Category Archives: Patient Protection and Affordable Care Act

Wellness Program Regulations Issued

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As our staffing software clients move forward with their decision making and implementation of the Affordable Care Act, one of the items that should be looked at is the implementation of a wellness program. On May 29, 2013 the Department of Health and Human Services (HHS), Labor and Treasury departments issued final regulations on implementation and expansion of employee based wellness programs. For those of you looking for the high points that don’t want to read through all 123 pages (!), the final regulations pretty closely match what were proposed initially. There are a few items of note that you should be aware of however:

• The employer has a great deal of flexibility and latitude in implementation.

• These rules do not supersede in any way the GINA, ADA, ERISA, and other state and federal discrimination laws. Expect further guidance from the EEOC on wellness program incentives.

• The rules clarify and provide an affirmative defense against ACA provisions based on health status. So long as the wellness program provides a “reward”—a discount or rebate on premiums or some other financial incentive it is permissible. The most ironic and probably the one that will be most written about is this can also include a premium surcharge (reward?!) if you fail to follow through with a smoking cessation program for example.

• There is a special focus on the reduction in use of tobacco and the rules increase the maximum possible reward to 50% on those wellness programs.

There are a lot of requirements and rules regarding wellness programs and BWSI recommends you work with a qualified and certified wellness program company. One of the key focuses of the final regulations is that everyone participating in a wellness program should be able to receive the full value of the reward. Let’s face it, losing weight or quitting smoking is very difficult, so to further incentivize wellness participants, they may have to submit to additional program requirements to receive the full value of the reward. While some research questions the efficacy of wellness programs, they aren’t going anywhere and could be a valuable tool to reduce absenteeism and increase productivity of your employees.

 

PPACA Update — Notice Regarding Availability of Exchange Coverage

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While many users of our staffing software, TempWizard, are still going through the calculations and strategic planning on how they are going to implement the Patient Protection and Affordable Care Act (PPACA), there is a provision that requires employers to provide notice to all employees regarding the availability of health coverage options through the state-based exchanges. Given that, even as of this writing, there is almost no firm information regarding these exchanges (recently rebranded “the Marketplace”), the Department of Labor delayed enforcement of the exchange notice provision (which was to begin on March 1, 2013).

On May 8, 2013, DOL issued temporary guidance in Technical Release 2013-02, as well as model notices so employers have some idea what to include in the notices to employees regarding coverage options through the exchanges. Employers are now required to issue exchange coverage notices no later than October 1, 2013, relying on temporary guidance issued to date. Given that many parts of PPACA are still in a state of flux, expect additional guidance and changes to the model notices. This notice must be provided to ALL employees, regardless of their full-time or part-time status irrespective if the employee participates in the employer’s group health plan. For newly hired employees after October 1, 2013—again, regardless of status—the notice must be provided within 14 days of hire.

According to the guidance issued, an exchange coverage notice must include:

• Information about the existence of the exchange and how to contact the exchange.

• A description of services provided by the exchange.

• A statement regarding eligibility for subsidized exchange coverage if the employee obtains coverage through the exchange AND the employer’s plan fails to meet a 60% (bronze) minimum value standard.

• A statement that the employee may lose any employer contribution toward the cost of employer coverage (some of which may be excluded from federal income tax under a 125 plan) if the employee obtains coverage through the exchange.

The DOL created model exchange coverage notices for:

• Employers who do not offer a health plan

• Employers who do offer a health plan

BWSI recommends that all staffing industry companies and our clients start to plan for the implementation of the notification requirement, possibly including it with an employee’s new hire packet. Given the seemingly constant pace of change regarding all things PPACA, we would probably add something in mid to late August on your PPACA implementation schedule for planning and procedures regarding the exchange notification requirement.

 

 

Movin’ on Up…Your Medical Premiums That Is!

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One of the dominant topics right now for most businesses, but particularly for the staffing industry and users of our staffing software is that of healthcare and the Patient Protection and Affordable Care Act (PPACA). Many insurance companies are sounding the alarm that the individual and small business market will see significantly higher premiums. At BWSI we have seen and heard numbers from 32% to even as high as 75% increases expected come 2014 in these markets. We also have read articles and seen news stories that say this is the case of insurers crying wolf and the sky is not falling. What should you expect? For the well over 100 million people whose insurance is covered through their employer, they should probably see increases in the 8-10% range at renewal time based on data BWSI has reviewed. However, it is the people who buy individual or small business coverage that should be concerned in our opinion, and if you are planning to purchase insurance via the state exchanges then you are buying an individual policy.

By 2020 it is estimated by PricewaterhouseCoopers that 26 million people will purchase insurance from the exchanges in addition to 12 million others who purchase policies outside of the exchange. This amounts to a rather huge increase in premiums being paid assuming everyone plays by the rules. Given that insurer’s costs are rising by $8 billion alone in 2014 in new taxes, which increase every year and the fact they have to stop denying coverage for pre-existing conditions at the same time it is critical to their interests to get as much new blood into the system as possible to offset these costs. Also hitting in 2014 is a “banding limitation” where the highest cost to older enrollees cannot exceed 3 times the costs for younger and presumably healthier enrollees. This means that the floor for the least expensive coverage will be moving higher to compensate which would make sense. However, in 2014 it will cost all of $95 for an individual as a tax penalty for not having coverage (called the individual mandate). What do you think all those young and healthy people are going to do considering they probably also have student loans, car payments, and just getting on their feet and can’t afford the insurance premiums anyway? Not to mention that getting a policy that is even remotely affordable probably will come with a sizable deductible on top of it—you probably guessed right that they will forgo coverage according to many studies. The financial math on this gets even worse if you make too much to qualify for subsidies which would offer reduced pricing.

Note that in all of the above information we haven’t even touched on healthcare costs in particular! If the cost curbs in PPACA fail to control medical inflation then the premium picture gets even worse. If we get a double whammy of more uninsured (in the form of the young and healthy forgoing coverage) and higher medical inflation then things start to crumble under their own weight. Currently I don’t think anyone knows exactly what to expect and are hoping for the best. The only absolute I have personally seen is that insurance rates for the young and healthy are going to go up in the individual and small business market. The lowest I have seen for renewal rates going into next year is a 33% increase which coincides with many actuarial studies I have read. BWSI feels it is important that companies that are considering not offering coverage or not offering affordable coverage understand what their employees could be facing as they get pushed out to the exchanges. Employees are most company’s best asset and understanding how all the PPACA regulations intertwine and affect all parties is critical in the decision making process.