Blog Home

Archive for the 'Employer-Sponsored Insurance' Category




Implementing Health Reform: Wraparound Coverage Excepted Benefits And Draft 2016 Letter To Issuers (Updated)


December 20th, 2014

In December 19, 2014, in what one hopes were their last major regulatory actions before the holidays, the Departments of Labor, Health and Human Services, and Treasury released a proposed rule on a new excepted benefit for wraparound coverage, while the Centers for Medicare and Medicaid Services released a Draft 2016 Letter to Issuers in the Federally Facilitated Marketplace.

This post will describe the wraparound coverage proposed rule.   It will be updated in the next day or two to analyze the letter to issuers (issuers being the Affordable Care Act word for insurers.)  I will note briefly, however, that the letter to issuers is very similar to the 2015 letter to issuers, with two major exceptions.  First, because open enrollment for 2016 begins on October 1, rather than November 15, as in 2015, the time frame for completing regulatory review begins earlier and is quite compressed.  Second, the 2016 letter picks up on a few new regulatory initiatives for 2016, such as attempts to provide more accurate provider directories and formulary information.  These changes will be explored more thoroughly in the update to this post.

Read the rest of this entry »

New Findings About The ACA’s Impact On Employer-Sponsored Health Insurance


December 19th, 2014

Since the Affordable Care Act (ACA) was signed into law, some of its critics have predicted that businesses would discontinue offering employer-sponsored health insurance, moving employees into the individual Marketplaces. If widespread dropping of employer-sponsored health insurance were to occur, government costs could increase since many low-wage workers would qualify for federal subsidies in the Marketplaces.

A new study, released today as a Web First by Health Affairs, examined data from the Health Reform Monitoring Survey for June 2013 through September 2014, assessing any early changes of employer-sponsored insurance under the ACA. Authors Fredric Blavin, Adele Shartzer, Sharon Long, and John Holahan report that the percentage of workers with employer offers for health insurance was basically unchanged between June 2013 and September 2014: 82.7 percent versus 82.2 percent. The authors are all affiliated with the Health Policy Center at the Urban Institute, in Washington, D.C. 

Read the rest of this entry »

Workplace Wellness Produces No Savings


November 25th, 2014

During the last decade, workplace wellness programs have become commonplace in corporate America. The majority of US employers with 50 or more employees now offer the programs. A 2010 meta-analysis that was favorable to workplace wellness programs, published in Health Affairs, provided support for their uptake. This meta-analysis, plus a well-publicized “success” story from Safeway, coalesced into the so-called Safeway Amendment in the Affordable Care Act (ACA). That provision allows employers to tie a substantial and increasing share of employee insurance premiums to health status/behaviors, and subsidizes such program implementation by smaller employers. The assumption was that improved employee health would reduce the employer burden of health care costs.

Subsequently, however, Safeway’s story has been discredited. And the lead author of the 2010 meta-analysis, Harvard School of Public Health Professor Katherine Baicker, has cautioned on several occasions that more research is needed to draw any definitive conclusions. Now, more than four years into the ACA, we conclude that these programs increase, rather than decrease employer spending on health care with no net health benefit. The programs also cause overutilization of screening and check-ups in generally healthy working age adult populations, put undue stress on employees, and incentivize unhealthy forms of weight-loss.

Through a review of the research literature and primary sources, we have found that wellness programs produce a return-on-investment (ROI) of less than 1-to-1 savings to cost. This blog post will consider the results of two compelling study designs — population-based wellness-sensitive medical event analysis, and randomized controlled trials (RCTs). Then it will look at the popular, although weaker, participant vs. non-participant study design. (It is beyond the scope of this posting to question non-peer-reviewed vendor savings claims that do not use any recognized study design, though those claims are commonplace.)

Read the rest of this entry »

Implementing Health Reform: 2016 Benefit And Payment Parameters Proposed Rule, Insurance Provisions


November 23rd, 2014

On November 21, 2014, the Centers on Medicare and Medicaid Services of the Department of Health and Human Services released its proposed Benefits and Payment Parameters (BPP) RulePart I of this post examined the benefit provisions of this proposed rule. This post will analyze the parts of the rule that deal with the insurance market reforms; the reinsurance, risk adjustment, and risk corridor programs; health insurance rate review; and the individual and SHOP exchanges.

