Tag Archives: Employee Benefits

Do the HIPAA Privacy and Security Rules Apply to My Organization?

October 22, 2018

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This article is the first in a two-part series addressing whether and how the Privacy and Security Rules (the “Rules”) under the Health Insurance Portability and Accountability Act (HIPAA with one P and two As, always) apply to various legal entities. This article addresses Covered Entities. Part two will address Business Associates.

What’s a Covered Entity?

There are three types of Covered Entities under the Rules. We’ll describe all three below, although the remainder of this article focuses on the Rules as they relate to employer-provided group health plans.

  1. Health care providers that engage in certain types of electronic transactions – Health care providers generally include what you’d expect, such as hospitals, clinics, pharmacies, nursing homes, health care practices, individual health care professionals, etc.To be a Covered Entity, the health care provider has to engage in certain types of electronic transactions including determinations of eligibility, billing, payment, and the coordination of benefits. Even in the rare instance that a health care provider is not subject to the Rules, other federal and state law likely affects how the provider may access or use personal health information.
  2. Health care clearinghouses – These have nothing to do with sweepstakes prizes and usually operate invisibly in the background as a go-between health care providers and health plans. A health care clearinghouse receives health information from an entity and processes the health information into a format usable by another entity. The best example we can give you occurs when a health care provider transmits billing information to a third party, the third party reprices the claims and formats the information into a new data set, and transmits the data set to a third party administrator or insurance carrier enabling it to process and pay the claims. The third party repricing and formatting the billing information in this example is a health care clearinghouse.
  3. Health plans – A health plan is a plan that provides or pays for the cost of medical care. Simple, right?

Group Health Plans

There are many types of benefits that involve personal health information. A plan is only a Covered Entity under the Rules if it is a health plan that provides or pays for the cost of medical care. Covered Entity status transforms a lot of personal health information that may be held or used by or on behalf of the health plan into Protected Health Information.[1]

In a nutshell, Protected Health Information (PHI) is:

  • Information about a past, present, or future health condition, treatment for a health condition, or payment for the treatment of a health condition;
  • Identifiable to a specific individual;
  • Created and/or received by a Covered Entity or Business Associate acting on behalf of a Covered Entity; and
  • Maintained or transmitted in any form.

We’re focusing on employer-provided group health plans and will provide an overview of their obligations under “Group Health Plan Responsibilities Under the Rules” below.

Is it a Group Health Plan?

Yes

No

Maybe So

  • Medical
  • Prescription drug
  • Dental
  • Vision
  • Health FSAs
  • HRAs
  • EAPs (if not just a referral service)
  • AD&D
  • Business travel accident
  • Leave administration (e.g. FMLA)
  • Life
  • STD/LTD
  • Stop-loss
  • Workers’ Compensation insurance
  • Onsite clinics
  • Long-term care
  • Wellness programs

 

[1] Even though a benefit plan may not be subject to the Rules, personal information created or used by the plan may still be protected under other federal or state law.  For example, leave administration and disability insurance are not generally subject to the Rules, but limitations under the Americans with Disabilities Act or other laws may apply.

A group health plan is exempt from the Rules if it covers less than 50 current and/or former employees and is self-administered by the employer without the assistance of a third party administrator or insurance carrier. This is hard to meet, but some small health flexible spending account (health FSA) or health reimbursement arrangement (HRA) plans may qualify.

Unlike ERISA, the Rules contain no exception for church or governmental plans.

What Did You Mean by “Maybe So?”

  • Onsite clinics – This feels like a trick. At first glance, you’d think an employer-provided onsite clinic might be a Covered Entity both as a health care provider and as a group health plan, but what seems obvious isn’t necessarily so.First, an onsite clinic might be operated in such a way that it doesn’t engage in any of the electronic transactions that would cause it to be a Covered Entity as a health care provider.  As a precaution, we recommend an employer seek the assistance of legal counsel before taking the position the Rules do not apply to its onsite clinic. Again, even though the Rules may not apply, personal information may still be protected by other federal or state law. Second, an onsite clinic that merely provides first aid-type services is not a health plan at all under the Rules. Third, an odd exception under the Rules seems to exclude onsite clinics that are health plans, even when the onsite clinic is integrated into other group health plan coverage (but see “It’s a bird, it’s a plane” below).
  • Long-term care – A long-term care policy is a group health plan unless it is limited to nursing home fixed indemnity coverage.
  • Wellness programs – Wellness programs can include programs that include medical care (e.g. biometric screenings and targeted health coaching) and those that do not (e.g. general education and activity challenges). If a wellness program does not include any medical care services, it is not subject to the Rules. In many instances, a wellness program will include both medical care and non-medical care services and/or be integrated into an employer’s medical plan (please see “It’s a bird, it’s a plane” below).

