The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
Sixty-five isn’t what it used to be, and more people are staying in the workforce longer every year. Smart brokers already tell their clients about how group health plan coverage interacts with Medicare. Beyond that, GPAHU members should make sure their group clients know just how many Medicare-eligible plan participants they can expect to deal with in the years ahead. New research shows 23% of Americans workers, including nearly 2 in 10 people currently over age 50, don’t plan to retire at all. Another quarter of American employees say that while they plan to retire eventually, they will keep working beyond their 65th birthdays.
Source: The Associated Press-NORC Center for Public Affairs Research 2019 Working Longer Study, July 2019, available at: https://workinglongerstudy.org/project/age-diversity-in-the-workplace/
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and their clients. Here are this month’s big three!
House Repeals Cadillac Tax
Governor Wolf signed H.B. 3 into law on July 2, 2019, creating a state-based health insurance exchange beginning with the 2021 open enrollment season. The bill, which passed the Senate unanimously and only generated one “no” vote in the House, also authorizes the Pennsylvania Insurance Department (PID) to seek a federal Patient Protection and Affordable Care Act (ACA) Section 1332 waiver to support a statewide reinsurance pool to backstop high individual market claims.
GPAHU, and our state affiliate, the Pennsylvania Association of Health Underwriters (PAHU), strongly endorse this new law. Our chapter leaders worked with policymakers on both sides of the aisle from the conception stage on, providing testimony and grassroots support for the bill as it worked its way through the legislative process. Based on the experience of other states, it should improve individual market competition and make coverage more affordable, particularly for people who do not qualify for premium tax credit subsidies.
The new law makes it clear that licensed health insurance agents and brokers will have an essential role in the individual marketplace. It gives a representative from PAHU a permanent seat on the exchange’s advisory board. Our chapter anticipates working closely with the PID to provide support as the marketplace gets up and running. PAHU will also submit comments to the federal government in support of the Section 1332 waiver. As opportunities come up for our chapter to work with our lawmakers on these two new programs, GPAHU will be sure to keep our members informed.
New HRA Rule Allows Employers to Pay for Individual Market Health Insurance
The Trump Administration released a new regulation and a FAQ document on June 13, 2019, that provides a legal window for employers to pay for their employees’ individual health insurance premiums beginning on January 1, 2020. There has been a lot written about the new rule since its release last month, but GPAHU wants to make sure our members know the essential details that could impact you and your clients
- Under the new rules, any size employer will be able to create an “individual coverage HRA” to directly reimburse all employees or specific classes of employees for qualified individual coverage and Medicare premiums using pre-tax dollars, provided that specific conditions are met
- An employer that chooses to provide the individual HRA option may not also offer those employees traditional group health insurance. The business will have to make a binary choice to either offer the individual coverage HRA or conventional group benefits. A company can limit the individual coverage HRA to certain classes of employees and provide traditional coverage to other classes, but the regulation contains strict rules and size limitations about what constitutes an acceptable class, to prevent discrimination.
- Any employer that elects an individual coverage HRA must provide employees with a detailed notice about their new coverage option at least 90 days before implementation. This means employers will need to make the final decision to go with an individual HRA more than three months before open enrollment starts, even though new plan year rates for traditional coverage will probably not be available.
- Any business that elects to offer an individual coverage HRA must require that all beneficiaries who are provided with reimbursements enroll in major medical coverage. Employers must also cease providing reimbursement if an employee drops this coverage. To substantiate reimbursements, the employer must require proof of coverage or an employee attestation. Businesses must offer the HRA on the same terms to all employees in each class and provide an opportunity to opt-out.
- Since the individual coverage HRA is still a type of self-funded group health plan, any employer that picks this option must complete all of the steps to maintain a compliant self-funded plan. This means preparing and distributing a summary of benefits and coverage and other required notices, maintaining plan documents, and complying with HIPAA privacy and data security requirements. In fact, compliance and liability protection becomes more critical if a group client decides to offer employees an individual coverage HRA.
- While the individual coverage HRA plan will be subject to ERISA in almost all cases, employers offering these plans will want to make sure that they don’t assume ERISA fiduciary responsibility for the underlying individual coverage their employees buy with HRA funds. If this were to happen, then the employer would have legal and financial obligations that would be next-to-impossible to meet. There is a safe harbor intended to prevent employers from assuming that liability and more detailed guidance is coming about how employers can meet the safe harbor. Brokers who have clients interested in this new plan option need to make sure their clients know about the safe harbor rules and watch for the new guidance.
