Monday, September 30, 2013

How to Navigate the Health Insurance Exchanges (Marketplace)

As we haven't been allow to see the steps involved with the Marketplace website (healthcare.gov, in Illinois you can also try getcoveredillinois.gov), here are some general ideas for you to be aware of.

1. You can go directly to each health insurer's website (that is in the Exchange) and look for health insurance both within the Exchange and outside of the Exchange.

2. You can go to healthcare.gov for any Federally Facilitated Marketplace or State/Federal Marketplace.

3. You will need an idea of what you think you will make in 2014. The rules state income is based upon Modified Adjusted Gross Income. They did not give details as to what that means, but for all practical purposes, think "Adjusted Gross Income." Estimate conservatively. If your income is much greater, then inform the Exchange to dial back your subsidy. The reason to do this is because the subsidies are actually forward looking tax credits. This means that the IRS will settle up with you at the end of the year. If the government has overpaid for your health insurance, they will ask for the money back! Of course if you had a bad year, the opposite is true too.

4. BE CAREFUL OF THE PLAN DESIGNS!!!!! I cannot stress this enough. The plans you will be viewing will be DIFFERENT that what you are used to.

  • Some will include extremely high prescription drug deductibles (for example, you pay a $1500 drug deductible before the drug copay kicks in). 
  • Others will include PER OCCURRENCE DEDUCTIBLES. Simply put, you pay this IN ADDITION to your normal deductible for things such as hospitalization, outpatient surgery, etc. An example would be you'd pay an extra $1000 each time you were admitted into a hospital, then you'd pay your deductible. 
  • Silver level plans will have HIGH DEDUCTIBLES. Insurance companies did this to keep the costs down. You will need to choose between having a $4000+ individual deductible for a reasonable premium or a higher premium and lower deductible.
  • THERE IS LESS CHOICE in the Exchange. If you do not qualify for a subsidy (you and your family make over 400% of Federal Poverty Level), then search for NON-EXCHANGE plans. In DuPage County, there are 3 insurance companies on the Exchange. Off-Exchange there are at least 5 with many more plans available. The rates for the same plan on and off the exchange will be exactly the same.
  • PEDIATRIC DENTAL will be a question on the applications. If you say you do not have a dental plan, then they will charge you extra for including dental coverage for children. My best guess is that if you do not have children on the health insurance plan and don't have dental, you shouldn't be charged extra, but we won't know until tomorrow.
  • IF YOU DON'T QUALIFY FOR A SUBSIDY consider getting a plan that starts 12/1/2013 with one of the insurance companies that will allow you to keep the plan for 1 full year. This will delay the increase in costs due to Health Reform for that much longer.
  • PLEASE - USE AN AGENT!!! There is no cost to use an insurance agent certified to sell in the exchange. The rates are exactly the same and they will be able to help you avoid the pitfalls of choosing a plan that doesn't work for you. What you don't know WILL hurt you.
Please call me if you want help. My phone is 630-779-1144.

Thanks,

Robert Slayton

Tuesday, September 17, 2013

Why the Web Based Exchange is likely to blow up on Tuesday October 1st (A rant by Robert Slayton)

After spending weeks working with the Centers for Medicare and Medicaid Services (CMS.gov) to try to figure out whether I'm registered as an Agent on the Federally Facilitate Exchange, I had an epiphany of sorts. If they can't even get the training and registering part right for Insurance Agents, then how in the heck will they be able to get the web based Marketplace (Exchange) off the ground which will have tens of thousands more people trying to sign up for coverage?

Right now when you call CMS's help number for Insurance Agents, you receive a recording that the website has issues and that they are working on it. Ever since they opened up the website, (September 3rd), it hasn't worked correctly. When I talked to a CMS representative last week (30 minute wait, 15 minutes on the phone), they couldn't check my status or give me any information. They referred me to another website which just has general information. The worst part about that referral was the website had 98 characters (here it is: http://www.cms.gov/cciio/programs-and-initiatives/health-insurance-marketplaces/a-b-resources.html). Imaging trying to write down this website as they read it off to you.