Does Self-Insured vs. Fully-Insured Matter?

It must, or we wouldn’t have a section addressing it, right? If a group health plan is self-insured, it is generally subject to all of the compliance obligations under the Rules. If a group health plan is fully-insured, many of the compliance obligations under the Rules belong to the insurance carrier if the plan (through its plan sponsor acting on the plan’s behalf) is “hands off” PHI.

  • “Hands Off” PHI – The plan sponsor does not create or receive PHI other than enrollment/disenrollment information or summary health information for the purposes of obtaining premium bids or modifying, amending, or terminating the plan. Many fully-insured group health plans qualify as “hands off” PHI.We can hear the howls of protest, but self-insured group health plans cannot qualify for “hands off” PHI relief under the Rules no matter how little the plan sponsor may be involved with their administration.
  • “Hands On” PHI – This applies if the plan sponsor is not “hands off” PHI and can access or receive specific information about claims information or payment.

We will provide an overview of the responsibilities for self-insured group health plans and fully-insured plans that are “hands off” or “hands on” PHI under “Group Health Plan Responsibilities Under the Rules” below.

It’s a Bird, it’s a Plane…

Sometimes, a legal entity may include parts that are subject to the Rules and others that are not. The Rules refer to this as a “hybrid entity” and examples include:

  • A welfare benefit “wrap plan” that incorporates both medical and non-medical care benefits such as medical, dental, vision, group term life, accidental death & dismemberment, business travel accident, and long-term disability benefits;
  • A standalone wellness program that includes both medical and non-medical care benefits such as biometric screenings, targeted health and nutritional counseling, general education, and step and/or healthy eating challenges; and
  • A Walgreen’s or CVS store that includes a pharmacy.

Left as is, the entire “hybrid entity” must comply with the Rules. However, the Rules allow a “hybrid entity” to separate itself for compliance purposes by designating which parts make up the Covered Entity and which do not. The Rules appear to only require this designation in the Covered Entity’s HIPAA Privacy and Security policies and procedures, but it wouldn’t be the worst idea ever to also include this in the corresponding plan document.[2]

Group Health Plan Responsibilities Under the Rules

A plan/plan sponsor can generally reduce its liability by limiting its contact with PHI. Many of the responsibilities in this section can be delegated to third parties, but the plan remains responsible for compliance with the Rules.

[2] The plan document will need to include certain HIPAA Privacy and Security language anyway, and the designation can go there.

Self-Insured Group Health Plan
and Fully-Insured Group Health Plan that is “Hands On” PHI[3]

  • €Appoint a HIPAA Privacy and Security officer (they can be different people in your organization)
  • €Identify the Covered Entity workforce (people in your organization that work with PHI to help administer your plan)
  • €Address all the administrative, physical and technological standards of the Security Rule
  • €Draft HIPAA Privacy and Security policies and procedures indicating how the plan complies with the Rules
  • €Train your Covered Entity workforce on your policies to safeguard PHI
  • €Identify all the plan’s Business Associates and enter into Business Associate Agreements with them
  • €Maintain a notice of privacy practices and distribute as required
  • €Create procedures to investigate potential breaches and address breach notification requirements
  • €Create a complaint process and designate a complaint contact
  • €Maintain processes for requesting restrictions, confidential communications and amendments to health information
  • €Amend plan document to comply with certain HIPAA Privacy and Security Rule requirements

 

Fully-Insured Group Health Plan that is “Hands Off” PHI

The plan may not:

  • Intimidate or retaliate against participants who exercise their rights under the Rules; or
  • €Require participants to waive their rights under the Rules
  • The plan has to comply with a limited number of safeguards under the Security Rule:[4]
  • €Appoint a HIPAA Security officer
  • €Perform a periodic risk analysis (this will document all PHI is in the hands of third parties such as the insurance carrier or a business associate and not the plan/plan sponsor)
  • €Document that the risk management procedures for PHI used by the insurance carrier are adopted by the plan and that the plan requires no additional measures to reduce risk
  • €Identify all the plan’s Business Associates, if any, and enter into Business Associate Agreements that comply with the HIPAA Security Rule requirements
  • €Amend plan document to comply with certain HIPAA Security Rule requirements

[3] We realize these are generally overlooked and likely present little risk.

[4] From a compliance perspective, the differences between the two types of plan are minor.

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What makes a great workplace?

