by admin | Jul 3, 2018 | ACA, Benefit Management, Compliance, Group Benefit Plans
On June 19, 2018, the U.S. Department of Labor released its Final Rule regarding Association Health Plans (AHPs). AHPs are not new, but they have not been widely available in the past and, in some cases, they have not been successful. The Final Rule is designed to make AHPs available to a greater number of small businesses as an alternative to standard ACA-compliant small group insurance policies.
This article answers common questions about AHPs under the current rules (which groups can continue to use) and the new rules.
Is group medical insurance the same for small and large employers?
Yes and no. Federal law imposes certain basic requirements on all group medical plans, regardless of the employer’s size. For instance, plans cannot exclude pre-existing conditions nor impose annual or lifetime dollar limits on basic benefits. If the plan is insured, it also is subject to the insurance laws of the state in which the policy is issued.
Small group policies, which are sold to employers with up to 50 or 100 employees, depending on the state, are subject to additional requirements. These policies must cover 10 categories of essential health benefits (EHBs), including hospitalization, maternity care, mental health and substance abuse treatment, and prescription drugs. (Some states allow certain grandfathered or grandmothered policy exceptions.) For most small employers, their options for group medical insurance are limited to small group policies that comply with the full scope of ACA requirements. On the other hand, the policies are subject to guaranteed issue and adjusted community rating rules, so carriers cannot refuse to insure a small employer nor use any past claims experience in setting rates.
Large group policies, which can only be sold to groups with at least 50 or 100 employees, depending on the state, are not required to cover all EHBs. Carriers have more flexibility in designing coverage options and developing premium rates in the large group market. This means larger employers have more options to choose from and may be able to purchase coverage at a lower cost than would apply to a small group policy. Note, however, that there is no guaranteed issue protection, so carriers can accept or reject each employer’s application or use the employer’s past claims experience in setting rates.
Lastly, self-funded plans are subject to the ACA and other federal laws, but generally are exempt from state laws. They typically are not feasible for small employers, however, due to the financial risk of uninsured programs.
What is an Association Health Plan (AHP)?
Group insurance covers the employees of an employer (or an employee organization such as a labor union). An AHP, as the name implies, covers the members of an association. Unrelated employers can obtain coverage for their employees through an AHP provided the employers form a bona fide association. Traditionally, this has meant that the employers had to have a “commonality of interest” and their primary interest had to be something other than an interest in providing benefits. For this reason, AHPs generally have been limited to associations formed by employers in the same trade, industry, or profession.
The Final Rule makes AHPs available to a wider range of businesses by expanding the meaning of “commonality of interest.” Once the Final Rule takes effect, an association may be formed by employers that are:
- In the same trade, industry, or profession, regardless of location; or
- In the same principal place of business; i.e., in the same state or in the same multi-state metropolitan area.
Under the new rules, the employer’s primary interest in associating may be benefits coverage, although they still will need to have at least one other substantial business purpose other than benefits. This is a key difference from the current rules.
When does the new Final Rule take effect?
The Final Rule expanding the definition of an association for purposes of an AHP will take effect on staggered dates:
- For fully insured AHPs: September 1, 2018
- For self-funded AHPs:
- If in existence on or before June 19, 2018: January 1, 2019
- If created after June 19, 2018: April 1, 2019
As noted, the new rules do not replace existing rules. Employers and associations may continue to follow the existing rules (which generally limit AHPs to employers in the same trade, industry, or profession). The new rules merely expand the opportunities for AHPs, such as making them available to employers in the same state or metropolitan area even if they are in different industries.
Are AHPs limited to employers with employees? What about sole proprietors?
Currently, sole proprietors, such as mom-and-pop shops without any W-2 employees, purchase medical insurance in the individual market. Individual policies often cost more than group policies or AHPs. The new rules will expand the availability of AHPs to include sole proprietors who work a minimum number of hours (so-called working owners).
What about state laws? Will AHPs be available nationwide?