New Definitions Of ‘Plan’ And ‘State’

The regulation begins with a modified definition of the term “plan.”  The terms “plan” is important in the ACA regulations.  A plan has been defined, with respect to a health insurer, as the combination of a benefit package, metal tier, and service area.  The new definition adds to this combination cost-sharing structure and provider network, so that plans that differ in their cost-sharing structure (deductibles, copayments, or coinsurance) or provider networks are different plans, even if they are offered at the same metal tier.  This definition becomes important, for example, in determining whether a plan offered outside the exchange is the same as a qualified health plan (QHP) offered in the exchange and can thus participate in the risk corridor program.  The proposed regulations later propose that the unreasonable rate review regulation applies at the plan level.

Read the rest of this entry »

New Health Policy Brief: The Family Glitch


November 10th, 2014

A new health policy brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) looks at the Affordable Care Act’s (ACA’s) so-called family glitch. Low-to-moderate-income families are eligible for a subsidy to purchase health insurance on the Marketplace if the cost of health coverage through their employers is more than 9.5 percent of their household income.

However, this formula is based on individual-only coverage and does not account for the higher cost of a family insurance plan. If the family glitch is not fixed, the path to affordable insurance for many spouses and children could be blocked—and children could be even further impacted if Congress fails to extend funding for the Children’s Health Insurance Program (CHIP) after the current appropriation ends in September 2015, which the brief also explains.

Read the rest of this entry »

Health Insurance Without An Annual Expiration Date? A Case For Exchange-Based Long-Term Policies


November 10th, 2014

Today, consumers make decisions every year about whether to renew or change health plans. Exchange-based multi-year plans would have to overcome significant obstacles before they become reality, but they hold the potential for helping the United States move toward goals of a healthier society and a more efficient health care system.

Since the launch of the federal and state health insurance exchanges in October 2013, set up to facilitate the purchase of insurance in line with the Affordable Care Act (ACA), millions of Americans have obtained coverage. In addition, several large employers, such as Sears and Walgreens, have announced that they will stop offering coverage and instead provide a defined contribution for their employees to purchase coverage on an exchange.

The growing role of exchanges, their price transparency, and the increasing share of the cost of coverage borne by enrollees is likely to make consumers pay increased attention to price. Price-sensitive buyers could encourage competition and thus efficiency. But there might be unintended consequences. Consumers might deliberately choose low-cost plans with limited benefits when they are healthy, knowing that the ACA allows them to purchase a more generous plan should they develop a chronic disease. The possibility of changing health plans when becoming sick might exacerbate the self-selection problem in the insurance market because the public exchanges allow only limited risk adjustment based on such factors as age, family composition, rating area, and tobacco use.

Read the rest of this entry »

Implementing Health Reform: Defining Group Health Plans And More


November 9th, 2014

A primary goal of the Affordable Care Act is to extend individual health insurance coverage through the exchanges and the premium tax credits to Americans who would otherwise be uninsured.  But most working-age Americans and their families remain insured through employer-sponsored group coverage. While seeking to expand individual coverage, therefore, the ACA also attempts to preserve group coverage.

Employers and those who advise employers have, however, sought to break down the barrier between group and individual coverage. That is, they have tried to figure out how employers can subsidize individual coverage for their employees rather than provide group coverage.  If this were possible, employers could assist their employees to secure coverage while avoiding the burden of operating a group health plan.  Employees might be able to simultaneously receive the benefits of employer contributions and of premium tax credits.  It might even be possible for employers to shunt off their high-cost employees with poor health status to the exchanges, where they would be charged community-rated premiums, while keeping healthy employees in a group plan, which would likely receive a favorable rate based on claims experience.

In earlier guidances, the Departments of Labor, Treasury, and Health and Human Services clarified that employer health care arrangements, such as health reimbursement accounts and employer payment plans, are group health plans subject to the group market reforms of the ACA, including the prohibition of annual limits or the requirement to cover certain preventive services.  Such arrangements must therefore be integrated with a group health plan that meets these requirements, therefore, to comply with the law.  They cannot be integrated with individual policies and comply with the law.

