Benefits Buzz March 2017
DID YOU KNOW?
Becoming health care literate can be complicated. Knowing your benefits and their costs can be a daunting task for anyone. In fact, being health care literate might be even harder than you think.
- More than 1 in 3 Americans (77 million people) have difficulty with common health tasks, like reading a prescription drug label or making a wise health care decision.
- Low health literacy is estimated to cost the United States $106 billion to $238 billion annually and accounts for 7 to 17 percent of all personal health care expenditures.
Source: U.S. Department of Education’s National Assessment of Adult Literacy (NAAL)
ACA and Employer Health Plans Under President Trump
President Donald Trump has made dismantling the Affordable Care Act (ACA) one of the cornerstones of his administration. Steps have already been taken to begin the process.
The initial steps, including an executive order issued by Trump, have no immediate impact
on the ACA. No ACA provisions or requirements have been eliminated or delayed at this time.
However, employers should be aware that the following plan requirements would change if the ACA is repealed:
- Prohibition on lifetime and annual limits
- Out-of-pocket maximum limit
- Waiting period limit
- Prohibition on pre-existing condition exclusions
- Dependent coverage to age 26
- Preventive care coverage requirement
- Prohibition on rescissions
- Patient protections
The steps that have already been taken to begin the process of repealing the ACA include a budget resolution and an executive order. These acts alone are not enough to repeal the current law.
A full repeal of the ACA cannot be accomplished through the budget reconciliation process. A budget reconciliation bill can only address ACA provisions that directly relate to budgetary issues—specifically, federal spending and taxation. A full ACA repeal must be
introduced as a separate bill that would require 60 votes in the Senate to pass.
Likewise, an executive order is not enough to repeal the ACA. The executive order on
the ACA is a broad policy directive that gives federal agencies the authority to eliminate or
fail to enforce any number of ACA requirements, as permitted by law.
Until the federal agencies begin to take action, it is difficult to know how the ACA will be impacted. The executive order’s specific impact will remain largely unclear until the new administration is fully in place and can begin implementing these changes. Additionally, health insurance policies for 2017 are already in place, and state laws, in many cases, prohibit significant changes from being made midyear.
Block Grants: What You Need to Know
“Block grants” are the Republican solution to Medicaid spending, and they are now a key strategy for President Donald Trump’s health care plan. Grant blocking is an old Republican strategy, originally pushed by Ronald Reagan in the 1980s. This tactic may indicate how the Trump administration plans to tackle the ACA.
A block grant is a fixed amount of money given to states by the federal government to be used for specific things, in this case Medicaid.
Currently, the nearly 75 million individuals who qualify for Medicaid are guaranteed coverage. The federal government and the state pay for their services jointly, but the government funding is open-ended and specifies what services the state must cover. In the grant blocking scenario, states would have much more freedom in deciding who qualifies for which services.
Lawmakers suggest that block grants could save the country $1 trillion over the next decade. However, experts are worried it will be at the expense of the elderly and disabled, who comprise the majority of Medicaid recipients.
DOL Overtime Rule
On Nov. 22, 2016, the Department of Labor’s (DOL) overtime rule was halted by a preliminary injunction, issued by a federal judge in Texas. The rule, which was scheduled to take effect Dec. 1, 2016, would have increased the annual salary threshold for “white collar overtime exemptions” to $47,476.
With this rule halted, employers across the country can enjoy a reprieve from having to
raise salaries for exempt employees to the new threshold or pay them overtime.
However, on Dec. 1, 2016, the last possible day, the DOL filed an appeal of the Nov. 22
decision. The parties’ final briefs on the appeal are due Jan. 31, 2017.
Employers should continue watching for new developments related to the overtime rule,
given the uncertainty. Until a final decision is reached in the case, employers can rely on
existing overtime exemption rules.
Employers that have already made adjustments to comply with the new rule may find it difficult to reverse any changes; however, employers may decide to postpone any changes that have not yet been made.
For employers looking to roll back salary adjustments, consider employee morale before rescinding promised changes. The HR department can be a valuable resource for communicating any changes to employees.
The Future of the Overtime Rule
Supporters of the rule remain committed to what they describe as fair increases in the
overtime exemption salary threshold; however, the DOL may be facing an uphill battle in implementing changes to the overtime exemptions.
In his written ruling, the judge suggested that he would side with the parties challenging the rule when resolving the case. He stated that, in issuing the rule, the DOL “exceeds its
delegated authority and ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test.
However, further steps need to be taken in the court process before the rule is permanently struck down.
It is also possible that, once he is in office, President-elect Donald Trump could take
executive action to block the rule, but it is not clear at this time what approach he would
take to change or undo the rule. If the court strikes down the rule, further congressional
or executive action may be unnecessary.
