by admin | Jun 6, 2017 | Employee Benefits, IRS
Under Internal Revenue Code Section 105(h), a self-funded medical reimbursement plan must pass two nondiscrimination tests. Failure to pass either test means that the favorable tax treatment for highly compensated individuals who participate in the plan will be lost. The Section 105(h) rules only affect whether reimbursement (including payments to health care providers) under a self-funded plan is taxable.
When Section 105(h) was enacted, its nondiscrimination testing applied solely to self-funded plans. Under the Patient Protection and Affordable Care Act (ACA), Section 105(h) also applies to fully insured, non-grandfathered plans. However, in late 2010, the government delayed enforcement of Section 105(h) against fully insured, non-grandfathered plans until the first plan year beginning after regulations are issued. To date, no regulations have been issued so there is currently no penalty for noncompliance.
Practically speaking, if a plan treats all employees the same, then it is unlikely that the plan will fail Section 105(h) nondiscrimination testing.
What Is a Self-Insured Medical Reimbursement Plan?
Section 105(h) applies to a “self-funded medical reimbursement plan,” which is an employer plan to reimburse employees for medical care expenses listed under Code Section 213(d) for which reimbursement is not provided under a policy of accident or health insurance.
Common self-funded medical reimbursement plans are self-funded major medical plans, health reimbursement arrangements (HRAs), and medical expense reimbursement plans (MERPs). Many employers who sponsor an insured plan may also have a self-funded plan; that self-funded plan is subject to the Section 105 non-discrimination rules. For example, many employers offer a fully insured major medical plan that is integrated with an HRA to reimburse expenses incurred before a participant meets the plan deductible.
What If the Self-Insured Medical Reimbursement Plan Is Offered Under a Cafeteria Plan?
A self-funded medical reimbursement plan (self-funded plan) can be offered outside of a cafeteria plan or under a cafeteria plan. Section 105(h) nondiscrimination testing applies in both cases.
Regardless of grandfathered status, if the self-funded plan is offered under a cafeteria plan and allows employees to pay premiums on a pre-tax basis, then the plan is still subject to the Section 125 nondiscrimination rules. The cafeteria plan rules affect whether contributions are taxable; if contributions are taxable, then the Section 105(h) rules do not apply.
What Is the Purpose of Nondiscrimination Testing?
Congress permits self-funded medical reimbursement plans to provide tax-free benefits. However, Congress wanted employers to provide these tax-free benefits to their regular employees, not just to their executives. Nondiscrimination testing is designed to encourage employers to provide benefits to their employees in a way that does not discriminate in favor of employees who are highly paid or high ranking.
If a plan fails the nondiscrimination testing, the regular employees will not lose the tax benefits of the self-funded medical reimbursement plan and the plan will not be invalidated. However, highly paid or high ranking employees may be adversely affected if the plan fails testing.
What Are the Two Nondiscrimination Tests?
The two nondiscrimination tests are the Eligibility Test and Benefits Test.
The Eligibility Test answers the basic question of whether there are enough regular employees benefitting from the plan. Section 105(h) provides three ways of passing the Eligibility Test:
- The 70% Test – 70 percent or more of all employees benefit under the plan.
- The 70% / 80% Test – At least 70 percent of employees are eligible under the plan and at least 80 percent or more of those eligible employees participate in the plan.
- The Nondiscriminatory Classification Test – Employees qualify for the plan under a classification set up by the employer that is found by the IRS not to be discriminatory in favor of highly compensated individuals.
The Benefits Test answers the basic question of whether all participants are eligible for the same benefits.
By Danielle Capilla
Originally Posted By www.ubabenefits.com
by admin | May 30, 2017 | Health & Wellness, Human Resources, Workplace
Your organization has 312 employees, which means you have 312 different needs for well-being support. Well-being strategies should not be a one-size-fits-all approach. Developing a set of flexible and responsive well-being strategies that meet changing individual needs throughout an employee’s tenure is a critical way to both attract and retain talent. A few case studies to illustrate:
Jordan is serving in an entry-level position. This single, gender fluid, 20-something is eager to learn and grow. In conversations with HR, Jordan has also indicated a high level of overall stress due to a burdensome education loan and is barely able to make loan payments on top of rent and other monthly expenses. Jordan’s outlook on saving for retirement is grim. At the same time, he is an active member of the local young professional network and keeps fit while playing in a competitive Ultimate league.