Out of the hundreds of agents I track, only 2 have said they have gotten their FFM# (this allows them to write business within the exchange).

But wait, it gets better. Not only will you have no agents who can help until CMS resolves the registration issue, in Illinois, the Feds are saying rates and plans won't be released until October 1st, the very day the Marketplace opens.

How is ANYONE (Customer Service Reps working for the Exchange, Navigators, In Person Assisters, and Agents) going to be able to help people in the Marketplace if we don't have any time to review the plan designs and rates associated with the insurance before it goes live?

Maybe the government IS training their reps beforehand. Then they will be the ONLY ones who can answer questions on day 1, thereby increasing their call volume dramatically, thereby causing long wait times and unhappy customers.

Imagine if you ran a large corporation with thousands of sales people. Wouldn't you train them on the new product (plans available within the Marketplace) and give them pricing before launching? Doesn't this make sense? Apparently not for the Government.

In Politics, you can fudge a lot of things when it deals with people and paper. When it comes to technology, you can't fudge. Either it works or it doesn't work. Having worked for years for a technology company who has delivered "vaporware" to clients, I've been on the receiving end of the screaming and yelling when a product doesn't work.

It will be interesting to see whether the website works and can keep up with the traffic. If I were a betting person, I'd bet on the Exchange's portal not working smoothly the first day (and week).

Let's see whether my prognostication comes true. I sure hope not. . .

Monday, September 16, 2013

Explanation of Guidance on HRAs, Health FSAs and Certain Other Employer Healthcare Arrangement Options

Explanation of Guidance on HRAs, Health FSAs and Certain Other Employer Healthcare Arrangement Options


By Larry Grudzien
Attorney-At-Law
September 16, 2013 

On Friday, September 13, the Departments of Labor, Treasury and Health and Human Services provided guidance on the application of certain provisions of the Affordable Care Act (Act) on health reimbursement arrangements (HRAs), certain health flexible spending arrangements (Health FSAs) and employee assistance programs (EAPs).   The following reviews this guidance:

1. Since HRAs are group health plans under ERISA, they must meet the market reforms under the Act.

2. HRAs integrated with a group health plan will be treated as complying with both the annual dollar limit prohibition and the preventive services requirement if certain conditions are met, as explained below.

3. An HRA can be integrated with the group health plan of the employer or of another employer.

4. An HRA used to purchase individual market coverage is treated as not integrated for the annual dollar limit prohibition or the preventive services requirements. 

5. For an HRA to be except from these requirements it must qualify as either a retiree medical plan or an "excepted benefit" under HIPAA. 

6. Amounts made available under an HRA that is integrated with an eligible employer sponsored plan can be used for determining affordability or minimum value, but not both.

7. If an HRA is integrated with a plan offered by another employer for purposes of the market reforms, such an HRA cannot count toward the affordability or minimum value requirement of the plan offered by the other employer.

8. An HRA will be treated as integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if the requirements of at least one of two integration methods, Minimum Value Not Required and Minimum Value Required, are met

Minimum Value Not Required:   This method is met if:


a)         the employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits;

b)         the employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage);

c)          the HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer's group health plan but are enrolled in other non-HRA group coverage, such as a plan maintained by the employer of the employee's spouse);

d)    the HRA is limited to reimbursement of one or more of the following-co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care (as defined under Code Section 213(d)) that does not constitute essential health benefits; and

e)    under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

This opt-out feature is required because the benefits provided by the HRA generally will constitute minimum essential coverage and will therefore preclude the individual from claiming a premium tax credit.

 

Minimum Value Required. This method is met if:


a)    the employer offers a group health plan to the employee that provides minimum value;

b)    the employee receiving the HRA is actually enrolled in a group health plan that provides minimum value, regardless of whether the employer sponsors the plan (non-HRA MV group coverage);

c)     the HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer's group health plan but are enrolled in other non-HRA MV group coverage, such as a plan maintained by an employer of the employee's spouse); and

d)    under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

9. An employee who ceases participation in a group health plan may use any remaining amounts credited in the HRA while integrated after being covered without causing the HRA to fail to comply with the market reforms.