January 9, 2017

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Human beings are social animals, and work is a social institution. Work can be a place where long-term relationships are formed. So what makes someone stay at their job for a long time?  For a company to be successful and retain employees there needs to be trust between the employee and workplace.  Building trust and having respect for employees can make a great workplace.

To build trust, it is heavily relied on the leadership or upper management of a company. As stated in Gallup’s research, “Employees don’t leave companies, they leave managers and supervisors.”  Employees should be able to look up or learn from their managers.  Managers should be able to believe their employee has what it takes to do the job.  Whether you are an employee in customer service or the CEO of the company there should be engagement with one another.

Employees are curious about how their company measures up with other companies. How a company measures up with other companies will determine if the employee stays or goes. Here are some things to help determine if your company is a great place to work and help retain employees;

  • Growth opportunities – Managers should notice the employee’s talent and move them to the direction/position to do their best work.
  • Challenges – Challenges keep employees excited about work. Research or projects should be part of the employee’s task.
  • Respect – Treat all people fairly. Build trust with employees. Be positive. Show recognition.
  • Perks – Not all perks are the same for everyone.  It could be office with a window view or simply having free coffee in the café.
  • Pay– Includes annual reviews with increases.  Bonus opportunities offered.
  • Work/Life balance – Offer flexible hours for employees to work. Work from home option offered.
  • Technology – Tools for employees to do their job and continue to learn.
  • Benefits – Medical, dental, life insurance, tuition reimbursement, retirement, etc.  The difference between what the company and employee pays for each of these.

Not every company will have all of the moral boosting factors listed above.  It is a competitive job market and people are looking into what a company offers before making a job decision.  What a company offers will help someone make a choice in a company but then it is up to company to keep the employee happy.

Every CEO of a company would love to hear their employees leave for the day shouting “I love my job and can’t wait to come back tomorrow!”  But to hear this, the company needs to make the employee feel valued.  The employee must enjoy their work and the company.  It might seem simple but it is not.  And making a great workplace will not happen overnight.  Just remember that having happy employees will retain employees and make the workplace a better company.

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2017 ACA Rates: Key Drivers

December 6, 2016

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Earlier this year, insurance companies filed premium rates for the fourth time under ACA guidelines.  We’ll take a look into three of the main driving factors influencing individual marketplace rates in 2017.

UNDERLYING GROWTH IN HEALTH COSTS

Medical trend is expected to increase slightly compared to recent years.  The largest contributing factor is a continued increase in available specialty drugs (see our article on high dollar specialty meds here).

Relative to historic medical trend levels, however, the current trend is comparatively low.  Counteracting forces include an increased focus on cost-effective and preventative care.

A number of significant brand name drugs are coming off patent, such as Crestor earlier this year.  In the coming years, this may also help alleviate some of the trend increase attributed to specialty drugs.

CONCLUSION OF THE TRANSITIONAL REINSURANCE PROGRAM

The Transitional Reinsurance Program was introduced along with the ACA to help insurers cover the cost of high claims incurred from a large population of previously uninsured, high-risk individuals.  The fund was set up to cover a portion of claims for the first three years – most heavily weighted to 2014, when the biggest hit was expected to incur, then less in 2015 and 2016.

After 2016, claims were expected to have stabilized.  Beginning in 2017, the program will have concluded and no funds will be offered.

Claims have not stabilized as expected and the decrease of program funds in both 2015 and 2016 were linked to higher premiums.  Likewise, the conclusion of the program in 2017 is expected to equate to a 4-7% increase in claim costs to insurers.

COMPOSITION OF RISK POOL

Positively, insurers will have had more solid information on the overall risk pool (population of insured) when setting rates for 2017 thanks to data released by CMS.  This is the first year since inception solid population data has been available.  Unfortunately, this may have a negative impact on rates as the Academy of Actuaries explains that “some insurers may have set premiums low relative to the market-wide risk profile.”

Rates will also reflect the insurers’ expectations for enrollment in 2017, as higher participation rates bring lower expected costs and vice versa.  If an insurer overestimated enrollment for 2016, their 2017 costs may need to be increased to account for the participation discrepancy.

The Kaiser Family Foundation estimates 46% of potential enrollees did so in 2016.  During this uncertain time, the White House has increased outreach to young Americans in an attempt to stabilize claims with a greater population of healthy participants.  This is crucial, especially with Aetna, United Healthcare and Humana having all withdrawn from the majority of marketplaces recently, citing hundreds of millions in losses.

Despite the GOP’s promise to repeal Obamacare, these factors will continue to influence our health marketplace.  Changes in legislation may certainly impact how these factors interact, but they are not going anywhere anytime soon.