Insurance products, including AHPs, are regulated by state law. Under both the existing and new rules, AHPs are multiple employer welfare arrangements (MEWAs). State laws on MEWAs are quite complicated. In some states, MEWAs are prohibited. In others, insured MEWAs are allowed but self-funded plans are prohibited. The laws vary from state to state, so different carriers will make different decisions about whether they want to design and market AHPs in various jurisdictions around the country.
A number of states are very concerned about AHPs and may prohibit them in their states or impose strict requirements to ensure they will provide reliable and effective coverage. Other states will view AHPs as cost-effective alternatives to ACA-compliant policies for small employers and look to encourage their expansion.
What’s next?
There is no clear answer to what’s next. Over the coming months, carriers across the country likely will review the reasons they have or have not offered AHPs in the past, and whether they want to consider new approaches in the future. Along with economic and market issues to consider, carriers also must consider the state insurance laws in different jurisdictions. At the same time, many state legislatures and insurance commissioners will be reviewing their existing rules and whether they want to promote or expand the availability of AHPs in their area.
Oh … and the lawsuits. Yes, that also is what’s next. As of this writing, attorneys general in different states are planning to join together in challenging the federal government’s Final Rule on AHPs. Their stated concern is that effective regulation is required to ensure that plans provide adequate coverage.
ThinkHR will continue to monitor developments in this area.
by Kathleen A. Berger
Originally posted on thinkhr.com
by admin | Mar 28, 2018 | Benefit Management, Benefit Plan Tips, Tricks and Traps, Human Resources
As the costs of health care soar, many consumers are looking for ways to control their medical spending. Also, with the rise of enrollment in high deductible health plans, consumers are paying for more health care out-of-pocket. From medical savings accounts to discount plans for prescriptions, patients are growing increasingly conscious of prices for their healthcare needs. Price shopping procedures and providers allows you to compare prices so that you are getting the best value for your care.
Why do you need to look beyond your nearby and familiar providers and locations for healthcare? Here’s a hypothetical example: Chris is a 45-year old male in good physical health. During his last check-up he mentions to his doctor that he’s had some recent shortness of breath and has been more tired as of late. His doctor orders an EKG to rule out any problems. If Chris went to his local hospital for this procedure, it would cost $1150. He instead looks online and shops around to find other providers in his area and finds he can get the same procedure for $450 at a nearby imaging center. His potential savings is $700 simply by researching locations.
So where do you start when shopping around for your health care? A good place to begin is by researching your health plan online. Insurance companies will post cost estimates based on facility, physician, and type of procedure. Keep in mind that these are just estimates and may vary based on what coverage you are enrolled in. Another way to shop is by checking out websites that have compiled thousands of claims information for various procedures and locations to give an estimate of costs. However, deciphering whether a site is reporting estimates based on the “medical sticker price” of charges or rates for private insurance plans or Medicare is difficult. There are huge differences in prices at different providers for the exact same procedure. This is because contracts between insurance agencies and providers vary based on negotiated amounts. This makes it hard to get consistent pricing information.
Check out these sites that do a great job comparing apples to apples for providers:
- Healthcare Blue Book
- What Kelly Blue Book is to cars, Healthcare Blue Book is to medical pricing
- New Choice Health
- Reports on pricing of medical procedures, providers, quality of facilities, and customer feedback for healthcare in all 50 states
- The Leapfrog Group
- Publishes data on hospitals so patients can compare facilities and costs for treatments and procedures
After compiling all the information on prices and procedures, you can still call and negotiate costs with the location of your care. Fair Health Consumer has tips on how to negotiate with providers and plan for your healthcare needs.
Knowledge is POWER and when you spend time researching and comparing healthcare costs, you are empowering yourself! Exercising due diligence to plan for you and your family’s medical needs will save you money and give you confidence in your decisions for care.
by admin | Mar 23, 2018 | Employee Benefits, Human Resources
Fear of missing out—is more than just a hashtag. Many Millennials admit that #FOMO drives a lot of their decisions on what they wear, what they do, even what they eat and drink. We live in a world of social influence.