10. If the requirements of Minimum Value Required Integration Method are met, an HRA integrated with that group health plan will not be treated as imposing an annual limit in violation of the annual dollar limit prohibition, even if that group health plan does not cover a category of essential health benefit and the HRA is available to cover that category of essential health benefits and limits the coverage to the HRA maximum benefit.

11. If a Health FSA offered by an employer does not qualify as excepted benefits, the Health FSA generally is subject to the market reforms. If they are not integrated with a group health plan, they will fail the preventive care requirements. There will be an exception for Health FSAs from the annual dollar limit prohibition that is offered under a cafeteria plan.

12.The above exception will not apply to HRAs that could be treated as Health FSAs.

13. An Employee assistance program will be considered to be an excepted benefit, but only if the program does not provide significant benefits in the nature of medical care or treatment. Since this term is not defined in the guidance, employers may use a reasonable, good faith interpretation of whether an EAP provides such care or treatment, until further guidance is released.

14. Premiums for coverage purchased on the marketplace cannot be reimbursed under a premium only plan under Code Section 125 for tax years beginning after December 31, 2013. For any premium only plans that have a noncalendar plan years as of September 13, 2013, this restriction will not apply before the first plan year beginning after December 31, 2013. Because of this, any individual may not claim a premium tax credit for any month in which he or she was covered by a qualified health plan purchased though a state marketplace and reimbursed under a premium only plan under Code Section 125.

This provision was added because several state marketplaces established before 2013 allowed individuals to be reimbursed for individual health insurance premiums purchased through a state marketplaces from premium only plan under Code Section 125.

These provisions apply for plan years beginning on or after January 1, 2014, but may be applied for all prior periods.
 
For More Information:
If you have any comments or questions regarding any of above information, please do not hesitate to call Robert Slayton at 630-779-1144 or Larry Grudzien at (708) 717-9638 

Friday, September 6, 2013

Model Exchange Notices are Required of ALL Companies who must comply with the Fair Labor Standards Act (FLSA) by 10/01/2013

Model Notices are Required of ALL Companies who must comply with the Fair Labor Standards Act (FLSA) by 10/01/2013


This document is for educational purposes only and is not intended, and should not be relied upon, as tax or legal advice. Recipients of this document should seek advice based on their particular circumstances from an independent tax advisor or legal counsel.  

Am I required to comply with the FLSA?


In general, employers who are engaged in interstate commerce OR engaged in the production of goods for commerce OR have $500,000 or greater GROSS revenues annually must comply REGARDLESS OF WHETHER YOU OFFER HEALTH INSURANCE.

What do I do if I offer Health Insurance?

Fill out and provide the following Model Notice. My strong recommendation is to work with your Insurance Broker on this. You should include the first 2 pages. The third page is optional and I usually recommend that employers not include it.

Page 1 – Fill out the contact information in the box at the bottom of the form.
Page 2 – Fill out the requested information. As for eligibility, my recommendation is to take the language directly from your Certificate of Coverage. DO NOT check the box stating that your plan meets both minimum value and affordability for EVERYONE unless it really does. It is okay not to check the box.


What do I do if I DO NOT offer Health Insurance?

Fill out and provide the following Model Notice. My strong recommendation is to work with your Insurance Broker on this. You should include the first 2 pages. The third page is optional and I usually recommend that employers not include it.

Fill out page 2.

Who do I give it to?

All of your employees (full time, part time, seasonal, student, mentally challenged, etc.). Interns, 1099 employees are not considered employees.

How do I distribute it?

It is best if you can attach it to a person’s paycheck. Other avenues are handing it out, mailing it, or providing it electronically (such as emailing it) PROVIDED you follow the Department of Labor’s electronic disclosure safe harbor.

Keep track of the date of distribution and a list of the people you distributed it to. If you are audited, this will be your lifesaver.

What about going forward?

You must provide this notice to ALL newly hired employees.

What else?


These model notices are only good through 11/30/2013. New notices should come out beforehand. 

Are there Penalties for not complying?

Yes, we guess it is $100/employee/day (nothing specific was mentioned, so we are using the general penalty).

What if I Need More Help?

Feel free to contact me.

