by Gentrie Pool, CSA, REBC, RHU, SGS
Editor Note: This article was written by Sterling’s Director of Sales Gentrie Pool and originally published here, by benefitspro.com – the #1 online destination for benefits professionals.
As we know, the Department of Labor, Treasury and Health and Human Services (collectively referred to in this article as the “Agencies”) are regularly releasing healthcare reform regulations and clarifications. Below is a brief summary of only some of the points that came out of 2014 from the Agencies.
What did healthcare reform give us in 2014?
1) 4980H Employer Shared Responsibility Requirements (often called “pay or play”)
- One year delay to 2016 for excise taxes for applicable large employers (ALEs) with less than 100 full-time equivalents in 2014. They still have (Section 6056) reporting requirements for 2015 though. Note: group size is not the only requirement for the delay.
- The look back measurement period (LBMP) applies to all employees within the same class (e.g. salaried or hourly) of applicable large employers (not just variable employees, for example).
- An applicable large group employer member is not considered to have made an offer of coverage to a full-time employee unless the employee had the opportunity to elect coverage for his/her dependent children, if any, That coverage, if elected, would extend through the end of the month in which the child turns 26 (or if earlier, the date the coverage ended for the employee).
2) Section 6056 Reporting
- This requires applicable large employer members to file an IRS form (similar to and in addition to a W-3) which identifies each of the employees who were full time at least one month of the calendar year and what, if any, coverage was offered. A form is also to be furnished to those full-time employees (similar to and in addition to a W-2) – Forms (1094 and 1095-C).
3) Section 6055 Reporting
- This requires minimum essential coverage providers to file an IRS form identifying each individual enrolled at least one day during that year. This applies to any employer who offers a self-insured plan and to individuals covered under the plan. The form also must be provided to covered individuals. Fully insured carriers will satisfy this obligation with respect to individuals covered under the policy. Employers sponsoring a self-insured plan are obligated to satisfy the requirement with respect to all individuals enrolled – Forms (1094 and 1095-B).
4) 2014 Health Insurance Reforms: Waiting Period Limitation and Out of Pocket Maximum Requirements
- PHSA Section 2708 generally limits waiting periods for otherwise eligible individuals to 90 calendar days. Regulations clarify that terms of eligibility generally cannot be based solely on the passage of time. Eligibility based on accumulated hours, not to exceed 1200, or a “measurement period” is permissible. Employers may implement a 30-day orientation period for employees who otherwise satisfy the eligibility requirement, after which the waiting period can begin.
- In referencing FAQs provided by the agencies, there was no mention of the dollar amount associated with out-of-pocket requirements for “reference-based pricing arrangement.” According to the FAQs, plans my treat providers who accept the plans “reference base pricing” as the only in-network providers, if certain conditions are satisfied. If those conditions are satisfied, then all services or treatment given by providers who did not accept the plans reference base pricing, including network providers, can be treated as out-of-network in the cost sharing for such services and fall outside the out-of-pocket maximum limitation. This is an important distinction because typically the out-of-pocket maximum imposed by health care reform applies to all cost sharing with respect to services or treatments provided by in-network providers, Cost sharing for out-of-network providers does not have to be applied to the out-of-pocket maximum.
Source for information in this article: Employers Council on Flexible Compensation: John Hickman, Esq., Ashley Gillihan, Esq., and Merdith Gage, Esq., Alston & Bird, LLP
Editor note: This report was originally published by Devenir Research and appears here.
The majority of this report was derived from the 2014 Year-End Devenir HSA Market Survey. This survey was conducted in order to continue to help shed light on the rapidly growing and evolving health savings account market. The survey was carried out in January, 2015 and primarily consisted of top 100 HSA providers in the health savings account market. All data was requested for the period ending on December 31st, 2014.
- HSA accounts approach 14 million. HSA accounts rose to 13.8 million, holding over $24 billion, a year over year increase of 25% for HSA assets and 29% for accounts for the period of December 31st, 2013 to December 31st, 2014.
- Health plans drive growth. During 2014, health plans were the leading driver of new account growth, accounting for 35% of new accounts.
- Continued strong market fuels HSA investment growth. HSA investment assets reached an estimated $3.2 billion in December, up 40% year over year. The average investment account holder has a $12,995 average total balance (deposit and investment account).
- Investors show solid returns. Investors achieved an average annualized return of 12.5% on their HSA investments over the last 3 years.
- HSA assets exceed $27 billion January 2015. The 2015 January HSA Supplement Survey found that HSAs grew to over $27 billion in assets by the end of January, 2015.
HSA Marketplace Projections
HSA providers continue to be optimistic in their outlook for the HSA industry, projecting HSA asset growth of 28.1% for the full year. In previous surveys HSA providers have been reasonably accurate with their growth forecasts, demonstrating an impressive understanding of the outlook of their book of business. Devenir currently projects that by the end of 2017 the HSA market will surpass $40 billion in HSA assets held amongst almost 30 million accounts.
Consumer driven health plans (CDHPs) help millions of American workers and their employers reduce healthcare expenses by shifting behaviors, rather than shifting costs. This trend continues to be validated in healthcare studies and by Sterling clients. With CDHPs, the evidence is clear that employee health utilization and employer healthcare premiums are reduced.
A long-time Sterling client, the Northern California Teamsters Trust, achieved these results with HSA plans (2013 data):
- Medical costs were $861 per employee per year under the HSA plan vs. $1,076 under the traditional plan.
- Drug costs were $62 per employee per year under the HSA plan vs. $154 under the traditional plan.
A recent Strategic Benefits—Health Care Survey (January 22, 2015), found that 19% of respondents offering employee coverage said CDHPs – including plans with health savings accounts (HSAs) and health reimbursement arrangements (HRAs) – are the most effective way of controlling the rising cost of health coverage.
Similarly, the Eighth Annual Cigna Choice Fund Experience Study (April 23, 2014) compared the claims experience of over 3.6 million Cigna customers enrolled in a CDHP, a traditional PPO or HMO health plan. The study found that people covered by CDHPs are more likely to “own” their health and health spending, resulting in improved total medical expenses by 12%. CDHP healthcare consumers:
- Are more engaged – Nearly 50% are more likely to complete a health risk assessment and those with chronic illnesses are up to 41% more likely to participate in disease management.
- Are more likely to manage their health benefits – 75% of CDHP customers use online tools to manage their health benefits and access information on care cost, quality and procedures.
- Demonstrate lower health risks – Employers that transitioned to offering only a CDHP option had 14% more low-risk individuals and 28% fewer high-risk individuals compared to those in a traditional plan.
- Reduce total medical costs – The CDHP medical cost trend was 12% lower than traditional plans during the first year. Employers did not shift out-of-pocket health expenses to employees in order to achieve reductions.
Both the Northern California Teamsters Trust and LA Mission, another Sterling client, discuss the advantages they realize with CDHP plans and Sterling HSAs. Go to the Sterling YouTube channel to hear in their own words how HSAs benefit their organizations:
Learn more about CDHP plans or call 800-617-4729. Our full suite of products includes HSA, HRA, FSA, POP, COBRA, ERISA Wrap, Form 5500 Filing and ACA compliance services.
Don’t forget! Tomorrow is National Wear Red Day.
Heart disease is not just a man’s disease.
Heart disease and stroke kill 1 in 3 women, yet it’s 80% preventable.
Help raise awareness to end this killer of women.
Make a change on National Wear Red Day and all year long!
- Wear Red to show your support for saving women’s lives
- Show how you Go Red on your social media profiles using #GoRed
- You can also share your Go Red photos on Sterling’s Facebook page