Read the rest of this entry »

Health Care Policy After The Mid-Term Elections


November 7th, 2014

As President Obama said in his post-election news conference, Republicans had a good night on November 4. They increased their majority in the House to a level not seen since the 1920s and may hold as many as 250 seats in the lower chamber. In the Senate, Republicans defeated at least three incumbent Democratic Senators, and are likely to defeat two more when all of the voting and counting is over.

The most likely scenario is that the GOP will hold 54 seats in the Senate come January — an increase of nine seats from the current Congress. It is noteworthy that half of the Democratic Senators who voted to pass the Affordable Care Act (ACA) nearly five years ago will no longer be in the Senate in 2015. Despite some commentary to the contrary, the ACA was a big issue in the election. To a person, the successful GOP Senate candidates ran strongly against the ACA. In the middle of October, anti-ACA ads were among the most frequently-aired political advertisements from Republican Senate candidates. By and large, these candidates won their races.

The conventional wisdom is that the ACA, now heading into its second year of full-scale implementation, cannot be rolled back in any substantial way at this point. That’s certainly the view of major corporate players and the health care industry. But it is decidedly not the view of the newly-elected Republican members of the House and Senate, or their constituents. They believe voters sent them to Washington to do their best to push back against the perceived excesses of the ACA and to begin replacing it with a reform plan that is less expensive, less damaging to the economy, and less reliant on federal regulation and control.

Read the rest of this entry »

Tax Filing And The ACA: Helping Americans Meet The Challenge


November 7th, 2014

Tim Jost’s post of September 21, 2014 expressed concern about the problems that Americans who are uninsured or who have received or qualify for premium tax credits will face in filing their taxes for 2014.  Those who are not otherwise insured and who wish to claim an exemption from the shared responsibility penalty will have to file tax form 8965.  Those who received advance premium tax credits during 2014 will have to file a form 8962, as will those who did not receive advance premium tax credits but who wish to claim premium tax credits on their tax return.  Tax filers who fail to reconcile their tax credits for 2014 cannot claim tax credits for subsequent years.

Individuals who did not have coverage at the beginning of 2014, but purchased coverage at some point in the year through the marketplaces, may need to file both forms.  For example, victims of domestic violence or spousal abandonment were granted a special enrollment period part of the way through 2014 and will have to file an 8965 for the months they were uninsured before they enrolled and an 8962 for months after they enrolled.

This post offers suggestions as to how the Internal Revenue Service and Centers for Medicare and Medicaid Services, the two agencies that oversee the shared responsibility and premium tax credit programs, might mitigate the problems that tax filers may face in filing their taxes for 2014.

Read the rest of this entry »

Implementing Health Reform: ‘Minimum Value’ Plans Must Have Hospital And Physician Coverage


November 4th, 2014

“Minimum value” is an important concept under the Affordable Care Act.  An employee who is offered employer-sponsored health plan that is affordable (that is, does not cost the employee more than 9.5 percent of the employee’s modified adjusted gross household income) and offers minimum value (MV), is not eligible for premium tax credits or cost-sharing reduction payments.  A large employer that fails to offer its full-time employees an affordable health plan that provides MV is subject to a penalty of $3,000 for each full-time employee who receives premium tax credits through the exchanges.

Yet MV is not clearly defined in the ACA.  The ACA provides that a plan does not offer MV if the “plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.”  It is not clear what is meant, however, by “benefits provided under the plan.”  It does not seem to mean that a plan must be the equivalent of a 60 percent actuarial value bronze plan in the individual and insured small-group market, because individual and insured small-group plans must cover the ten essential health benefits, and large-group plans are not required to do so.

MV cannot mean, however, that an employer can simply pay for 60 percent of the cost of whatever benefits the employer chooses to offer, no matter how minimal those benefits may be.  MV is quite obviously something more than “minimum essential coverage,” the “skinny benefit plans” which employers may offer to avoid the separate $2,000 for-every-full-time employee penalty.

Read the rest of this entry »

The Payment Reform Landscape: Benefit And Network Design Strategies To Complement Payment Reform


November 4th, 2014

For the past ten months on Health Affairs Blog, we’ve been discussing the evidence for different models of payment reform, examining everything from pay for performance to nonpayment. But no discussion of payment reform is complete without addressing benefit and network designs and how they can help or hinder various payment reforms.  When the right payment method is paired with the right benefit and/or network design, they can work together to help reduce costs and improve care.  There are a number of payment approaches that pair well with specific benefit and network design strategies to yield higher-quality, lower-cost care. Below we discuss a few of these effective pairings.