Anvi has been in an executive leadership role with the organization for seven years. She is a gifted and valued trailblazer who keeps the organization nimble in a climate of constant change. Despite spending long hours at work, her colleagues know little about Anvi’s family and personal life, as she is rather private. From time to time though, Anvi demonstrates affection for her team by sharing artfully created meals that illustrate her diverse cooking skills and interests.
Mark has been a dedicated, career-long, mid-level employee in accounting. Although lately he shows declining interest in his once-beloved work. Colleagues have noticed in Mark a new tendency to decline offers to share lunch or coffee breaks. Last year, Mark led the company volunteerism committee, but has recused himself from this duty, citing a conflict of interest with his role as a finance officer for a local non-profit organization.
Each of these individuals show up to the workplace with a unique set of values, talents, beliefs, interests, and resources. At the same time, all employees benefit from a workplace culture that attends to each person’s sense of purpose, plus physical, social, financial and community well-being. It can be a daunting challenge to meet such diverse needs and interests, which is why we must build programs and policies with employees, listening to what they want and seeking out ways to efficiently design a system of supports. The first step to any thoughtful program is to conduct a needs assessment. Turn up the volume on your curiosity and lead with the question: What do employees want? Consider gathering responses by survey, current HR data sources, and focus groups. Be sure to gather demographic information that will help segment the findings. The results may confirm your beliefs about employee wishes or reveal interesting surprises, as noted in this example.
In a 2015 survey of 1,647 folks across 11 diverse organizations, the American Institute of Preventative Medicine found the following:
- Incentive strategies: Almost unanimously, employees favored reduced health insurance premium (34 percent) and cash (25 percent) as incentives to get healthier. However, 53 percent of those age 70 and older noted they do not need an incentive to be healthier.
- Well-being topics of interest: Nutrition (78 percent) and physical activity (77 percent) topics were of highest interest by those age 18 to 69. These same age groups also favored stress management topics more than colleagues age 70 and older. Moderate interest in depression was common among all age groups, and all age groups showed the least interest in tobacco cessation. Compared with colleagues of older age groups, the youngest cohort (18 to 24) indicated high interest in sleep enhancement.
- Program offerings: All age groups favored health risk assessments (26 percent) and health challenges (25 percent) over other well-being program offerings. Furthermore, older groups (50 to 69 and 70 and older) prefer in-person educational seminars, and younger employees (18 to 24) were more likely to engage in weight loss programs.
- Fitness devices: The oldest individuals were more likely than all younger individuals to report owning a personal fitness tracking device such as a Fitbit or pedometer, 40 percent age 70 and older, 37 percent age 50 to 69, 31 percent age 33 to 49, 29 percent age 25 to 32, and 17 percent age 18 to 24.
A small-scale needs and interest study like this can challenge our biases about certain groups within our employee population and reveal key details about the value employees hold for well-being programs. Results should inform design of a well-being strategy that accurately and cost-effectively meets a range of needs in the workplace. After all, “research is formalized curiosity. It is poking and prying with purpose,” said Zora Neale Hurston. The pursuit of growing a cost-effective culture of well-being and individual value for programmatic supports will be more beneficial to organizational health than a hard measure of return on investment.
By Lindsay Simpson
Originally Posted By www.ubabenefits.com
by admin | May 23, 2017 | Benefit Management, Health & Wellness
Your wellness program seems to have it all – biometric screenings, lunch and learns, and weight loss challenges. So, why do you struggle with engagement, or to see any real results? While traditional wellness components are still a large part of plans today, emerging trends, coupled with generational differences, make for challenges when designing an impactful program.
As wellness programs begin to be viewed as a part of the traditional benefits package, the key differentiator is creating a culture and environment that supports overall health and well-being. Visible engagement and support from front-line and senior leadership drives culture change. By prioritizing health through consistent communication, resource allocation, personnel delegation, and role modeling/personal health promotion practices, employers gain the trust of their employees and develop an environment situated around wellness. When employees recognize the importance of wellness in the overall company strategy and culture, and feel supported in their personal goals, healthy working environments begin to develop, resulting in healthier employees.
Looking beyond traditional wellness topics and offering programs that meet the goals of your employees also leads to higher engagement. The American Heart Association CEO Roundtable Employee Health Survey 2016 showed improving financial health, getting more sleep, and reducing stress levels are key focus areas for employees as part of overall wellness. More so, employees see the benefits of unplugging and mentoring, two new topics in the area of overall well-being. While most employers feel their employees are over surveyed, completing an employee needs or preference survey will ensure your programs align with your employees’ health and wellness goals – ultimately leading to better engagement.
