SVP, Benefits Consulting

In August, at the request of Employee Benefit News, I wrote ACA myths: A baker’s dozen. Based upon the popularity of that article and the continuing ACA confusion, I prepared the following sequel: 8 myths about the Affordable Care Act. I hope you enjoy it.

Since then, Congress easily passed the PACE Act and the President signed the bill. Based upon the news reports, one might not realize that Congress and the President have made significant, incremental progress in repealing and modifying certain cumbersome aspects of the ACA, especially as they relate to employers. Since 2010, for example, we’ve now seen the repeal of:

That the Federal Government doesn’t seem keen on taking credit for this bipartisan cooperation might be a symptom of the problem.

Specific to the Maryland / DC / Virginia region, the impact of the PACE act is confusing and incongruent. As it stands, following is our understanding of the impact:

Maryland

Some months ago, Annapolis included a clause that would automatically change the definition of small group back to less than 51 should the Federal definition change. Thus, at this point, small employer once again means an employer employing 50 or fewer full-time employees + full-time equivalents.

Meanwhile, you may recall the new Maryland Stop Loss Law we wrote about back in June. This law refers to small employers as defined by the Maryland Insurance Code, which according to Insurance Department Bulletin 15-27, uses the federal definition. In effect, what this means is that for all small employer health insurance purposes, at this point, small employer means an employer employing 50 or fewer employees. This is true for small employer health insurance purposes, stop loss purposes, and SHOP purposes.

Virginia

Some time ago, the Virginia insurance law was amended to increase the definition of small employer to mean an employer employing 100 or fewer employees. Because this is the definition in the law it will require an additional law to change the definition back to 50 or fewer employees in accordance with the PACE Act.

Nevertheless in accordance with transition authority, the Virginia Bureau of Insurance has affirmed that insurers can continue to renew plans as small employer plans even if the employer size falls between 50 and 100. This transition relief is available for renewals occurring on or before October 1, 2016. It appears that the Virginia legislature may, prior to that time, change the law.

In the meantime, what this means is that while an employer with, for example, 75 employees, may renew their Virginia based fully insured plan January 1, 2016 in large group, if they change carriers, the new carrier must place them in small group.

DC

Washington, DC is retaining a small employer definition of 50 or fewer. What this means is that the planned mandatory expansion of DC HealthLink into the 51+ employee space is suspended, indefinitely.

You can stay current with the latest ACA developments via our Health Reform Bulletin site.

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

The Most Important ACA Number

By: Zack Pace, SVP, Benefits Consulting

When it comes to benefits management, the most important number for any small to mid-sized business to know is how many full-time employees + full-time equivalent employees it averaged in calendar year 2014.1 This solitary, unassuming number is the primary determining factor regarding:

  1. If the employer is subject to Affordable Care Act (ACA) employer shared responsibility for tax year 2015
  2. If the employer must file IRS Form 1095-C and 1094-C for tax year 2015 (AKA Affordable Care Act reporting)2
  3. For employers in most markets sponsoring fully insured medical plans, if their 2015 renewal is subject to the ACA fair health insurance premium rules (AKA age-banded rates)

Given the dramatic impact of this single number, it’s recommended that employers task their accountant with this calculation, review the resulting impact with their ERISA attorney and benefits advisor, and make proper adjustments

However, given all of the regulatory and market pressures on small to mid-sized businesses, what I’m discovering is that this calculation is often not making it to an accountant’s desk. Employers are often calculating this figure internally or simply estimating it.

In my latest Employee Benefits News article, I describe the importance of this number and provide two quick case studies: The ACA: Know your number. Now is the perfect time to double-check that this number was calculated correctly.

The full article is available here: The ACA: Know your number.

What other ACA and benefit topics 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. My Employee Benefit News articles are available here.

Footnotes:

  1. See Treasury’s Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act for an overview of this calculation and the Final Regulations for the specifics. Or simply contact your accountant.
  2. See Treasury’s Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056) for the details.

 

IHC Radio Interview: Health Plans, Spousal Exclusions, & the Cadillac Tax

By: Zack Pace, SVP, Benefits Consulting

A few days ago, I was a guest on The Institute for HealthCare Consumerism’s Radio Show. We discussed the concepts I presented in this Employee Benefit News article: The alternative to health plan spousal exclusions. It didn’t take us long to get to the heart of the inherent challenges of excluding spouses from employer health plans and why many employers are adopting a more practical, efficient approach.

Next, we moved on to the approaching Cadillac Tax hurricane. As I outlined in Cadillac tax hurricane preparation: After-tax HSA contributions, it seems likely that this excise tax will eliminate Flexible Spending Accounts and pre-tax Health Savings Account contributions, beginning in 2018.

The full interview is available here: Zack Pace, CBIZ, Discusses Health Plan Spousal Exclusions.

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