But before we get into the specifics, why it is important to motivate providers to deliver and patients to seek higher-value care?  Health care providers may not only respond to direct financial incentives, but they are also likely to respond to knowing information about their performance is being put in front of prospective and current patients.  They also may be more willing to accept new forms of payment if acceptance means payers will encourage more patients to seek their care.

On the flip side, patients are unlikely to know how their providers are paid.  But if motivated (financially and otherwise), patients may act on meaningful distinctions in price and quality by choosing higher-value providers, saving money for themselves and whoever else is footing the bill for their care.

Read the rest of this entry »

Will Employers Favor Private Exchanges Over Coverage Sponsorship?


October 17th, 2014

Over the past couple years, health care exchanges probably have consumed more of corporate benefits managers’ time and psychic energy than any other topic. An outstanding question is whether the rank and file of American businesses will drop the hassle that employer-sponsored coverage represents, or default to private exchanges.

Private exchange offerings typically move employees from their companies’ previous self-funded health plans to fully-insured individual arrangements, purporting to offer more flexibility and choice that can adapt to the wide-ranging needs of employees and employers, while creating a more competitive health plan marketplace.

Several recent surveys have reported that employers plan to move aggressively to private exchanges. In a survey last year of more than 700 businesses, the Private Exchange Evaluation Collaborative, a group of regional business health coalitions working with the consulting group PwC, found that 45 percent of employers have implemented or are considering using a private exchange for active employees before 2018. Similarly, a February Aon Plc survey found that, while 95 percent of employers say they expect to continue offering health care for the next 3-5 years, and 5 percent of employers currently use a private exchange, 33 percent say they may consider using one in the future.

Read the rest of this entry »

Implementing Health Reform: Reference Pricing And Network Adequacy


October 12th, 2014

On October 10, 2014, the Departments of Labor, Treasury, and Health and Human Services issued a frequently asked question (FAQ) regarding the use of reference-based pricing in non-grandfathered large group employer plans.  Although the issue the FAQ addresses specifically is the use of reference pricing, the FAQ is remarkable insofar as it is the first departmental guidance that I am aware of that addresses the use of networks by self-insured ERISA plans.

Network adequacy is an issue that has long been addressed in the nongroup and insured group market in many states by state insurance law.  The ACA also requires qualified health plans, and arguably any individual and small group plan subject to the essential health benefits requirements, to have adequate provider networks.  Special rules implementing ACA section 2719A of the ACA limit cost-sharing for out-of-network coverage for emergency services.

The departments also stated in an earlier FAQ that cost sharing cannot be applied by any non-grandfathered health plan for preventive services provided by out-of-network providers if the services are not available in network.   But I am unaware of the departments otherwise attempting previously to regulate group health plan network requirements, at least under the ACA.

Read the rest of this entry »

The Payment Reform Landscape: Value-Oriented Payment Jumps, And Yet …


September 30th, 2014

Today, Catalyst for Payment Reform (CPR) unveiled some potentially exciting news: Our 2014 National Scorecard on Payment Reform tells us 40 percent of commercial sector payments to doctors and hospitals now flow through value-oriented payment methods, defined as payment methods designed to improve quality and reduce waste.  This is a dramatic increase since 2013 when the figure was just 11 percent.

Traditional fee-for-service, where we pay for every test and procedure regardless of its value, may rapidly be becoming a relic.  While the Scorecard findings are not wholly representative of health plans across the United States, they are directionally sound and allow us to measure progress toward value-oriented payment in the commercial sector.  (Scorecard findings are based on data representing almost 65 percent of commercial health plans across the country.)

On the face of it, this is thrilling news for CPR, especially since our organizational goal is that at least 20 percent of payments to doctors and hospitals will flow through methods proven to improve value by the year 2020.  But we are not closing up shop just yet.  The proliferation of value-based payment arrangements only matters if they succeed at reducing costs and improving the quality of care. And for many value-oriented payment models, we still don’t have the evidence.