Wellness programs are not immune to generational differences, like most other facets of business. While millennials are most likely to participate and report that programs had an overall impact, they prefer the use of apps and trackers along with social strategies and team challenges. Convenience and senior level support are also important within this group. Generation X and baby boomers show more skepticism toward wellness programs, but are more likely to participate when the programs align with their personal goals. Their overall top health goal is weight loss. Ultimately, addressing the specific needs of your member population and providing wellness through various modalities will result in the greatest reward of investment.
Evaluation and data are the lynchpins that hold a successful program together. Consistent evaluation of the effectiveness of programs to increase participation, satisfaction, physical activity, and productivity – all while reducing risk factors – allow us to know if our programs are hitting the mark and allow for additional tailoring as needed.
By Jennifer Jones
Originally Posted By www.ubabenefits.com
by admin | May 19, 2017 | Benefit Management, HSA/HRA
In a world of insurance and acronyms, the term “HRA” is thrown around a lot, but it has a variety of meanings.
HRA can mean health reimbursement account, heath reimbursement arrangement, or health risk assessment, and all of those mean something different. I want to be clear that in the following article I am going to be discussing the use of health reimbursement accounts with fully insured health plans. We can leave the other meanings of HRA for another time.
An HRA can be “wrapped” with a high-deductible, fully insured health plan and this can lead to savings for an employer over offering a traditional health plan with a lower deductible.
Offering a high-deductible health plan and self-funding, the first $2,000, or $3,000, in claims on behalf of the employees can translate to significant savings because the employer is taking on that initial risk instead of the insurance carrier. Unlike a consumer-driven health plan (CDHP) that has a high deductible and can be paired with a health savings account (HSA) where an employer can contribute funds to an employee’s HSA account that can be used to pay for qualified medical expenses, an employer only has to pay out of the HRA if there is a claim.
With an HSA that is funded by the employer, the money goes into the HSA for their employees and then those funds are “owned” by the employee. The employer never sees it again. Under an HRA, if there are no claims, or not a high number of claims, the employer keeps those unused dollars in their pocket.
An HRA component to a health plan is subject to ERISA and non-discrimination rules, meaning everyone that is eligible should be offered the plan, and the benefits under the HRA should be the same for everyone enrolled. It is advisable that an HRA be administered by a third-party that pays the claims to the providers, or reimburse plan enrollees under the terms of the plan, in order to keep employees’ and their dependents’ medical information private from the employer as to avoid potential discrimination.
The HRA component of a health plan is essentially self-funded by the employer, which gives the employer a lot of flexibility and can be tailored to their specific needs or desired outcomes. The employer can choose to fund claims after the employee pays the first few hundred dollars of their deductible instead of the employer paying the claims that are initially subject to the high deductible. An employer can have a step arrangement, for example, the employer pays the first $500, the employee the second $500, the employer pays the next $500, and the employee pays the final $500 of a $2,000 deductible.
If an employer has a young population that is healthy, they may want to use the HRA to pay for emergency room visits and hospital in-patient stays, but not office visits so they can help protect their employees from having to pay those “large ticket items,” but not blow their budget. While an employer with a more seasoned staff, or diverse population, may want to include prescription drugs as a covered benefit under the HRA, as well as office visits, hospital in-patient stays, outpatient surgery, etc. Or, if an employer needs to look at cost-saving measures, they may want to exclude prescriptions from being eligible under the HRA.
Keep in mind, all of these services are essential health benefits and would be covered by the insurance carrier under the terms of the contract, but an employer can choose not to allow the HRA to be used to pay for such services, leaving the enrollee to pay their portion of the claims. In any case, the parameters of what is eligible for reimbursement from the HRA is decided and outlined at the beginning of the plan year and cannot be changed prior to the end of the plan year.
If you are thinking about implementing a high-deductible health plan with an HRA for your employees, be sure you are doing it as a long-term strategy. As is the case with self-funding, you are going to have good years and bad years. On average, a company will experience a bad, or high claims, year out of every four to five years. So, if you implement your new plan and you have a bad year on the first go-round, don’t give up. Chances are the next year will be better, and you will see savings over your traditional low-deductible plan options.
With an HRA, you cap the amount you are going to potentially spend for each enrollee, per year. So, you know your worst-case scenario. While it is extremely unlikely that every one of your employees will use the entire amount allotted to them, it is recommended that you can absorb or handle the worst case scenario. Don’t bite off more than you can chew!