Robert Slayton
630-779-1144

Robert@robertslayton.com

Thursday, August 1, 2013

Pediatric Dental with the Affordable Care Act – What does this mean? Do I need to Buy it?

Pediatric Dental with the Affordable Care Act – What does this mean?


Today I will be talking about State Federal and Federally Facilitated Exchanges (also known as Marketplaces). State Based Exchanges will come up with their own rules so are not included here.
Pediatric Dental is one of the 10 Essential Health Benefits required to be on a health insurance plan starting in 2014. Below is what I've been able to figure out so far. As changes happen, this will be changing.


What is Pediatric Dental?


It simply means that all children under the age of 19 will have coverage for preventative, basic, major/restorative, and most will include “medically necessary” orthodontics. Picture your current dental plan. It usually looks like the following (this would be considered a “high plan” under the new rules):

Network
e.g. Delta Dental
Deductible Individual/ Family
$50/$150
In Network/Out Network %
Preventative Care
100%/100%
Basic Care
80%/80%
Major Care
50%/50%
Orthodontia
50%
Annual Maximum
$1,000.00
Lifetime Orthodontia  Max
$2,000.00


Pediatric dental plans can be offered both as a standalone product (similar to the above) within the exchange or embedded within the medical plan.


Stand Alone


If the plan is offered as a standalone product, it will look similar to the above plan (with different percentages). The big difference is that the annual out of pocket maximum will be $700 for one child and $1400 for 2+ children. This means that if orthodontia is deemed as medically necessary, the most someone would pay in one year would be $700. Furthermore, there is NO ANNUAL MAXIMUM for children (not adults). So if a child needs $4000 of covered work done, then the child’s family would pay only $700 within that year.


Embedded within a Medical Plan


We are still waiting to see how this may look. A health insurance company can have pediatric dental’s deductible be the same as the medical deductible or have it be separate.


Do I need to buy Pediatric Dental?


Technically yes. Some states will be including it with all plans. Most states will offer a standalone dental benefit that can be combined with a separate medical plan. They will also be offering medical plans with dental included within the medical plan.


Technically, all states will require “reasonable assurance” that you own a dental plan that covers children. If you are on a Federally Facilitated Marketplace (Exchange) website, it will allow you select a medical only plan and check out without selecting a separate dental plan. It will ask you whether you have other dental and if you say yes, then you can continue. Currently there is no verification as to whether you actually have a pediatric dental plan.


If I don’t have Pediatric Dental, but do have Medical, will I be subject to the Individual Mandate?


Probably not as I believe the question on the tax return will be whether you have been covered by a health insurance plan and not ask whether your plan includes pediatric dental. Furthermore, people on grandfathered plans will not be required to have pediatric dental and will not be subject to the Mandate.


What if my company offers dental already?



Chances are that pediatric dental will NOT be part of your company’s medical plan in 2014 as the requirement states that if a company offers a standalone dental plan that covers children, then they do not need to include pediatric dental within their medical plan.

Thursday, July 18, 2013

Why the Individual Mandate won't work for Health Reform

We've heard a lot about the individual mandate in the Affordable Care Act. The first year it will be 1% or $95 (whichever is more). It then goes up to 2.5% or equal to the lowest cost Bronze Level plan (whichever is more). Refer to page 12 of the following: http://www.irs.gov/PUP/newsroom/REG-148500-12%20FR.pdf.

There are a number of exemptions available which people haven't talked about, but are very important. Here they are (taken from http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision):
-----
6. What are the statutory exemptions from the requirement to obtain minimum essential coverage?
  1. Religious conscience: You are a member of a religious sect that is recognized as conscientiously opposed to accepting any insurance benefits. The Social Security Administration administers the process for recognizing these sects according to the criteria in the law.
  2. Health care sharing ministry: You are a member of a recognized health care sharing ministry.
  3. Indian tribes: You are a member of a federally recognized Indian tribe.
  4. No filing requirement: Your household income is below the minimum threshold for filing a tax return. The requirement to file a federal tax return depends on your filing status, age, and types and amounts of income. To find out if you are required to file a federal tax return, use the IRSInteractive Tax Assistant (ITA).
  5. Short coverage gap: You went without coverage for less than three consecutive months during the year. For more information see question 22.
  6. Hardship: A Health Insurance Marketplace, also known as an Affordable Insurance Exchange, has certified that you have suffered a hardship that makes you unable to obtain coverage.
  7. Unaffordable coverage options: You can’t afford coverage because the minimum amount you must pay for the premiums is more than eight percent of your household income.
  8. Incarceration: You are in a jail, prison, or similar penal institution or correctional facility after the disposition of charges against you.
  9. Not lawfully present: You are neither a U.S. citizen, a U.S. national, nor an alien lawfully present in the U.S.
-----