But one area where #FOMO really does you a disservice? No one is afraid of missing out on the benefits of life insurance. And why should you? There are so many other things competing for your dollars. That said, do you know what you’re missing out on by not having it? Are you making one or more of these mistakes?
You think life insurance is much more expensive than it actually is. Three in four Millennials overestimate the cost of life insurance—sometimes by a factor of 2, 3, or even more! (2017 Insurance Barometer Study by Life Happens and LIMRA) Imagine being able to afford life insurance for the cost of that daily latte, and for less money than your avocado toast habit!
You think you can’t qualify for life insurance. Nothing could be further from the truth, and yet four in 10 Millennials think this is true, according to the same study! Younger candidates have an easier time getting life insurance because they are generally healthier.
You’ll turn to GoFundMe if something goes wrong. In an era where social networking does all things, it’s natural to think that your loved ones can crowdfund their way to solvency after something happens. But life insurance benefits aren’t taxed like GoFundMe proceeds are, and life insurance has a defined, immediate payout that GoFundMe does not. Plus, your loved ones don’t need the stress or the stigma of having to ask others for help.
You’d rather spend that money on other things. In fact, one study recently suggested that many Millennials are more concerned about planning their next night out with a significant other than planning for their financial future. But sensible steps now will make for a better future with that significant other long past tomorrow night’s date.
You don’t care because you don’t have people depending on you for money. Take a look at your student loans. Were any of them private loans? Who is liable for them—in full, often immediately—if something happens to you? There are other debts you may need to consider as well—anything where you have a co-signer.
You keep saying you’ll get around to buying insurance, but don’t. Millennials are getting married, having families! Young families have enough to worry about with daycare costs and increased medical costs, right? Well, imagine what your young family would do about those bills if something happened to you. Could your spouse pay the rent or mortgage without your income?
You tune out when “adulting” gets too hard. One recent college grad recently confessed to me that he hadn’t elected into any of his employee benefits at the dream job he got in his field because “my dad takes care of that.” He was shocked to learn what he was missing out on!
Yes, adulting *is* hard, but a sound financial plan that includes retirement and insurance coverage (health, life, and disability insurance are all part of that plan) goes a long way to making sure that you don’t look back on your younger years and think, “Oh, why didn’t I start this sooner?” Plus, you don’t have to do it alone—that’s what insurance agents are for. They will sit down with you at no cost, or obligation, to discuss what you need and how to get coverage to fit your budget. But then, signing up—that IS on you. Don’t miss out.
By Helen Mosher
Originally published by www.LifeHappens.org
by admin | Aug 18, 2017 | COBRA, Human Resources
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows qualified beneficiaries who lose health benefits due to a qualifying event to continue group health benefits. While some group health plans may provide COBRA continuation coverage at a reduced rate or at no cost, most qualified beneficiaries must pay the full COBRA premium. The COBRA election notice should include information about COBRA premiums.
For fully insured health plans, the premium is the cost to maintain the plan for similarly situated employees. For self-funded plans, the premium is the cost to maintain the plan for similarly situated employees as determined by an actuary or the past cost from the preceding determination period. The applicable premium calculation for both fully- and self-funded plans includes the cost of providing coverage to both active employees and COBRA qualified beneficiaries. All COBRA premiums must be calculated in good faith compliance with a reasonable interpretation of COBRA requirements.
Generally, COBRA payments are made on an after-tax basis. Qualified beneficiaries have 45 days after the election date to make an initial premium payment. The plan may terminate the qualified beneficiary’s COBRA rights if no initial premium payment is made before the end of the 45-day period. In addition, plans must allow monthly premium payments and cannot require payment on a quarterly basis. As established under COBRA, premiums are due on the first day of each month with a minimum 30-day grace period. A plan may terminate COBRA coverage for nonpayment or insufficient payment of premiums after the grace period.