HRA administrators usually charge a monthly rate per enrollee for their services, and this should be accounted for in the budgeting process. Different HRA third-party administrators have different claims processes, online platforms, debit cards, and business hours. Be sure to use one that offers the services that you want and are on budget.
Another aspect of offering a high-deductible plan with an HRA that is often overlooked is communication. If an employee does not know how to utilize their plan, it can create confusion and anger, which can hurt the overall company morale. The plan has to be laid out and explained in a way that is clear, concise, and easy to understand.
In some cases, the HRA is administered by someone other than the insurance carrier, and the plan administrator has to make sure they enroll all plan enrollees with the carrier and the third-party administrator.
The COBRA administrator also has to offer the HRA as part of the COBRA package, and the third-party administrator must communicate the appropriate premium for the HRA under COBRA. Most COBRA enrollees will not choose to enroll in the HRA with their medical plan, as they are essentially self-funding their deductible and plan costs through the HRA instead of paying them out of their pocket, but many plan administrators make the mistake of not offering the HRA under COBRA, as it is mandated by law.
Offering a high-deductible plan with an HRA is a way for small employers to save over offering a low-deductible health plan, and can be a way for an employer to “test the waters” to see if they may want to move to a self-funded plan, or level-funded plan, in the future.
By Elizabeth Kay
Originally Posted By www.ubabenefits.com
by admin | May 16, 2017 | HIPAA, Hot Topics
The U.S. Department of Health and Human Services Office for Civil Rights (OCR) issued its Man-in-the Middle Attacks and “HTTPS Inspection Products” guidance. The OCR warns organizations that have implemented end-to-end connection security on their internet connections using Secure Hypertext Transport Protocol (HTTPS) about using HTTPS interception products to detect malware over an HTTPS connection because the HTTPS interception products may leave the organization vulnerable to man-in-the-middle (MITM) attacks. In an MITM attack, a third party intercepts internet communications between two parties; in some instances, the third party may modify the information or alter the communication by injecting malicious code.
OCR provides a partial list of products that may be affected. Also, OCR provides a method that organizations can use to determine if their HTTPS interception product properly validates certificates and prevents connections to sites using weak cryptography.
OCR emphasized that covered entities and business associates must consider the risks presented to the electronic protected health information (ePHI) transmitted over HTTPS. Further, OCR encouraged covered entities and business associates to review OCR’s recommendations for valid encryption processes to ensure that ePHI is not unsecured and the U.S. Computer Emergency Readiness Team’s recommendations on protecting internet communications and preventing MITM attacks.
HIPAA Enforcement in the News
Below is a round up of the settlements recently in the news related to ePHI.
OCR Announces HIPAA Settlement for Impermissible Disclosure of ePHI, Insufficient Risk Analysis, and Insufficient Risk Management Processes
The U.S. Department of Health and Human Services Office for Civil Rights (OCR) announced its $2.5 million settlement with a wireless health services provider for impermissible disclosure of ePHI. OCR’s investigation revealed that the provider had insufficient risk analysis and risk management processes in place at the time of the impermissible disclosure, including failing to implement policies and procedures regarding ePHI safeguards. The settlement requires the provider to implement a corrective action plan.
OCR Announces HIPAA Settlement for Insufficient Security Management Process for ePHI
OCR announced its $400,000 settlement with a federally qualified health center (FQHC) based on the FQHC’s failure to have a security management process, including risk analyses sufficient to meet the Security Rule’s requirements. The settlement requires the FQHC to implement a corrective action plan. OCR’s announcement also provided a link to its guidance on the Security Rule.
OCR Announces HIPAA Settlement for Failure to Have Business Associate Agreements
OCR announced its $31,000 settlement with a small, for-profit health care provider based on the provider’s failure to produce a signed business associate agreement with its business associate who stored records containing PHI. The settlement requires the provider to implement a corrective action plan.
Employers Ask…
UBA’s question of the month from employers addressed breach notification requirements:
Q. Under what circumstances do HIPAA’s breach notification requirements not apply when a breach of protected health information (PHI) occurs?
A. Generally, breach notification must be provided when a breach of unsecured PHI is discovered. HHS provides only two methods of creating “secured PHI” that would not be subject to the notification requirements if there is a breach:
This means that if PHI/ePHI is encrypted or destroyed and a breach occurs, HIPAA’s notification requirements are not triggered.
By Danielle Capilla
Originally Posted By www.ubabenefits.com