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Getting help with College Debt

November 15, 2016

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Growing up everyone always ask you, “what do you want to be when you grow up?” They never asked you how you were going to become that person or tell you how much college it would take to become that person. And along with college comes debt.

There are employers that if you are working full time and going to school they offer tuition reimbursement. Tuition reimbursement is a benefit to employees. The amount that employers will reimburse can vary and usually the employee has to earn a certain grade. Employers offer tuition reimbursement to retain current workers and attract new talent.  There are tax breaks for employers for tuition reimbursement on a federal level. But what if you can’t work and go to college at the same time?

Wouldn’t it be nice to graduate from college and get a job that helps lower your student loan?  Good news is employers are starting to do this. Employers are making tuition assistance part of their benefit package. Employees should keep in mind the student loan assistance amounts get taxed as income for the employee.

According to the Society for Human Resource Management (SHRM), only about 3% of companies in the US offer to help employees with student loans.  Also, the contribution that a company offers can vary.  Here are some companies that offer assistance and their contributions;

  • Chegg- annual contribution of $1,000
  • Fidelity Investments- annual contribution of $2,000
  • Aetna – annual contribution of $2,000
  • Pricewaterhouse Coopers – $100 a month

Some of the companies have limits on how many years they will pay the annual contribution. There could also be requirements such as requiring full-time employment or at the company for a certain length of service before the employee is eligible to get the contribution. The companies that offer the contribution understand helping ease the financial burden of college debt can help their employees have more motivation to stay with them.

Paying off a student loan can take years and could possibly make someone miss out on a goal they had for after college.  Studies show that college graduates have an average of $30,000 in student loan debt. Doing research to find a company that offers tuition reimbursement or helps employees with their student loans is something that can benefit someone going to or has graduated from college.  Hopefully, the companies that offer student loan assistance can start a trend so more companies will offer the assistance to employees.

http://www.businessinsider.com/companies-help-pay-student-loan-debt-2016-3

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The Drug Problem

April 14, 2016

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When Turing Pharmaceuticals raised the price of Daraprim from $13.50 to $750 overnight last September, they were brought under tremendous scrutiny – though it was not the first increase of its kind by a pharmaceutical company on a newly acquired drug.

Turing argues the price change will have little effect on the market, and profits will be used to develop new drug therapies with fewer side effects.  The opposition claims the pharmaceutical industry as a whole is grossly convoluted and requires some form of additional regulation.

One of the most prevalent of these regulations is to allow Americans to import drugs from Canada or other foreign countries – a possibility strongly supported by both Democratic Presidential contenders Bernie Sanders and Hillary Clinton.

With price restrictions set in force by the Canadian government, prescriptions can be sold at 55% less than what Americans are paying just over the border.  If you think it sounds pretty tempting, you’re not alone – despite FDA regulations outlawing re-importation, the states of Vermont, Illinois, Wisconsin and Minnesota are already doing it.

Even if your state does not allow it, regulations for the rest of us are vague.  Individuals have long been allowed to import drugs for personal use provided they have a prescription for a required treatment not yet available in America, and do not take in more than a three month supply at a time.  Though lower price is not an approved reason, it is left to the discretion of the customs agent whether to allow it through, and they will often look the other way.  With the addition of online pharmacies, foreign drugs are even more accessible to individuals without much of a threat of consequence.

So, is it a good idea?

I lean towards outright allowing individuals to import their prescriptions for personal use.  Those that are willing to do so on their own should be able to.  This is in line with the Safe & Affordable Drugs from Canada Act of 2015 which was re-introduced to Congress earlier this year.

I do not believe that pharmacies and wholesalers should be given the same pass, as Bernie Sanders has proposed.  Allowing importation on that scale is a roundabout way of enforcing our own government price ceilings, meddling with core economic pricing of supply and demand and the ability to fund new research and innovation.

Other proposed regulations to control rising drug prices include lowering the biologic (specialty) drug exclusivity period from 12 to 7 years, giving FDA approval priority to specialty drugs with only one or two competitors available, and prohibiting anti-competitive “pay-for-delay” deals between brand and generic drug makers.

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Voluntary Benefits

October 1, 2015

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Just as employer-sponsored and funded benefits have evolved over the past thirty years, so too have voluntary employee benefits, also known as worksite benefit plans. Once the domain of 2-3 specialty insurance carriers (i.e., Aflac, Colonial, TransAmerica) and primarily sold to small and mid-size employers, voluntary benefits have exploded. Now nearly all group insurance companies offer a suite of voluntary insurance plans and market them to all employer segments, regardless of size, location, or industry.

