The Fact of the Month
Here’s something to talk about when you are discussing plan design options with your clients.
A small minority of health care consumers consistently spend most health care dollars. The Employee Benefits Research Institute (EBRI) reports that, generally, 20 percent of those insured by employer-based health benefits in the United States account for 80 percent of total spending on health care services. Ten percent of the population accounts for 70 percent of expenditures, five percent are responsible for 56 percent of the expenses, and one percent accounts for 28 percent of spending. When considering the persistence of these high-cost claims, a recent EBRI study found 27 percent of these claimants were in the top ten percent of spending for at least one year, while 73 percent were never in the top ten percent. Among the 27 percent who were ever in the top ten percent, 21 percent were in the top ten percent only one or two years, four percent were in the top ten percent for three or four years, and only two percent were in the top ten percent each of the five years. Despite a small percentage of employees controlling most of the spending on health care services, employers offer health plans that mainly look and feel the same to plan enrollees regardless of healthcare usage. Although targeting frequent users would have the most significant impact on spending, it is also the most challenging population to address.
Source: Persistency in High-cost Health Care Claims: “It’s Where the Spending is, Stupid” is available at www.ebri.org.
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!
Pennsylvania Exchange Board Begins Monthly Meetings and Issues Notice About 2019 Open Enrollment for Brokers and Exchange Assisters
The Pennsylvania Health Insurance Exchange Authority recently started holding its monthly board meetings, which are open to the public. During its meetings, the Authority Board began taking the initial necessary steps to ensure that the new state-based exchange will be fully operational for the 2021 plan year. To address the 2020 plan year and the current individual market open enrollment period, the Exchange Authority Board and the Pennsylvania Insurance Department jointly issued Notice 2019-07 on November 2, 2019.
This notice reminds all Pennsylvania agents and brokers and other exchange coverage assisters and navigators that for the 2020 plan year, including the open enrollment season that began on Friday, November 1 and runs through Sunday, December 15, 2019, Pennsylvania will be operating as a State-Based Exchange on the Federal HealthCare.gov platform. So, for 2020, all eligibility and enrollment activities will occur through HealthCare.gov. The notice makes it clear that the Department and the Authority expect that all Pennsylvania agents, brokers, and assisters will comply with all applicable federal and state laws and regulations, including the federal Marketplace annual training requirements.
Beyond issuing this guidance, so far, the Authority and its Board of Directors have been hiring staff, approving RFPs for technological systems, budgeting, and establishing a board governance structure. Our lobbying firm, the Bravo Group, represented the Pennsylvania Association of Health Underwriters (PAHU) at both the October and November Exchange Authority board meetings. The Exchange Authority’s Advisory Council, which will include a PAHU member representative appointed by our state board, is expected to begin its meetings early in 2020. The role of the Advisory Council will be to assist and advise the greater Authority board.
PAHU representatives also plan to meet directly with the Exchange Authority’s new Executive Director, Zachary Sherman, in the near-term future. We will discuss the critical role health insurance agents and brokers will play with the state-based exchange once it is fully operational. If you would like to be involved with this meeting, please contact GPAHU legislative chair Vicky Cagliola or PAHU legislative chair Jessica Waltman.
Pennsylvania House Insurance Committee Advances Surprise Balance Billing Legislation
On October 29, 2019, the Pennsylvania House Insurance Committee took the first step towards approving H.B. 1862. This measure is “surprise billing legislation” designed to protect people who go to an in-network healthcare facility but later receive an expensive medical bill from an out-of-network provider. The Committee approved it, but still needs to be considered by the full House and then can be considered by the Senate. While balanced billing legislation is one of our association’s top policy priorities at both the state and federal levels, PAHU is concerned that H.B. 1862 includes an arbitration approach if providers object to being paid a median in-network rate for the services in question. PAHU and NAHU generally oppose this approach, as it is less efficient and can be more costly for consumers. Our association hopes to continue working with state lawmakers on the structure of HB 1862 as it moves forward. Our goal will be modifying the arbitration clause in the legislation. Based on the current legislative schedule, HB 1862 could advance quickly and be addressed by the Senate in December. However, it is more likely that our lawmakers in Harrisburg will still be working on it in 2020.
New Compliance Requirements Will Impact Businesses with Employees in NJ and DC
Last year, New Jersey and the District of Columbia passed individual health insurance coverage mandates for their residents, effective in 2019. Both jurisdictions will be enforcing those mandates in 2020 and the requirements don’t just impact state and city residents. Employers from all states that employ even one resident of New Jersey or the District of Columbia may have responsibility for reporting coverage information about their resident employees. So, brokers in our area need to develop a working understanding of the brand-new reporting responsibilities and alert all affected clients.
A business that must file Forms 1094 and 1095 B or C with the IRS because it is an applicable large employer, or it offers a self-funded group plan could be affected by the requirements of New Jersey or the District of Columbia. If such a company has at least one employee eligible for group coverage who lives in New Jersey, then New Jersey reporting requirements apply. The same is true for those companies that employ at least one person who is eligible for group health insurance coverage that lives in the District of Columbia. These requirements rely on where employees live, not the business location, and they are separate from federal employer reporting obligations.
Many federal employer reporting vendors are also prepared to handle New Jersey and the District of Columbia reporting. Still, GPAHU members should check with any vendors they work with directly and encourage their clients to do the same.
New Jersey has guidance available for employers explaining their new reporting requirements in detail. The District of Columbia published Notice 2019-04, outlining its new policies. However, below is a summary of the most important things to know about each jurisdiction:
- The state reporting deadline is March 31, 2020. Originally it was February 15, 2020, but the state extended it to mirror the federal reporting deadline.
- Employers with New Jersey reporting obligations need to send the state the same Forms 1094 and 1095 B or C that they file with the IRS.
- The state will accept all Form 1094 and 1095 data a business sends to the IRS. That means they will take an employer’s transmission even if it includes information about nonresidents.
- The only way New Jersey will accept coverage returns from employers and health coverage issuers is electronically. There is no paper reporting option available.
- Employers (or their reporting vendor) must use the New Jersey Division of Revenue and Enterprise Services’ (DORES) MFT SecureTransport service to submit their filings. This the same system the state uses for Form W-2 transmissions.
District of Columbia
- The District’s employer reporting deadline is different than for IRS filings. For the tax year ending December 31, 2019, the deadline will be June 30, 2020. For all later years, the deadline will be 30 days after the IRS deadline for submitting 1095-B or 1095-C forms, including any extensions granted by the IRS.
- To meet the District’s reporting requirement, employers need to send the District’s Office of Tax and Revenue the same Forms 1094 and 1095 B or C that they file with the IRS.
- The only way the District will accept coverage returns from employers (or the employer’s third-party employer reporting vendor) is electronically.
- Forms must be submitted through MyTax.DC.gov using prescribed layouts and file formats. There is no paper reporting option available.
Check This Out!
If you want to better understand how business leaders view healthcare and how it could influence your clients, check this out!
The Health Coverage Improvement Foundation is an independent Pennsylvania nonprofit organization that drives high-value health care through stakeholder collaboration and targeted quality improvement initiatives. Check out their work in the five-county area on healthcare literacy, population and community health and clinical and quality improvements.