If a qualified beneficiary makes an insignificant underpayment, then the premium payment will still satisfy the payment obligation. An underpayment is deemed insignificant if the shortfall is no greater than the lesser of $50 or 10 percent of the required amount. However, if the plan notifies the qualified beneficiary of the shortfall and grants a reasonable amount of time to correct the underpayment (usually 30 days after the notice is provided), then the qualified beneficiary is required to make the payment; otherwise, COBRA coverage may be canceled.
Fully Insured Health Plans
Generally, the applicable COBRA premium amount for fully insured plans is the insurance premium charged by the insurer. The applicable premium is based on the total cost of coverage, which includes both the employer and employee portions. The premium amount is based on the cost of coverage for similarly situated individuals who have not incurred a qualifying event.
A group health plan may charge at most 102 percent of the premium during the standard COBRA coverage period for similarly situated plan participants (100 percent of the total cost of coverage plus an additional 2 percent for administrative costs). However, the plan may increase the premium for a disabled qualified beneficiary and charge 150 percent of the applicable premium during the 11-month disability extension period (months 19 through 29). In addition, COBRA regulations permit a plan to charge a 150 percent premium to nondisabled qualified beneficiaries as long as the disabled qualified beneficiary is covered under the plan. If the disabled qualified beneficiary is no longer covered under the plan, then the remaining qualified beneficiaries may continue coverage up to 29 months at 102 percent of the cost of the plan.
If an employer maintains more than one plan, then a separate applicable premium is calculated for each plan. Also, the applicable premium for a single plan may vary due to factors such as the coverage level, the benefit package, and the region in which covered employee resides. For instance, single employees may pay a different applicable premium than employees who include their spouse on the plan. Thus, the plan may charge different premiums based on the varying coverage levels.
The most common tier structures include employee-only, employee-plus-spouse, employee-plus-children, and employee-plus-family. According to Internal Revenue Ruling 96-8, a fully insured plan that pays different premiums for individual versus family coverage must use those same premium tiers for COBRA continuation coverage. Thus, COBRA premiums are divided into multi-rate and single-rate tier structures.
By Danielle Capilla
Originally Published By United Benefit Advisors
by admin | Jul 6, 2017 | Employee Benefits, Group Benefit Plans
In conversations with HR professionals and benefit brokers, we find that the topic of long-term care insurance (LTCi) is often covered in less than two minutes during renewal meetings. When I ask why the topic of conversation is so short, they tell me, “Employees just aren’t asking about it, so they must not be interested.”
If employees aren’t asking about LTCi, does it mean they aren’t interested? They just may be unaware of the value of LTCi and that it can be offered by their employer with concessions not available in the open market. Here are the top seven reasons why LTCi should be a bigger part of the employee benefits conversation.
- Do you know LTCi can be offered as an employee benefit?
There are multiple employer-sponsored products, including those with pricing discounts, guarantee issue, and payroll deduction.
- Do you believe Medicaid and Medicare will provide long-term care for employees?
This is a popular misconception. Medicare and Medicaid will restrict your employees’ choices of where and how they receive care. These options will either not offer custodial or home care, or they’ll force employees to spend down their assets for care.
- Do you think LTCi is too expensive, or that your employee population is too young to need it?
Many plans can be customized to meet personal budgets and potential care needs. It’s also important to know that rates are based on employees’ ages. The younger the employees are, the lower their rates will be.
- Are you aware of the variety of LTCi plans?
Many policies offer flexible coverage options. Depending on the policy an employer selects, LTCi can cover a wide range of care—in some cases even adult day care and home safety modifications.
- Do you believe the market is unstable?
Today’s products are priced based on conservative assumptions, and employers are enrolling very stable LTCi plans for their employees. Each month, we see new plan options and products being introduced along with new carriers entering the market.
- Do you already offer an LTCi plan but it’s closed to new hires?
Being able to offer a similar LTCi benefit to all employees is crucial for most employers. Find a partner that can assist with the current LTCi plan and can assist with bringing in a new LTCi offering for new hires
By Christine McCullugh
Originally Posted By www.ubabenefits.com
