by admin | Feb 16, 2017 | Compliance, Employee Benefits, Hot Topics, Human Resources
Recently, the Department of Labor (DOL), Department of Health and Human Services (HHS), and the Treasury (collectively, the Departments) issued FAQs About Affordable Care Act Implementation Part 35. The FAQ covers a new HIPAA special enrollment period, an update on women’s preventive services that must be covered, and clarifying information on qualifying small employer health reimbursement arrangements (QSE HRAs).
HIPAA Special Enrollment Period
Under HIPAA, if an individual loses eligibility for coverage in the individual market, then that individual is entitled to special enrollment in group health plan coverage.
The coverage eligibility loss may include coverage purchased through a Marketplace (other than coverage eligibility loss due to failure to pay premiums on a timely basis or termination of coverage for cause, such as making a fraudulent claim or an intentional misrepresentation of material fact). Further, the individual is entitled to special enrollment in group health plan coverage for which the individual is otherwise eligible, regardless of whether the individual may enroll in other individual market coverage, through or outside of a Marketplace.
To be clear, if an individual has Marketplace coverage and the carrier is discontinuing the plan, the discontinuation event is not a loss of eligibility for coverage; in this case, the individual is not entitled to a special enrollment period.
Women’s Preventive Services
The Health Resources and Services Administration (HRSA) updated its Women’s Preventive Services Guidelines on December 20, 2016, to recommend preventive services and items.
Non-grandfathered group health plans and health insurance issuers must cover, without cost sharing, women’s preventive services consistent with the updated guidelines for plan years beginning on or after December 20, 2017. Until that date, non-grandfathered group health plans and health insurance issuers are required to provide coverage without cost sharing consistent with the previous HRSA guidelines and the Public Health Services Act for recommended services and items.
Generally, under the HRSA guidelines and other federal laws, group health plans established or maintained by religious employers (and group health insurance coverage provided with these plans) are exempt from the requirement to cover contraceptive services.
Qualified Small Employer Health Reimbursement Arrangements
On December 13, 2016, the 21st Century Cures Act (Cures Act) introduced a new type of tax-preferred arrangement called the Qualified Small Employer Health Reimbursement Arrangement (QSE HRA) that small employers may use to help their employees pay for medical expenses.
Under the Cures Act, the QSE HRA is not a group health plan. A QSE HRA is an arrangement offered by an eligible employer that meets the following criteria:
- The arrangement is funded solely by an eligible employer, and no salary reduction contributions may be made under the arrangement.
- The arrangement provides, after the employee provides proof of coverage for the payment to, or reimbursement of, an eligible employee for medical care expenses incurred by the employee or the employee’s family members (as determined under the terms of the arrangement).
- The amount of annual payments and reimbursements do not exceed $4,950 ($10,000 for family) with amounts to be indexed for increases in cost of living.
- The arrangement is provided on the same terms to all eligible employees of the eligible employer.
To be an eligible employer that may offer a QSE HRA, the employer may not be an applicable large employer (ALE) and may not offer a group health plan to any of its employees.
The Departments’ prior guidance concluded that employer payment plans (EPPs) and non-integrated health reimbursement arrangements (HRAs) are group health plans that fail to comply with the group market reform requirements that prohibit annual dollar limits and that require the provision of certain preventive services without cost sharing.
Because a QSE HRA is statutorily excluded from the definition of a group health plan, the group market reform requirements do not apply to a QSE HRA. With respect to EPPs and HRAs that do not qualify as QSE HRAs, the Departments’ prior guidance continues to apply.
The statutory exclusion of QSE HRAs from the group health plan definition is effective for plan years beginning after December 31, 2016. With respect to plan years beginning on or before December 31, 2016, the Cures Act provides that the relief under IRS Notice 2015-17 applies.
Under the extension provided by the Cures Act, for plan years beginning on or before December 31, 2016, the tax penalty 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 Notice 2015-17. These employers are not required to file IRS Form 8928 solely because they had such an arrangement for the plan years beginning on or before December 31, 2016.
The Cures Act’s extension of the relief is limited to EPPs and does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums. Also, as an employer-provided group health plan, coverage by an HRA or EPP that is not a QSE HRA and that is eligible for the extended relief under the Cures Act would be minimum essential coverage. This means that a taxpayer would not be allowed a premium tax credit for the Marketplace coverage of an employee, or an individual related to the employee, who is covered by an HRA or EPP other than a QSE HRA.