- If a broker wants to help employees with their individual coverage options, the rule explicitly permits this within the framework of an employer’s ERISA safe harbor. Employers will also still need licensed health insurance producers to help them set-up and maintain the underlying individual HRA plan.
- Offering an individual coverage HRA doesn’t exempt an applicable large employer (ALE) from its responsibility to offer eligible employees affordable minimum value coverage. However, the new rules aren’t entirely clear on how an ALE can make sure their individual health coverage HRA meets the law’s affordability standard. The Trump Administration has promised another new regulation explicitly addressing the affordability requirement soon, but until then, interested ALEs should be cautious. Not only are all of the rules and liability exposures unknown, but it is also unknown how employer reporting compliance vendors and HRA service providers will handle these complicated issues.
- The new rule allows employers to create a Section 125 cafeteria plan alongside an individual coverage HRA, but it is limited to individual coverage purchased off-exchange only. It is unclear how individual coverage HRAs can meet the current Section 125 plan nondiscrimination testing requirements. As a self-funded plan, the individual HRA will also need to comply with Section 105(h) nondiscrimination rules. The Trump Administration plans to issue new guidance about this, but until then, employers should proceed carefully.
As soon as the new rules and guidance on the affordability safe harbor, nondiscrimination requirements, and the ERISA safe harbor are released, GPAHU will provide our members with more information and analysis.
Transparency, Surprise Billing Are Hot Topics in Congress and With President Trump
Congress and the Trump Administration are both making a lot of noise about surprise out-of-network medical bills and the price of health insurance and medical care. On June 26, 2019, the Senate Health, Education, Labor and Pensions (HELP) Committee approved the Lower Health Care Costs Act. The legislation addresses surprise balanced billing and includes price transparency measures, including broker compensation disclosure.
Meanwhile, on June 24, 2019, President Trump issued an executive order on healthcare price transparency, account-based health insurance options, and surprise medical bills.The Senate legislation is still a work-in-progress, with groups of Senators trying to get changes made to both the balanced billing resolution process and the price transparency provisions. The bill will be amended before it hits the Senate floor, which could be as soon as the end of July. NAHU staff in Washington, DC, are working closely with lawmakers on potential changes. If the Senate approves the legislation, the House still needs to act. No House legislation to-date includes broker fee disclosure for the executive order, it doesn’t make any immediate policy changes either. Instead, it requires federal agencies to issue reports and new regulatory guidance over the next few months. The most important new requirements in the executive order are:
- The Trump Administration will propose a rule requiring all hospitals to post their negotiated prices for routine care and services in a consumer-friendly way by the end of August. Based on the length of the regulatory process, the price transparency requirements for hospitals won’t take effect until 2020 at the earliest.
- The Administration will be soliciting comments in the next 90 days about how healthcare providers, health insurers, and self-insured group health plans can give people more information about their expected out-of-pocket costs. However, the order doesn’t provide a timeline or requirement for what the Administration will do with the information once it’s collected.
- New guidance to allow HSA-compatible high-deductible health plans (HDHPs) to cover low-cost preventive care related to chronic medical conditions, before the application of a deductible will be released by the end of October 2019. However, unless the guidance is released much sooner than that, it won’t be reflected in 2020 fully-insured plan designs.
- There will be new rules issued within six months to expand the list of tax-qualified medical expenses. The order gives direct primary care arrangements and healthcare sharing ministries as examples of potential new expenses. Due to timing and public comment requirements, the 2021 tax year is probably the soonest that any changes will be in effect.
- New guidance will come within six months to raise the flexible spending account (FSA) carryover amount. Depending on how quickly the Treasury Department acts, the amount could be higher beginning in either 2020 or 2021.
- The President must be furnished with a report within six months on how the Administration can take steps to reduce surprise medical billing.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a brand-new resource to check out!
The National Insurance Producers Registry (NIPR) is a not‐for‐profit technology company that provides cost‐effective, streamlined, and uniform licensing data and compliance services for insurance professionals. The NIPR mobile app lets any licensed agent view their demographic, licensing, and appointment information. Mobile users are also able to subscribe to licensing renewal notification reminders. Download the app for free by searching “NIPR Mobile” in the Apple App Store or Google Play.