We also remain a bit circumspect because only about half of the value-oriented payments (out of that 40 percent figure) put providers at some financial risk if they fail to improve care or spend over budget.  To employers and others helping to foot the bill for health care, many new payment methods often feel like “cost plus arrangements.”  Instead, purchasers would like to see risk sharing across payers and providers.

Read the rest of this entry »

Implementing Health Reform: Excepted Benefits Final Rule


September 29th, 2014

Congress adopted Title I of the Affordable Care Act to increase access to health coverage for individuals by reforming employer group health coverage and health insurance offered to individuals and groups, requiring large employers to offer their employees affordable minimum health coverage or pay a penalty, imposing a penalty on individuals who can afford health coverage but fail to obtain it, and offering advance premium tax credits through the exchanges to individuals who cannot otherwise afford to purchase health coverage.

Coverage has long been available both through groups and for individuals that provides some health-related benefits but is neither a group health plan nor insured health coverage, as those terms are defined in the ACA.  These benefits were originally labeled by the Health Insurance Portability and Accountability Act (HIPAA) of 1996 as “excepted benefits,” because they are excepted from the forms of benefits regulated initially by HIPAA and now by the ACA.

On September 26, 2014 the Internal Revenue Service, Department of Labor, and the Centers for Medicare and Medicaid Services (“the agencies”) issued regulations expanding access to excepted benefits through insured and self-insured groups.

Read the rest of this entry »

Implementing Health Reform: Complicated ACA Tax Forms Could Cause Problems


September 21st, 2014

In a few months, millions of Americans will be filing either form 8962 to reconcile the advance premium tax credit they received with the tax credit they were actually due, or form 8965 because they owe a tax under the shared responsibility (individual mandate) provision of the Affordable Care Act or claim an exemption from that requirement.

By the close of open enrollment in April, 6.7 million Americans had chosen a qualified health plan with premium tax credits,  and many more have since enrolled in a QHP through a special enrollment period and received tax credits.  Each of them will need to file a form 8962.  The Congressional Budget Office estimates that 30 million Americans are potentially subject to the shared responsibility requirement, and that 23 million of them may qualify for an exemption.  The 7 million individuals who owe the penalty will have to file a form 8965, as will most of the 23 million who claim an exemption.

On September 15, 2014 the Internal Revenue Service released draft instructions for form 8965.  On September 17, 2014, the IRS released draft instructions for form 8962.  It is difficult to overstate how complicated these instructions are.  The tax credit and individual responsibility provisions of the ACA were complicated to begin with, but have become ever more complex as new exceptions and special rules have been created as implementation of the legislation has proceeded.  Many of the mostly low income Americans who will be completing these forms are marginally literate, at least in English, and have been accustomed to filing very simple tax forms like the 1040-EZ (which cannot be used by an individual claiming a tax credit) or perhaps not to filing taxes at all.  They are likely to be confused, frustrated, even angry, and certainly bewildered, completing these forms.  It is to be hoped that most of them will be assisted by well-trained tax preparers.

Read the rest of this entry »

New Health Policy Brief: Employee Choice


September 18th, 2014

A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) looks at health coverage choice for employees of small businesses. Unlike large organizations, small businesses have been less likely to provide comprehensive health insurance or a choice of plans, and their employees are more likely to be uninsured or underinsured.

To address this insurance gap, the Affordable Care Act (ACA) created the Small Business Health Options Program (SHOP) Marketplaces in each state. (Note: The SHOP exchange was the subject of an earlier Health Policy Brief.) These Marketplaces (eighteen run by state exchanges, thirty-three by the federal government) will provide “one stop shopping,” for small businesses to compare health plans and enroll their employees.

To make SHOP Marketplaces more attractive to small businesses, the ACA required SHOP Marketplaces to offer a feature known as employee choice, in which employers can offer their employees a choice from multiple health insurance plans. While the majority of state-based SHOP Marketplaces have chosen to offer access to multiple plans, employee choice will not be mandatory until 2016. This Health Policy Brief examines the issue of employee choice, the status of its implementation, and whether the concept is successfully attracting more small businesses to offer coverage through SHOP Marketplaces.