Practically speaking, the Departments’ prior regulations and guidance continue to apply to EPPs and HRAs that do not qualify as QSE HRAs, including arrangements offered by employers that are not eligible employers as defined under the Cures Act, such as ALEs.
By Danielle Capilla, Originally Published By UBA
by admin | Jan 26, 2017 | Benefit Management, Employee Benefits, Retirement
Employers I’ve talked to all have the same goal: to help employees build a sound retirement plan to achieve financial success and security. The main components to protect an employee’s financial future are managing a nest egg, growing investments, and safeguarding against uncertainty.
The Missing Component
As an employer, you may be missing a key component in safeguarding against uncertainty – the need for long-term care. Seventy-five percent of people over the age of 65 will need some form of long-term care in their lifetime1, however, far fewer are financially prepared to handle that need. With nursing home costs averaging $84,000 per year2, it’s not surprising that many Americans are having to spend down their retirement savings to pay for care. Long-term care is custodial care received in an assisted living facility, nursing home, or your own home should you need assistance with activities of daily living or suffer from a severe cognitive impairment.
Long Term Care Insurance
Savvy employers are helping fill the uncertainty gap by introducing long-term care insurance to employees. Employers can offer long-term care insurance plans with reduced underwriting and group pricing that employees wouldn’t be able to get as an individual. Better pricing and easier approval make the product accessible to employees that couldn’t normally qualify for coverage.
Long-term care education is key to helping employees protect their retirement savings. Without your help, employees can fall victim to widely held misconceptions. They may think:
- Other benefits will cover them
- The government will pay for their care
- This is only for old people
The truth is that long-term care insurance is the only benefit that covers this type of custodial care, and government options (Medicaid) are only available to people with low income and limited resources.
Shield and Supplement the 401(k)
Do you already contribute to your employees’ 401(k) plan? If so, you can spend the same amount of employer dollars, but provide richer benefits by pairing a 401(k) with long-term care insurance. By taking a small amount of contributions from the 401(k) plan and directing those toward your long-term care insurance premium, the resulting benefit can provide more than $200,000 of long-term care coverage and only slightly adjust the total 401(k) plan value.
Unlike other benefits, where providers may change from year to year, the majority of long-term care insurance purchasers will hold on to their original plan for life, and 99 percent of employees who have the coverage keep it when they move to their next employer, or into retirement. You can think of it as a “legacy benefit” that employees maintain for life to protect their retirement savings.
By Megan Fromm, Originally published by United Benefit Advisors
by admin | Jan 24, 2017 | Benefit Management, Employee Benefits
Determining how an employer develops the most effective formulary, while protecting the financial stability of the plan, is certainly the challenge of this decade. Prescription management used to mean monitoring that the right people are taking medications to control their disease while creating strategies to move them from brand name to generic medications. With the dawn of specialty medications, formulary management has become a game of maximizing the pass-through of rebates, creating the best prior authorization strategies and tiering of benefits to create some barrier to more expensive medications, all without becoming too disruptive. As benefits managers know, that is a difficult challenge. The latest UBA Health Plan Survey revealed that 53.6 percent of plans offer four tiers or more, a 21.5 percent increase from last year and nearly a 55.5 percent increase in just two years. Thus, making “tiering” a top strategy to control drug costs. There are many additional opportunities to improve and help control the pharmacy investment, but focusing on the key components of formulary management and working on solutions that decrease the demands for medications are critical to successful plan management.
When developing a formulary, Brenda Motheral, RPh, MBA, Ph.D., CEO of Archimedes, suggests that chasing rebates is not a strategy to optimize your investment. Some of the highest rebates may be from medications that add no better therapeutic value than an inexpensive medication that does not offer a rebate, but net cost is much lower than the brand or specialty medication being offered. Best formulary management will mean that specific medications that do not offer a significant therapeutic value are removed from the formulary, or are covered at a “referenced price” so the member pays the cost difference. Formulary management will need to focus on where the drug is filled and which medications are available.
When setting up parameters on where a drug is to be filled, the decision needs to be made if a plan will promote mail order. Mail order, if used and monitored appropriately, makes it more convenient for a patient to receive their regularly used medications and may provide savings. In fact, the UBA Health Plan Survey finds that more than one-third (36.3 percent) of prescription drug plans provide a 90-day supply at a cost of two times retail copays. But if mail order programs are not monitored, people can continue to receive medications that are no longer required and never used, adding to medical spend waste. Furthermore, in our analysis, we are finding that not all medications are less expensive through mail order, as shown in Figure 1 below. Therefore, examining the cost differential is critical in a decision to promote, or not promote, mail order.
