Tag Archives: Health Care Reform

2017 ACA Reporting Forms Available

October 6, 2017

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On Wednesday the IRS released the final 1094-C and 1095-C forms along with the instructions.  Applicable Large Employers (ALEs) will use the C forms to report on their offers of coverage to full-time employees. Like last year, fully-insured ALEs will complete Parts I and II of Form 1095-C while self-insured ALEs will complete Parts I, II and III of Form 1095-C. Small self-insured employers will use Forms 1094-B and 1095-B to report on all those enrolled in their coverage.  The instructions for the B Forms are here.

Employers must file the Forms by February 28, 2018 if filing on paper, or by March 31, 2018 if filing electronically. Those employers how are filing 250 or more returns must file electronically.  However, because March 31st falls on a weekend employers actually have until the following Monday, April 2nd to electronically file with the IRS. Copies of Forms 1095-C and 1095-B are due to individuals by January 31, 2018.

We will present a Health Care Reform update on December 15th that will cover 1094/1095 reporting in great detail. You can sign up for the webinar here.

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Upcoming Creditable Coverage Notice Deadline

September 22, 2017

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The Centers for Medicare and Medicaid Services (CMS) requires employers offering prescription drug coverage to disclose to all Medicare Part D eligible individuals the creditable status of their plan by October 15th each year.  The Creditable Coverage notice helps individuals make informed and timely decisions about whether and when to enroll in Medicare Part D and avoid potential late enrollment penalties.  We’ve previously discussed the Creditable Coverage notice here.

Because it’s often difficult to know for sure who is a Medicare Part D eligible individual, many employers chose to include the notice in enrollment materials or in separate mailings provided to all employees. If the employer wishes to distribute the notice with their enrollment materials, they must be sure to follow certain formatting requirements. The notice must be:

  • Prominently referenced
  • In a (minimum) 14-point font in a separate box, bolded or offset on the first page.

Model notices can be found on the CMS website.

In addition to the Creditable Coverage notice, employers must annually disclose their creditable coverage status to CMS. Disclosures to CMS must occur:

  • Within 60 days after the beginning date of the plan year for which disclosure is provided;
  • Within 30 days after termination of the prescription drug plan; and
  • Within 30 days after any change in creditable status of the prescription drug plan.

Disclosures to CMS must be completed and sent electronically through their website.  If an employer misses the current year’s deadline, they should file with CMS as soon as possible.

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Affordable Care Act Penalties Are Still in Effect

August 15, 2017

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When President Trump took office this January, he signed an Executive Order directing HHS and other federal agencies to “waive, defer, grant exemptions from or delay implementation of any provision or requirement” of the Affordable Care Act (ACA) “to the maximum extent permitted by law.” This Executive Order was touted as the first step in repealing the ACA and many people began wondering what practical effect the Order would have. Some even theorized the Employer and Individual Mandate penalties would be waived.

In practicality, the Executive Order is more of an ideological statement because executive orders cannot change existing law. Under the Administrative Procedures Act (APA), agencies cannot rescind existing laws until they engage in a new notice-and-comment rulemaking process (including required public comment period and delayed effective dates) and follow other procedural requirements. This makes it very hard for a President to overturn final regulations without the cooperation of Congress. Since the Employer Mandate and Individual Mandate penalties are written into law, it would take an act of Congress to amend or repeal the monetary amount of the penalties. However, Congress has not passed any amendments or repeal provisions so the Employer Mandate and Individual Mandate penalties are still law.

In fact, the Department of the Treasury issued 4 opinion letters from April to June 2017 which confirm what we already knew: ACA penalties are still in effect. Taxpayers are still required to follow the law and pay what they may owe. Applicable Large Employers (ALEs) should continue to offer affordable, minimum value coverage to their full-time employees and minimum essential coverage to dependents.  If individuals are not eligible or not offered employer-sponsored coverage they must still have minimum essential coverage (or qualify for an exemption) for each month of the year.

For more information on the Employer Mandate, click here.

For more information on the Individual Mandate, click here.

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Dynamic Insurance, Cyber Security, and the Internet of Things

August 4, 2017

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The internet of things is advancing rapidly, and frankly so is insurance. We can assure you that the heated debates in congress and confusing jargon won’t be going away anytime soon. In fact, it will probably get a lot more complicated, but insurance companies have their analytics department to lean on in these times of chaos. The world around us is more connected now than ever before and this gives us more accurate data to look forward to. Let’s start with drones. The rising use of drones will present both opportunities and risks for many industries. We have seen this technology become a natural part of many markets. For example, filming a scene that requires aerial view becomes a lot less expensive with a drone, and inspecting the exterior of buildings becomes a lot less dangerous when the life of an employee is not at risk. According to the U.S. Bureau of Labor, 38.8% of total deaths in construction occur from falls in just one calendar year. Falls are the number one cause of death in the construction industry and the third largest cause of death across all industries (Drones Create Safety). A $1,000 piece of equipment becomes priceless when it can transfer the risk of a life. But who is responsible for the misuse of a drone, and is there liability coverage for your commercial drone? This article will address how innovative technologies can improve current industries or potentially disrupt them and what role insurance companies will play in the near future.

