Wednesday, November 28, 2012


More fees are coming to pay for health reform AKA Affordable Care Act.  Listed below are fees that are in place or going to be in place soon to pay, in some part, the cost of health reform.

  1. Patient Centered Outcomes Research Fee (PCORI) Fee: (This fee is also known as the comparative effectiveness fee.  Most understand this to be where doctors tell us if the procedure we need is cost effective.  The fee is $1 per member per year in 2012 then moved to $2 per member per year the second and then will be adjusted each year until 2019 when its supposed to dissolve.  Which seems unlikely.)
  2. Transitional Reinsurance Fee: (Fees collected from Health Issuers and Third Party Administrators to distribute funds to carriers with non-grandfathered plans that attract individual at risk for high medical costs).  Again, penalize the people who try to maintain a healthy lifestyle.  In effect from 2014-2016
  3. Insurer Fee:  Goes into effect in 2014 and is permanent. (This fee funds premium tax subsidies for individual and families with household incomes between 100 and 400 percent of Federal Poverty Level who purchase health insurance through the exchanges.) This fee will be approximately 2.3% of premium the first year.  
In total you can expect your premium to increase approximately 3.8% in 2014 just because of the above fees.  This isn't the end though.  I am sure there are more to follow once they have been dug out of this law.

Thursday, September 20, 2012


IRS Notice 2012-58  is aimed at employers with more than 50 full-time employees and solidifies how employers are to determine whether an employee is full-time or part-time.  A full-time employee, for health reform purposes, is defined as someone who works, on average, 30 hours or more per week.  This number is important for several reasons but mainly if you should be offering them health coverage and if they could count against you if you are penalized for either not offering minimal essential coverage or if your health plan is deemed unaffordable.

Often-times employers will bring employees on board as a part-time employee and through shift changes or picking up hours here and there become full-time but still labeled part-time.  The IRS is going to be looking at these employees very closely as to whether they should have been considered full-time.  The way they are going to do this is specified in the link above but a synopsis is located below:

Ongoing Employees (Safe Harbor)

1) For ongoing employees (employees who have been working for at least one standard measurement period), employers "Look-Back" over a period of "Standard Measurement" of at least 3 months but no more than 12 Calendar months to determine average weekly hours.

2)  Those employees who average more than 30 hours during this "Standard Measurement Period" or "Look-Back Period" are considered full-time.  Employers may take an (Optional) "Administrative Period" of no longer than 90 Days to bring them into full-time benefits.

3) Following the Look-Back Period", starts the "Stability Period" which is at least 6 months long and no shorter than the "Standard Measurement Period".  During the stability period the employee remains either Part-Time or Full-Time based on their determination, even though they may have moved back into Part-Time or Full-Time status.

Newly Hired Employees, Variable and Seasonal (Safe Harbor)

1) Similar to ongoing employees, Employers may use an initial "Measurement Period" of at least 3 months but no more than 12 months to determine average hours, and an (Optional) administrative period of no more than 90 days to bring that employee on board as full-time eligible if they meet the Full-Time criteria.

2) The "Stability Period" must be the same length as the "Stability Period" for ongoing employees.

3) The rules for the "Stability Period" are the same for Newly Hired and Ongoing Employees.

This requirement under health reform appears to be aimed at those 50+ employers who are thinking that they may be able to avoid penalties associated with not offering minimal essential coverage or unaffordable coverage by hiring more part-time employees.  The fed needs their penalty income to pay for health reform so one way or another they will get it.  Unless you plan on bringing a part-time employee on full-time, keep them under 30 hours per week to avoid any potential fines.

Wednesday, September 19, 2012


So here we are, on the heels of a presidential election, a bit over a year away from the full effects of the Affordable Care Act (Health Reform) and employers need to make sure they are remaining compliant or it could cost, a lot.  Below is a time-line and essential changes that you may want to earmark.  In past posts I have shared these with you but thought were important enough for a re-visit.


1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  

2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.

3) Summary of Benefits Coverage (SBC)-Applies to first Open Enrollment period after September 23, 2012.  Insurers and Plan Administrators must provide a summary of benefits and coverage to employers and plan participants.  For employer groups the responsibility to get these to the employees relies primarily on the employer.  Under this provision, there is a 60 Day Advance Notice of Material Change where carriers must provide a 60 day advance notification if any material changes to the coverage are to go into effect.

4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.

5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.

6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.  