Figure 1
| Drug Name |
Rx Category |
Mail Order |
Retail |
| Zytiga® |
Malignancies |
$8,749 |
$6,027 |
| Sumatriptan Succinate |
Migrane / Neurologic |
$575 |
$308 |
| Ranexa® |
Cardiovascular |
$259 |
$413 |
Another formulary consideration is in monitoring the increase in same drug pricing. The stories surrounding the price increases of EpiPens® has been well-documented, but how well do you understand the impact of price increases on your plan? Monitoring price increases, as shown in Figure 2, may help an employer turn to their pharmacy benefit manager (PBM) to ask for help in controlling these price increases, or help in decisions related to formulary inclusion.
Figure 2
| Drug Name |
Rx Category |
Plan Paid per
30-day Supply
(SPLY) |
Plan Paid per
30-day Supply |
| Cialis® |
Genito-Urinary / Acute Minor |
$287 |
$442 |
| AndroGel® |
Endocrine / Chronic Meidcal |
$471 |
$523 |
| Viagra® |
Genito-Urinary / Acute Minor |
$615 |
$978 |
Formulary management solutions can become a cat-and-mouse game. The ultimate approach to manage the total spending on medications is by managing the growing demand. There has been significant press related to the opioid overutilization in the U.S., as illustrated in the article “Prescription Addiction.” But that issue is much broader in our society and relates to taking a pill as a quick solution to solve our medical problems. In March 2016, the Department of Health and Human Services (HHS) stated that 30 percent of the growth in spending related to medications was due to an increase in prescriptions per person. Certainly, medications should be used when there are no alternatives to control disease or pain. However, turning to medications as a first option for chronic condition control for issues like hypertension, blood sugar control, cholesterol control versus improving diet and exercise, etc., is just a band-aid solution that, in most cases, does not resolve the root issue. Yet, because this is sold as a quick fix, we see an increase in the number of individuals on medications. In 2012, 34 percent of plan members engaged in Vital Incite were taking four or more (active ingredients) medications, and that has grown to more than 45 percent in 2016. The data also illustrates that in 2012 more than 42 percent of members were not on any medications, but that group size has shrunk to only 27 percent. No formulary can impact this issue.
This increased use could be considered an improvement in care if their disease were more controlled. Appropriate and medically-impactful utilization would mean that a person is working toward improving diet and exercise and is taking the least expensive, yet effective, medication to control his or her disease.
Considering that diabetes medication options have really expanded, an employer would hope that the more expensive medication is providing the best control of disease. But, taking the medication alone will not control the disease and, at times, the progression of the medication cost can be related to progression of the disease due to a lack of disease management. For instance, a diabetic may have progressed from taking metphormin (marketed under the tradename Glucophage® among others), which costs approximately $27 per month, to metphormin ER (Glucophage® XR), which allows a person to take only one pill a day, so it may provide increased compliance, but costs $274 per month. Now, the option of taking Glumetza® is offered, which can be reimbursed at up to $3,620 per month, and is said to provide more stable results. But, if we examine the A1c control values from Vital Incite, do we find the reduction in A1c values as evidence that this additional investment in medication options is providing better control? Figure 3 provides an example of A1c control by prescription status. The goal would be that those on medications will become controlled. But, in our data, we are not seeing a significant improvement in persons with HgA1c levels above 7 percent. Control is achieved from diet, exercise, and appropriate medications. There are theories that people on these more expensive medications are using that as an approach to help them maintain their unhealthy behaviors. Therefore, taking medications alone does not appear to provide an effective solution and, in fact, providing chronic condition medications for free, without requiring any other effort, may not be the best investment for an employer.
Figure 3
| HgA1c Level |
In Treatment |
Untreated |
Discontinued
Treatment |
Possibly
Untreated |
| < 5.7 |
6 |
1 |
2 |
3 |
| 5.7 to 6.4 |
21 |
2 |
1 |
11 |
| 6.5 to 7.0 |
17 |
|
|
7 |
| > 7.0 |
53 |
4 |
|
5 |
In conclusion, determining which issues are having the most impact on an employer group will allow benefits managers to determine the company’s priorities. This is not an easy task, but with pharmacy spend increasing at a national average of 7.3 percent annually and becoming a higher percentage of the overall medical spend, new strategies need to be considered. Focusing on the key components that balance formulary management with the correct approach to manage the demand on medications can influence total pharmacy spend.
By Mary Delaney, United Benefit Advisors