What are voluntary, or worksite, benefits and why have they become so popular? As the name implies, they are insurance benefits offered to employees on an employee-paid, payroll-deduction basis. Importantly, they are typically products that the employee would not be able to purchase on their own, at least at the same price and the same favorable underwriting conditions as they are offered within the employee group. As a result, they are considered to be “benefits of employment”, and the employer, who pays nothing aside from some admin time, receives credit for including the benefits as part of the overall employee benefit plan.

There are a number or reasons why voluntary benefits have become increasingly popular with employers and employees alike.  Primarily though, as deductibles, co-pays, and out-of-pocket maximums within employer health plans have dramatically risen over the past 25-30 years, not to mention employee contributions toward the premiums, employers have sought to offer supplemental benefits that can provide their employees with additional financial safety nets. Because the benefits are limited in scope, they are very affordable, and owned by the employee, who can take the coverage with him or her when and if they leave their employer for any reason.

An employee with young children playing organized sports may be concerned about how he or she would be able to pay the costs associated with a broken leg or a torn ACL. A female employee with a family history of breast cancer might be worried about the high cost of treatment in the event she contracts the disease. Offering voluntary benefits allows employees to select coverage that meets the unique needs of themselves and their families

Most carriers offer one or more of the following menu of voluntary benefits, and these benefits tend to be the most popular with employees:

  • Accident Insurance
  • Short and Long term Disability Insurance
  • Critical Illness and Cancer Insurance
  • Limited medical, or “mini-meds”
  • Hospital indemnity
  • Dental Insurance
  • Vision Insurance
  • Term and Universal Life Insurance

Other, more “exotic” benefits are also finding their way into the mainstream, including: pet insurance, home and auto insurance, travel discounts, health club memberships, legal services, and identify theft protection, to name a few.

Before committing to a voluntary benefits enrollment, employers need to take a number of factors into consideration, including:

  • How do the proposed voluntary benefits complement the existing employer-paid benefits? Are there gaps in the current health and financial protection benefits that many employees are seeking to close?
  • What is the demographic makeup of the employee population? What is the average take-home pay?
  • How and when should voluntary benefits be communicated to the employees?   Which enrollment method, or combination of them, should be utilized to ensure that all employees have access to the maximum amount of information with a minimal disruption to the normal work flow?
  • If voluntary benefits are currently offered, what is the participation level? Are employees actually filing claims?

According to a recent survey of employers by Employee Benefit News, there is a disparity between those employers who offer voluntary benefits and those employers who indicate that they are in high demand or somewhat in demand. For example:

  • Accident insurance is offered by 51% of employers; however, 79% say that this benefit is in high demand or somewhat in demand.
  • Cancer insurance is offered by 34% of employers; however, 78% say that this benefit is in high demand or somewhat in demand.
  • Critical illness insurance is offered by 41% of employers; however, 72% say that this benefit is in high demand or somewhat in demand.

The timing of the voluntary benefits enrollment and the methods used to communicate and enroll employees are critical to the success of the offerings, with success being measured by the percentage of employees who enroll in one or more of the benefits. Generally speaking, if 30% or more of the eligible employees enroll in at least one benefit, the enrollment can be considered a success. If the plans are communicated properly and if all employees are required to either enroll or decline the benefits in writing, telephonically, or on-line, our experience shows that 30% participation is easily attainable. Depending on the other variables mentioned above (current benefits, employee demographics, etc.), we have seen voluntary benefits enrollments exceed 50% participation levels, which qualifies as a very successful enrollment, one that is highly appreciated by a large majority of employees.

In future posts, we’ll dig a little more deeply into the details of the more popular voluntary benefit plans and discuss the various communication and enrollment methods that are available to employers.

 

 

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2016 ACA Rates: Key Drivers

September 22, 2015

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2016 rates have officially been submitted by insurers for ACA plans, and we are seeing states begin to approve some big increases. A 9.5% average increase in Florida, 19.8% average increase for Coventry, the state’s largest insurer of exchange plans in Iowa, and 36.3% for BlueCross BlueShield of Tennessee, to name a few. To be fair, not all states are seeing such dramatic changes – Washington averages a 4.2% increase.

But where are these rates coming from? The American Academy of Actuaries released an issue brief examining some of the driving factors influencing individual and small group exchange rates for 2016. We’ll take a look at four key points.