Wednesday, August 22, 2012


Under PPACA (Health Reform), you as an employer, starting with your first open enrollment period after September 23, 2012, will be required to issue a Summary Of Benefits Coverage (SBC) to all health plan participants.  This is an approximate 4 page (front and back) document explaining the key benefits and coverage of the employer plan(s).  In most cases the insurance carrier will provide either copies or a link to a file in PDF format in order to download and distribute.  According to PPACA, the responsibility to distribute the SBC to plan participants lies with the employer group.  This is not to say, that at some point, carriers may decide to simply issue these directly to the plan participants as a courtesy to their clients. 

Thursday, August 16, 2012


Starting in October 1, 2012 employers will pay $1 per participant on your health plan per year to fund Comparative Effectiveness Research.  The dollars will go to the Patient-Centered Outcomes Research Trust Fund and will fund a new organization call the Patient Centered Outcomes Research Institute (PCORI).  This amount will increase to $2 per participant per year in 2013.

The idea behind the fee or tax is that these dollars will go to conduct comparative effectiveness research of various medical interventions and publicly disseminate them. Whether or not this fee will go to fund decisions on your personal healthcare is yet to be seen.

Thursday, June 28, 2012


At approximately 10:00 today, in a vote of 5-4 Chief Justice Roberts, siding with the liberal Justices, read that the Individual Mandate under the Affordable Care Act (Health Reform) is constitutional not as interstate commerce but as a tax.  In other words the government can't force individuals to purchase health care but they can impose a tax penalty if they don't.  

For people in favor of the law, this is an obvious win in their direction.  However, people not in favor of the law, the President, or continued government over-reach could see this as helpful for Romney's presidential bid in November.

Tuesday, June 26, 2012



The Affordable Care Act requires CareFirst to rebate part of the premiums it received if it does not spend at least 80 percent of the premiums CareFirst receives on health care services, such as doctors and hospital bills, and activities to improve health care quality, such as efforts to improve patient safety. No more than 20 percent of premiums may be spent on administrative costs such as salaries, sales and advertising. This is referred to as the “Medical Loss Ratio” standard or the 80/20 rule. The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars. You can learn more about the
80 /20 rule and other provisions of the health reform law at:

What the Medical Loss Ratio Rule Means to You
The Medical Loss Ratio rule is calculated on a State by State basis. In the District of Columbia,  CareFirst did not meet the 80/20 standard. In Virginia the Small and Large Group HMO plans did not meet the 80/20 Standard and in Maryland the Individual Consumer-Driven Only Market was affected.   In 2011, CareFirst spent only 79.2%of a total of $1,000,000 in premium dollars on health care and activities to improve health care quality. Since it missed the 80 percent target by .8% of premium it receives, CareFirst must rebate .8% of the total health insurance premiums paid by the employer and employees in your group health plan. We are required to send this rebate by August 1, 2012, or apply this rebate to the health insurance premium that is due on or after August 1, 2012. Employers or group policyholders must follow certain rules for distributing the rebate.

Ways in Which an Employer Can Distribute the Rebate
If your group health plan is a non-Federal governmental plan, the employer or group policyholder must distribute the rebate in one of two ways: Directed to: Small Groups Platform: Facets

• Reducing premium for the upcoming year; or

• Providing a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based. 

Beginning July 9, 2012, CareFirst will distribute rebate checks to 9,870 fully insured employer groups for the 2011 calendar year.

• Rebates differ by product and jurisdiction. The typical group will receive a rebate check between $561 and $10,785.

Tuesday, June 19, 2012


As we all wait for the Supreme Court to rule on the future of health reform, there are items in the law that will be taking place in the near future.  Below is a listing of those items:

1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  

2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.
(I  am thinking that most carriers will offer this coverage as its easier for them to manage than trying to determine Grandfathered and Non-Grandfathered eligibility)

3)  Plan years beginning after September 23, 2012-Summary of Benefits will need to be updated to include more easily readable and understandable benefit descriptions.  This responsibility will fall mainly on insurers for fully insured plans.

4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.

5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.

6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.  