Read the rest of this entry »

Employer-Sponsored Family Health Premiums Rise 3 Percent In 2014


September 10th, 2014

Average annual premiums for employer-sponsored family health coverage reached $16,834 this year, up 3 percent from last year, continuing a recent trend of modest increases, according to the Kaiser Family Foundation (KFF)/Health Research & Educational Trust (HRET) 2014 Employer Health Benefits Survey released today. Workers on average pay $4,823 annually toward the cost of family coverage this year. Health Affairs Web First article published today contains select findings from the KFF/HRET report.

This year’s increase continues a recent trend of moderate premium growth. Premiums increased more slowly over the past five years than the preceding five years (26 percent vs. 34 percent) and well below the annual double-digit increases recorded in the late 1990s and early 2000s. This year’s increase also is similar to the year-to-year rise in worker’s wages (2.3 percent) and general inflation (2 percent).

Annual premiums for worker-only coverage stand at $6,025 this year.  Workers on average contribute $1,081 toward the cost of worker-only coverage this year.

“The relatively slow growth in premiums this year is good news for employers and workers, though many workers now pay more when they get sick as deductibles continue to rise and skin-in-the-game insurance gradually becomes the norm,” Foundation President and CEO Drew Altman, said.

Read the rest of this entry »

Transcending Obamacare? Analyzing Avik Roy’s ACA Replacement Plan


September 2nd, 2014

Avik Roy’s proposal, “Transcending Obamacare,” is the latest and most thoroughly developed conservative alternative for reforming the American health care system in the wake of the Affordable Care Act. It is a serious proposal, and it deserves to be taken seriously.

Roy’s proposal is a curious combination of conservative nostrums (limiting recoveries for victims of malpractice), progressive goals (eliminating health status underwriting, providing subsidies for low-income Americans), and common sense proposals (enacting a uniform annual deductible for Medicare).

Most importantly, however, Roy proposes that conservatives move on from a single-minded focus on repealing the ACA toward building upon the ACA to accomplish their policy goals. He supports repealing certain features of the ACA—including the individual and employer mandate—but would retain others, such as community rating and exchanges. As polling repeatedly shows that many Americans are not happy with the ACA, but that a strong majority would rather amend than repeal it, and as it is very possible that we will have a Congress next year less supportive of the ACA than the current one, Roy’s proposal is important.

Read the rest of this entry »

Implementing Health Reform: Tax Form Instructions


August 29th, 2014

On August 28, 2014, the Internal Revenue Service re-released the draft forms that will be used by employer, insurers, and exchanges for reporting Affordable Care Act tax information to individuals and to the IRS for 2014 and 2015, as well as the instructions for completing those forms.  The IRS also released in the Federal Register requests for public comments on three of those forms — the 1094-Bthe 1094-C, and the 1095-C — under the Paperwork Reduction Act.  This post reports on these forms and instructions and on a guidance released by the Centers for Medicare and Medicaid Services.

The tax forms had been published earlier and are described in an earlier post.  The instructions for the forms, however, had not been available and had been eagerly awaited by employers, insurers, exchanges, and tax professionals. Forms 1094-C and 1095-C will be used by large employers with more than 50 full-time or full-time-equivalent employees to determine whether the employer is responsible for penalties under the employer shared responsibility requirements of the ACA.  They will also be used to determine whether employees have received an affordable and adequate offer of coverage, rendering them ineligible for premium tax credits.  Employers are required to provide each full-time employee with a form 1095-C and to file each of these together with a transmittal form 1095-B form with the IRS.

The instructions for the 1094-C and 1095-C are by far the most complex of the instructions released on August 28, filling 13 pages with dense, two column, print.  Most of the complexity derives from the options for complying with the employer mandate and the transition exceptions to that mandate that the administration has created.  These alternatives and exceptions were explored in my posts on the employer mandate final rule when it was issued in February, 2014.  These forms are also complicated by the fact that the IRS decided to allow self-insured large employers to file only the large employer 1094-C and 1095-C, rather than requiring them to also fill out the 1094-B and 1095-B forms, which are filed by other entities that provide minimum essential coverage.  Because the employer mandate has been delayed, large employers are not required to file these forms for 2014, although they may do so voluntarily.

Read the rest of this entry »

Click here to email us a new post.