UNDERLYING GROWTH IN HEALTH COSTS

Though medical costs are not increasing as rapidly in recent years as they have in the past, spending is still projected to grow over inflation in 2016. A major contributor is the influx of high-cost specialty drugs being approved, as well as spending on more sophisticated cyber security.

REDUCTION IN TEMPORARY REINSURANCE PROGRAM FUNDS

What happens when the ACA grants insurance coverage to an influx of sick, previously uninsurable people and insurance companies get hit with their huge claims all at once? The 3-year Temporary Reinsurance Program was the answer. Since the beginning of coverage in 2014, for the individual market, the program has reimbursed insurance companies a percentage of a person’s claims over a certain amount. It was most heavily weighted to 2014, when the biggest hit was expected to ensue, with less coverage in 2015, and still less in 2016, it’s last year in existence.

It’s estimated that the lowered benefit of the program to insurers in 2016 equates to a 2-6% increase in claim costs.

COMPOSITION OF RISK POOL

While insurers can no longer charge higher premiums to individuals based on their health status, they do charge premiums based on the collective health status of all of the individuals they insure – their risk pool. Who will be in their risk pool in 2016, and what amount of claims can be expected from them? This is probably the most important question in determining 2016 rates, and the most uncertain for a few reasons.

  1. There is no solid data to base expectations on. The only full year of data available for ACA plans is 2014. Even then, a lot of enrollees weren’t on plans for a full year due to all of the start-up issues and extended open enrollment period. It’s also difficult to determine the amount 2014 claim costs were inflated from those who newly gained insurance and spent more than they normally would bringing themselves back up to speed.
  2. Turnover is high. People often move between individual and employer coverage. And, during open enrollment, any individual can move to any ACA plan they want.
  3. The status of the overall population was unknown when rates were filed. The ACA moves funds to/from insurers depending on how their risk pool compares to the overall state’s market. However, complete population information was not released before rates were filed.

Until more historical data is available, many assumptions on their risk pool will be made by insurers in determining rates.

EXPANSION OF SMALL GROUP DEFINITION

Beginning in 2016, small group employers will include those up to 100 employees (currently only up to 50), forcing groups 51-100 to adhere to more strict rating rules. For groups with lower-cost employees, chances are good this will increase their premiums, while groups with higher-cost employees will likely find lower rates by joining the small group risk pool.

With the transitional policy, however, groups 51-100 aren’t required to move to an ACA plan until up to October 1, 2017 (in states that allow the transitional policy, which includes Missouri). The small group market could experience adverse selection, with less healthy groups joining the population and healthier groups keeping their non-ACA plans through 2017, causing upward pressure on rates.

Another option for healthier 51-100 groups, whether the transitional policy is in place in their state or not, is to self-insure to avoid joining the small group market, further negatively impacting it.

On 10/1/2015, the Senate passed legislation to preserve the definition of “small employer” under the ACA as those with 50 or fewer employees, and is expected to get President Obama’s signature.  The bill would allow states to decide for themselves if they will extend the definition of “small employer” to include those with 51-100 employees.

Of course, many other factors contributed to determining 2016 premiums. Others mentioned include changes to provider networks, administrative costs, and risk margins.

Though the ACA was signed into law over 5 years ago, we are now beginning to see some of the effects on rates as many regulations continue to roll-out. At this time next year, rates submitted for 2017 will have a complete year of data behind them for the first time. However, with the Temporary Reinsurance Act still in effect, and the allowed extension of non-ACA plans through 2017, we will be seeing rates continue to stabilize in the years to come.

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Pharmacy Benefit Manager 101

September 22, 2015

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Do you think about when it comes to pharmacy drugs? With the price of specialty drugs sky rocketing you might want to consider thinking about your PBM relationship. Perhaps working more closely with your PBM could help you save money in more ways than you think.

So what exactly is a PBM? If your plan includes prescription medication benefits, chances are that your plan contracts with a pharmacy benefits manager (PBM) to administer those benefits. A Pharmacy Benefit Manager (PBM) is a third party administrator (TPA) of prescription drug programs. They can range in size from small to large. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims. They can work with self-insured companies, government programs, unions, TPAs and managed care companies.

With the price for prescription drugs continuing to spiral upwards, pharmacy drug solution continues to rank as top cost control priority for many companies. Working in coordination with your PBM provides a number of opportunities to reduce costs and manage risk. Here is a list of things that should be brought up in those discussions::

  • Specialty Drugs- Prior authorization and quantity limits
  • Risk Stratification – limit certain expensive drug therapies
  • Formulary Exclusivity- Formulary is a list of preferred and non-preferred drugs that are covered
  • EGWP – The Employer Group Waiver Program can be a cost savings who offer retiree medical coverage
  • Generic Pricing Comparison- Use of generic drugs
  • Clinical Program Evaluation- Step therapy, compound management, medication therapy management.