Thursday, May 10, 2012


Below please see additional guidance from the IRS regarding reporting value of employee benefits on form W-2.  If you have a hard time reading please go directly to the IRS site here





Tuesday, April 24, 2012


According to the Legislative Wrap-Up (please see below) Maryland House Bill 443 and Senate Bill 238 allow agents and consultants to broker plans through the public exchanges.  This is wonderful news as it gives employers and individuals access to both private insurance programs as well as those offered through the public exchanges while maintaining their relationship with agents/consultants.  Hopefully, this will help spur competition and ultimately lower insurance costs making coverage more affordable for everyone.  Of course the Supreme Court may throw a wrinkle or two as to how the law will go into effect.  But  come January 1, 2014, I would assume that regardless of what the Supreme Court decides, Maryland will plow forward with their version of Health Reform.

The Legislative Wrap-Up
Library and Information Services, Department of Legislative Services

Maryland Health Benefit Exchange Act of 2012
HB 443 (passed) makes various updates to Maryland’s Health Benefit Exchange laws. This Administration bill, as amended, expands the operating structure of the Maryland Health Benefit Exchange by, among other things, authorizing the exchange to contract with health insurance carriers in a certain manner, establishing the framework for the Small Business Health Options Program (SHOP) Exchange, and establishing navigator programs for the SHOP and Individual exchanges. The bill requires SHOP Exchange navigators to be licensed, Individual Exchange navigators to be certified, and insurance producers to be authorized to sell qualified plans in the SHOP and/or Individual exchanges. The bill also establishes a process for selecting the benchmark plan that will serve as the standard for the essential health benefits for health benefit plans offered in the small group and individual markets, both inside and outside the exchange.

The legislation has a general effective date of June 1, 2012, although some provisions do not take effect until January 1, 2014.

Monday, April 2, 2012


Is making individuals pay for health insurance or pay a penalty constitutional?  That, over three days last week, was being argued in front of the US Supreme Court.  At this point it's any body's guess, however, a decision will be reached sometime in June. 

In additional to the individual mandate, what else will need to be taken out of the Health Reform Law in order to protect it from abuse?  At the very least, guaranteed issue coverage would need to be taken off the table.  And possibly open enrollment periods added in.  Without this there would be no way to protect from people jumping on and off plan when they needed care......which would be catastrophic. 

During the several days of testimony the more liberal Justices seemed to drive questions that would uphold the law while the conservative Justices were not as sure about congress' power regarding making people purchase health coverage.  The Justices include 5 Republicans and 4 Democrats. 

This is a very big deal to the Obama Administration.  He has even issued a "Challenge" to the Supreme Court to uphold the law.  If this law fails or at least a major portion (Individual Mandate), it could have devastating impacts on his re-election effort.

Thursday, March 15, 2012


Admit it, you thought I was talking about March Madness, right? The U.S. Supreme Court is set to hear arguments later this month regarding the constitutionality of the Individual Mandate.  If you recall, the individual mandate is that provision in PPACA (Health Reform) that states all people must have individual medical coverage or face a fine.  How the outcome could affect the way employers offer medical coverage could go several different ways.

If the Mandate is ruled constitutional, health reform will continue on its path, states will continue to set-up their exchanges and employers will need to make decisions whether to continue to offer coverage or send employees to the exchanges or a combination of both.  Employer groups of under 50 employees will see little or no monetary adverse consequence to sending employees to the exchange or not because there are no penalties to do so.  If the employer has over 50 employees, not offering some form of minimal essential coverage could cause fines and penalties levied on them.  There are decisions, especially for employers under 50 employees, if its financially prudent to shut down their medical plans and send all employees to the exchanges.  There are schools of thought that for some employers, in order to stay competitive, they will need to continue to offer employer sponsored coverage.

If the Mandate is ruled unconstitutional there is no requirement for employees or anyone else to elect medical coverage.  Since the individual mandate is a guard against "adverse selection" and allows risk to be spread among everyone, it could potentially be the death of the health reform law as it is written.  Since there are no pre-existing condition exclusions and individuals would be able to come onto plan when they wanted, mostly the people electing coverage would be those that needed it.  In other words there is no incentive, or dis-incentive not to carry coverage.  So the risk pool would be made of mostly sick people and eventually would make the cost of coverage unaffordable leaving us in a much worse place then we are now. 

If the individual mandate was removed, other provisions like no pre-existing condition limitations may need to be adjusted to keep people from hopping on-plan simply when they need coverage.  Some thoughts could be limited open enrollment periods, higher premiums for those outside of this period, etc. 

In all, health reforms are needed.  Forcing people to carry coverage may or may not be a good thing.  As far as employers are concerned there is much to keep our eye on in the upcoming months as we draw closer to full implementation of health reform.