Other Issues for Employers
Although changes to the overtime exemptions may not take effect for some time (if ever), employers must continue to comply with current regulations. In preparing for the rule, many employers have discovered that employees may have been misclassified, which is an issue that must be addressed to avoid violating the current FLSA regulations.
2016 Kaiser Health Benefits Summary
Each year, the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) conduct a survey to examine employer-sponsored health benefit trends. Here are the main points of the 2016 survey:
- Average premiums have risen nearly 60 percent for single coverage since 2006.
- Preferred provider organizations (PPOs) were the most common plan type, followed by high deductible health plans (HDHPs) with a savings option—covering 48 and 29 percent of workers, respectively.
- The average deductible amount for single coverage was over $150 higher than last year—jumping to $1,478 from $1,318.
- The average in-network co-payments were $24 for primary care and $38 for specialty care; in-network coinsurance amounts were 18 percent and 19 percent, respectively.
- Small and large firms both offer wellness programs, with 46 percent of small firms and 83 percent of large firms offering at least one.
- Eighty-two percent of workers in large firms and 13 percent in small firms are covered under some sort of self-funded (partially or fully) plan.
- Of the large firms offering health benefits, 39 percent cover some health care services through telecommunication.
- Of the firms polled, 56 percent offer health benefits to some workers, which is similar to recent years.
- Of the firms offering health coverage with 50 or more employees, 2 percent offer health benefits through a private
The Presidential Election’s Impact on Health Care
Donald Trump’s victory in the election, along with Republican majorities retained in both the Senate and House of Representatives, will likely have a significant impact on a number of compliance issues over the next four years.
During his campaign, Trump called for a repeal of President Barack Obama’s hallmark health care reform legislation, the Affordable Care Act (ACA). In addition, Trump’s victory raises uncertainty over the future of other policies enacted under President Obama, including the new overtime requirements under the Fair Labor Standards Act (FLSA).
Throughout his presidential campaign, Trump ran on a platform of repealing and replacing the ACA. In addition, since its enactment, Republicans in both the Senate and the House of Representatives have virtually all opposed the ACA, calling for its repeal.
Due to the sweeping Republican victories seen in this election, it is likely that some changes will be made to the ACA over the next four years. While it is largely unclear, at this time, what those changes will look like, Republicans in the past have suggested the following:
- Fully repealing the ACA, with or without a potential replacement health care reform legislation
- Partially repealing key provisions (such as the individual and employer mandates), while retaining some less controversial provisions
- Changing the Medicare and Medicaid programs
- Implementing new policies intended to expand coverage and lower health care costs
However, the newly elected officials will not take office until early 2017. This means that there will likely be no significant legislative or regulatory changes to the ACA before then. Due to the additional uncertainty for employers, with compliance obligations hinging on the political process, employers may want to hold off on making any large-scale changes related to their employer-provided health care.
2017 Health Care Compliance Highlights
Certain changes to some ACA requirements take effect in 2017 for employers sponsoring group health plans, such as increased dollar limits. To prepare for 2017, employers should review upcoming requirements and develop a compliance strategy.
Here are some of the requirements effective in 2017. Note this list is not exhaustive and may not be applicable to you. Please contact your Stuckey Insurance representative with any questions regarding your health care compliance.
- Cost-sharing Limits: For the 2017 plan year, the annual limit on total enrollee cost-sharing for essential health benefits (EHB) is $7,150 for self-only coverage
and $14,300 for family coverage.
- Health Flexible Spending Account (FSA) Contributions: The ACA limits an employee’s pre-tax salary reduction contributions to a health FSA each year. The limit is increased to $2,600 for 2017.
- Summary of Benefits and Coverage (SBC): A new SBC template and related materials were released for use beginning on or after April 1, 2017.
- Reinsurance Fees: Health insurance issuers and selffunded group health plans that provide major medical coverage must pay fees to a reinsurance program for
2014–2016. Fully insured plan sponsors do not have to pay the fee directly. Reinsurance fees do not apply for 2017 and beyond, although the 2016 reinsurance fees will be paid in 2017.
- Health Plan Affordability: An applicable large employer’s (ALE) health coverage is considered affordable if the employee’s required contribution for
the lowest-cost self-only coverage that provides minimum value does not exceed 9.5 percent of the employee’s household income for the taxable year (adjusted to 9.69 percent for plan years beginning in 2017).
- Section 6055 and 6056: For the 2016 calendar year, reporting deadlines under Section 6055 and/or Section 6056 are as follows:
a. Information returns must be filed with the IRS by Feb. 28, 2017 (or March 31, 2017, if filed electronically); and
b. Written statements must be furnished to individuals by March 2, 2017. This reflects a 30-day extension of the furnishing deadline provided in Notice 2016-70.
Please contact your Stuckey Insurance representative for more information on this or any other compliance-related topic.
The information contained in this newsletter is not intended as legal or medical advice. Please consult a professional for more information.
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