Prescription drug coverage can add 30 percent or more to the cost of a health care premium. Selectively bidding and using an independent pharmacy benefit manager to administer a drug plan may help reduce this cost. This is typically called a Prescription Carve-Out Plan. The employer self-funds the actual cost of the prescription claims (often times the medical as well). Then bids the PBM services, often this can result in significant pricing advantages saving anywhere from 7-27% over typical industry shelf rates. Carving-out the pharmacy offers companies the opportunity to save money without cutting employee pharmacy benefits.

There are currently around 60+ PBMs managing drug benefits for companies in the United States. PBMs can be independently owned and operated or subsidiaries of managed care plans or major drug stores. In 2012 the five largest PBMs were:

  • Express Scripts
  • CVS Health
  • Prime Therapeutics
  • United Health/OptumRx – now Catamaran
  • Catamaran Corporation

http://georgevanantwerp.com/2007/10/12/what-is-a-pbm/

http://wbcbaltimore.com/top-7-pbm-trends-for-2015/

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Reporting Deadline Approaching

September 21, 2015

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The Centers for Medicare and Medicaid Services (CMS) requires you to notify Medicare Part D Eligible members if the drug coverage offered by the employer is Creditable or Non Creditable by no later than October 15th of every year and annually notify CMS, online within 60 days after the first day of the plan year of the coverage status.

REQUIREMENTS 

Provide notice to Medicare eligible individuals whether the plans prescription drug coverage is creditable or not creditable. Most insurance carriers or Pharmacy Benefit Managers (PBM’s) are providing notices to employers as to whether the coverage is Creditable or Non Creditable. If you did not receive a notice from the carrier you can call and ask them. Although you are only required to provide this notice to Medicare eligible participants we recommend you provide this notice to all employees in the event an employee has a spouse or dependent who is Medicare eligible that you may not be aware of. CMS provides detailed guidance and model notices on their website.

Provide notice to Centers for Medicare and Medicaid Services (CMS) of employer program status. The online disclosure form can be found on the CMS website .

DISCLOSURE OPTIONS

When providing notices to Medicare eligible individuals a number of options are allowed as follows:

  1. Provide the model notice “As Is” subject to completion of certain blanks.
  2. Prepare a customized notice – an employer with or without creditable coverage can provide a customized creditable coverage notice, provided that it meets CMS’s content standards, summarized below.

If coverage is creditable, customized disclosure notices must address the following items:

  • that the employer has determined that the prescription drug coverage is creditable ;
  • the meaning of creditable coverage , as defined by the guidance; and
  • Why creditable coverage is important and that the individual could be subject to payment of higher Part D premiums if he or she subsequently has a break in creditable coverage of 63 days or longer before enrolling in a Part D plan.

If the coverage is non-creditable, customized disclosure notices to Part D eligible individuals must address the following items:

  • that the employer has determined that the prescription drug coverage is not creditable ;
  • the meaning of creditable coverage , as defined by the guidance;
  • that an individual generally may only enroll in a Part D plan from October 15 through December 7 of each year, starting with the 2012 plan year; and
  • an explanation of why creditable coverage is important and that the individual may be subject to payment of higher Part D premiums if he or she fails to enroll in a Part D plan when first eligible.
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Advantages of a Health Reimbursement Arrangement

September 11, 2015

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Section 105 of the Internal Revenue Service (IRS) regulations allow for reimbursement of medical expenses under an employer sponsored health plan. This is also known as a Health Reimbursement Arrangement or HRA. Under the HRA, the employer will provide the funds to reimburse members for those eligible expenses that have been incurred. Some examples of eligible expenses include deductible, co-pays and coinsurance along with dental and vision claims as well. What will be covered is determined by the employer and their goals regarding employee benefits.

piggybankAdvantages for the employer by offering an HRA include qualified claims being tax deductible, the flexibility to design plans that will enhance the overall employee benefit package and having more choices with the potential of greater control over costs. Advantages for the employee include rolling over unused funds into the next plan year, contributions made by the employer are excluded from the gross income of the employee and reimbursements for qualified expenses may be tax free.

From time to time there is the misconception that an HRA and FSA (Flexible Spending Account) are truly one in the same. While they are similar, there are some distinct differences. The HRA is funded only by the employer, no employee contributions are allowed. The HRA can only reimburse what is available in the account at that particular time. While the amount elected in the FSA is available from day one of the plan year. HRA regulations do not require an eligible expense be incurred in the current plan year; only that the member be an active participant in the HRA at the time of the expense. The employer does have the option to allow this expense to occur or not. A member can elect both an HRA and FSA if the employer offers the two and the member meets all eligibility requirements.