Friday, February 24, 2012


The following is from an earlier post but as we get closer to the implementation of the exchanges the information is even more important.  Many of these types of partially-self funded plans have included wellness provisions and many other value added services.  In addition, for groups that are relatively healthy, can significantly drive down the cost of health care coverage with no risk to the employer.

Under Health Reform (PPACA) and currently in the Maryland Small Group Market (Under 50 Employees), medical plans are guaranteed issue.  This means that when a small group employer puts a medical plan in place there are no questions asked.  Plans are chosen, employees enrolled and thats it.  There are two main criteria used  to establish a rate:  Average age of the employees electing coverage and Location of the Company.  All things being equal, one employer located in the same county as another employer with the same average age will pay the exact same rate for the same medical plan through the same carrier.  The rates that the insurance carrier uses are filed with the State of Maryland and based on pooling.  What this means is that regardless of how much or how little you or your employees use the medical coverage you will pay the exact same rates as other companys with the same demographics because all claims are pooled together.  Now, if your company is sick, then this is a good thing because you are going to benefit from all the healthy people in the pool.  However, if your group is healthy, you are helping to pay for all those sick, unhealthy people.  This is where self-funding or partial self-funding comes in.  For small group plans, partial self-funding is a combination of traditional medical coverage, a claims fund, and stop-loss coverage.  Under a traditional plan you pay your premium whether you use the plan or not.  Under self-funded plans, if you don't use the plan, some of those premium dollars may come back to you.  For example, lets say a 40 employee group pays $200,000 in medical premium per year.  Under a partially self-funded plan $100,000 may go to a claim fund.  To protect your fund there are limits on claims.  One is a specific Stop-Loss Insurance, maybe $10,000 (for specific one-time claims) and Aggregate Stop-Loss Insurance (this amount is the total amount of claims that will be paid out before this coverage kicks in).  If all those dollars aren't used in the plan year, they are paid back to the employer.  If claims exceed this amount, under partially self-funded plans, employers costs are only limited to their premiums paid in.  These plans will become ever more attractive to healthy employer groups as Exchanges are set-up and younger healthy employees may be opting-out to go find cheaper coverage leaving the employer group with older, more costly, employees that will only drive up the costs of their coverage. 

Tuesday, January 24, 2012


The provision that required employers to report the cost of Medical, Dental and Vision coverage was supposed to go in effect for reporting year 2011.  However, that was delayed and the IRS has issued guidance for reporting these amounts (2012-9) for 2012 W-2's.

In a nutshell, the IRS stated that all employers who have issued more than 250 W-2's will be required to show the value of the employer sponsored medical, dental and vision coverage on their employees 2012 W-2's.  The cost of coverage does not include contributions made to a Health Savings Account (HSA), Medical Savings Account (MSA) or Health Reimbursement Arrangements.

In calculating the cost of coverage to be reported, the IRS indicated that this amount would be the same amount used to calculate the COBRA cost, not including the 2% administration fee, if any.

Those employers who file less that 250 W-2's are exempt from this provision at least through 2012.

The big question is why does the IRS want this information?  They state it's for informational purposes only.  Two thoughts:  This could be a way for the Fed to determine if their is coverage in place in regards to the "no coverage penalty" or a way for the Fed to tax those "Cadillac Plans" in 2018.

Tuesday, January 10, 2012


In December the Department of Health and Human Services outlined proposed policies defining what exactly are "Essential Health Benefits" to be included in health plans.  All insurance policies must cover these services in order to be certified and offered in the exchanges.  Below are a list of those services:

Ambulatory Patient Services
Emergency Services
Maternity and Newborn Care
Mental Health and Substance Abuse Disorders
Prescription Drugs
Rehabilitative and Habilitative Services
Lab Services
Preventive and Wellness Services, Including Chronic Disease Management
Pediatric Services, Including Oral and Vision Care

Each state would need to select a "Benchmark Plan" which could include at least all of the services above.  Could be from the largest plan in the state, largest state plan, largest federal plan, largest hmo plan offered in state.  This is the HHS's way of saying we are flexible.  If the state does not elect their own, the default benchmark plan will be the small group plan with the largest enrollment in the state. 

This "benchmark plan" is not to be confused with "Minimal Essential Coverage" which if you have more than 50 employees, could determine whether your health plan could set you up (or help you avoid) a big penalty from the fed. More to come later on that...........

So basically this means that all health plans would need to include an array of services in each of those ten areas identified in order to be offered through the state exchanges.