Unaffordable Coverage Option (#7)


I'd like to focus on just one of the 9 exemptions, the Unaffordable coverage option (#7). If you surf out to the Kaiser Family Foundation's subsidy calculator (http://kff.org/interactive/subsidy-calculator/) and plug in a family of 4. The projected premium is $12,887/year for the second lowest Silver Plan. The projected premium for a Bronze level plan is $10,681/year.

If you divide $10,681 by 0.08, you'd need to make more than $133,512.50/year to receive a penalty if you decide to forego coverage (8% of $133,512.50 equals $10,681). That means there are a lot of people who will NEVER be faced with a penalty. Of course if you were, you'd just have to fill out the religious exemption section listing something like being a Christian Scientist or other religious organization that does not believe in traditional medicine.

How the IRS Collects the Penalty


Furthermore, the only way the IRS can collect this penalty is via your income tax return. If you don't pay income tax, then it's pretty hard for them to come after you as they are not allowed to garnish wages or freeze bank accounts. The last statistic I heard about the percentage of Americans who don't pay income tax was 47% (see http://abcnews.go.com/Politics/OTUS/mitt-romneys-47-percent-pay-income-taxes/story?id=17263629). So this mandate won't impact almost 1/2 the country.

So, whatever the CBO scores say about the number of people who will pay a penalty, my guess is that it will be much lower than expected.

Heck, if I were a young invincible, I'd happily pay the $95/year to save $2000/year in premium. That would be extra beer money. As I didn't have any assets and low income, there really is nothing for the doctors and hospitals to take from me if I had an illness (BTW, it's already a law that if you show up at the Emergency Room, they must treat you). The challenging part would be if I had expensive medications, but that's easily remedied through programs with the major pharmaceutical companies to supplement the cost to low income people. Then at open enrollment time, I'd sign up for a plan that starts January 1st of the following year. As there are no pre-existing conditions anymore, my conditions would be covered.

Of course if I wanted insurance sooner, I could just marry someone. This is considered a qualified reason (gaining a dependent) which allows me to get the insurance sooner. Once I had the insurance, we could get the marriage annulled (yet another qualified reason).

So why buy health insurance?

Health insurance is important because of the potential of taking your life savings on a major illness (I've seen it numerous times). It also helps give access to the top doctors and hospitals. If the government wants people to buy health insurance, they must focus on the reasons to buy and not on the penalties.

Frankly, there are three kinds of personal insurance coverage needed to protect against catastrophic loss due to health/death. The first is health insurance, the second is life insurance (to keep your beneficiaries living in the same lifestyle instead of having to sell everything), and disability insurance. The most overlooked is disability insurance.

Cash Machine

Imagine you had a cash machine in your home. It legally produced $1,000 -- $10,000/week every week of the year. My question is how much would you spend to make sure that income came in every week for the next 10 - 40 years? Would you spend $50/week?, $500/week?, or more to assure it keeps coming in?

If you would spend the money to protect the machine, then disability insurance makes sense. You are that cash machine. If you can't work, the money won't come in and you'll have nothing to live on.

The reason why people go into bankruptcy due to medical debt is because they have no income coming in during the illness. If you don't have money to pay for your premiums (because you are buying food or paying rent), then the policy lapses. Once the policy lapses, you are on the hook for all subsequent expenses. 

Questions

If you have questions on health reform, need a help with any of the above insurance products (for both individuals and businesses), please give me a call or shoot me an email.