A common question for members participating in an HRA is “what happens to the account balance if they leave the company”? There are two different options that are available when this occurs and one is unique to HRA’s. First, an employer can allow the employee to continue the HRA through COBRA. The employee would fund 100% of the premiums for the HRA and any health plan it might be tied to. The second and unique feature is referred to as the spend-down provision. This would allow an employee no longer with the company to use the existing HRA balance for expenses incurred after employment has ended. The employer does control if this will be an option for members along with which qualifying events are eligible, how much of the available funds can be used and how long the ex-employee has to use the funds.

With the majority of the regulations for ACA now in place, the deductible reimbursement plan option may no longer be available for certain segments of the market. However, the HRA is still to be considered a viable alternative for those looking to replace or enhance certain aspects of a benefit package for employees.

 

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Does your benefits plan hit the mark?

July 7, 2015

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Workplace benefits are increasingly becoming a subject of focus for HR.  According to the Society for Human Resource Management (SHRM), 61% of employees who were very satisfied with their benefits said they felt a strong sense of loyalty to their employer vs. 24% of employees who were very dissatisfied with their benefits.

Knowing how your company’s benefits program compares to your competitors is an important component of any retention strategy.  J.W. Terrill can help you understand how your plans measure up through the 2015 Mid-Market Benefits Survey. The survey is now open and your participation is encouraged.

One of the key goals of the survey is to provide meaningful information so that employers like you can make better-informed decisions regarding your benefit plans. Participants will receive a customized report providing valuable insight into how your program compares with other employers. As a participant, there is NO COST to you and was designed with your needs in mind:

  • Quick & Easy – in a user-friendly web-based format, you can complete it at any time and even return to your survey for later editing and completion
  • Comprehensive – all of your benefit plans are covered
  • Thorough interpretation – your individual results will be provided in a clear, easy-to-understand format by a qualified and knowledgeable consultant
  • Are you a past participant? Your answers are pre-populated from prior responses
  • Earn HRCI and CPE recertification credits

Questions? Contact Denise Kaiser at 314-594-2793 or send an email to survey@jwterrill.com for more information.

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What is an HRA or Health Reimbursement Arrangement?

March 11, 2014

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Section 105 of the Internal Revenue Service (IRS) regulations allow for reimbursement of medical expenses under an employer sponsored health plan. This is also known as a Health Reimbursement Arrangement or HRA. Under the HRA, the employer will provide the funds to reimburse members for those eligible expenses that have been incurred. Some examples of eligible expenses include deductible, co-pays and coinsurance along with dental and vision claims as well. What will be covered is determined by the employer and their goals regarding employee benefits.

Advantages for the employer by offering an HRA include qualified claims being tax deductible, the flexibility to design plans that will enhance the overall employee benefit package and having more choices with the potential of greater control over costs. Advantages for the employee include rolling over unused funds into the next plan year, contributions made by the employer are excluded from the gross income of the employee and reimbursements for qualified expenses may be tax free.

From time to time there is the misconception that an HRA and FSA (Flexible Spending Account) are truly one in the same. While they are similar, there are some distinct differences. The HRA is funded only by the employer, no employee contributions are allowed. The HRA can only reimburse what is available in the account at that particular time. While the amount elected in the FSA is available from day one of the plan year. HRA regulations do not require an eligible expense be incurred in the current plan year; only that the member be an active participant in the HRA at the time of the expense. The employer does have the option to allow this expense to occur or not. A member can elect both an HRA and FSA if the employer offers the two and the member meets all eligibility requirements.

A common question for members participating in an HRA is “what happens to the account balance if they leave the company”? There are two different options that are available when this occurs and one is unique to HRA’s. First, an employer can allow the employee to continue the HRA through COBRA. The employee would fund 100% of the premiums for the HRA and any health plan it might be tied to. The second and unique feature is referred to as the spend-down provision. This would allow an employee no longer with the company to use the existing HRA balance for expenses incurred after employment has ended. The employer does control if this will be an option for members along with which qualifying events are eligible, how much of the available funds can be used and how long the ex-employee has to use the funds.

With the majority of the regulations for ACA now in place, the deductible reimbursement plan option may no longer be available for certain segments of the market. However, the HRA is still to be considered a viable alternative for those looking to replace or enhance certain aspects of a benefit package for employees.

Continue reading...