Do we really want more healthcare data?

Wellness technology is advancing rapidly with untapped data. Not long ago, insurance companies started compiling data on teenage drivers. Soon enough they found a strong correlation between a student’s grades, and their likelihood to get in an accident. Of course, grades do not depict how well you can drive, but a strong correlation can help save the insurer a lot of money. Soon came the “good student” discount. If you can provide proof that your teenage driver will get grades above the threshold that the carrier believes has a statistical impact on the amount of accidents the insured will experience, you can save some money. Because of the historical data, companies can now better underwrite their clients and the insured is awarded with a discount and another reason to nag their kids about grades. The good student discount isn’t the only way insurance companies use correlation data. They also use it to responsibly insure smokers. The insurer can better predict their client’s health issues based on employee lifestyles (Tech-Enabled). Insurance companies have been adapting to data since the inception of insurance. Even recent policy such as the Affordable Care Act, is still making major changes to the health insurance market.

Correlation is everywhere. The law of large numbers explains that the more information on the consumer side, the more accurate the underwriting becomes. Obviously, client wellness and the data behind it is very important to insurance companies. Fitbit started out in 2007 as a small group of people with an idea of a fashionable activity-tracking bracelet. Now, Fitbit is publicly traded on the New York Stock Exchange, selling over 22.3 million devices in the past year with reported revenue of $574 million (Fitbit Reports). Not only did Fitbit just go international with Vector Watch UK Limited, but they also acquired FitStar Labs, a private company that develops software applications for games, social networking platforms, and mobile devices. Fitbit has quickly gone from an interesting concept, to a full-blown technology powerhouse collecting very sensitive data.

With all the recent advances in wellness data and wearable technology, getting the data to companies that want it is probably just a few lawsuits and a small acquisition away. Who stores and can obtain this information is being questioned more every day. According to the HuffingtonPost, prosecutors obtained data from Chris Bucchere’s activity bracelet to prove that he was speeding before his accident. Bucchere was convicted with a felony for vehicular manslaughter (Weinstein, Mark). While many argue a breach of policy, others are taking advantage of the information while they can. For example, John Hancock Life Insurance Company is offering their clients a 15% discount if they permit their Apple Watch to monitor their activities (IoT Insurance). Data like this has the potential to disrupt consumer information in many industries, especially current healthcare data. It is important to keep in mind that access to personal data is a topic that is already highly controversial and debated in the litigation community. Innovations like smart watches and activity bracelets can increase the accuracy of current data and lower consumer cost, but these advances in wellness technology need to be monitored for their disruptive nature and potential for abuse.

My car can now drive itself, should I switch insurance providers?

Ford, Chevy, Volkswagen, Buick, and Honda are all reputable household names making major moves towards autonomous vehicles. Even Teslas are quickly becoming more affordable as recent innovations in self-driving technology are leading to rapid industry expansion. The Insurance Institute for highway Safety is anticipating about 3.5 million self-driving vehicles by 2025, and 4.5 million by 2030 (Self-Driving). Recent improvements such as the rear-view monitor, blind spot sensors, and self-parking technology are being integrated into the factory design of many popular cars. These improvements in design and safety have led to a lower fatality rate. “The likelihood of a driver dying in a crash of a late model vehicle fell by more than a third over three years, and nine car models had zero fatalities per million registered vehicles,” (Insurance Institute for highway Safety). There is no question that our ability to prevent crashes will greatly reduce the number of fatal accidents. What is unclear, however, is how liability laws might evolve to insure autonomous vehicle technology. Insurers will have to determine how to underwrite policies where accident medical bills are lower than ever, while replacing vehicle cost may be higher than usual. It may also become common to see a higher percentage of product liability claims as the insured blame the suppliers for mistakes made on the car’s behalf and fight for subrogation. Need for liability coverage will become more important. As suggested by the 2014 RAND study on autonomous vehicles, “…product liability might incorporate the concept of a cost-benefit analysis to mitigate the cost to manufacturers of claims.” This could relieve pressure on the healthcare and disability cost related to automobile claims.

As of right now, there are basically two types of liability systems. There is the no-fault concept in some states, while in others liability is based on the tort system. The arrival of self-driving cars will have an impact on policy, but for now there isn’t much of a direction. Will the systems align to be more uniform, or will the states pass on the torch to the federal government asking them to play a larger role? The more that car manufacturers are blamed, the more likely we are to see the federal government getting involved. RAND Corporation did a study of the benefits of self-driving vehicles in 2016 and concluded that personal liability will decrease while manufacturer liability is likely to increase (Self-Driving). Car manufacturers are starting to look more like computer manufacturers. Patrick Lin, a writer for Forbes, believes that with this shift in technology, “…hard ethical decisions in programming and new product liability cases will surely challenge law and disrupt the insurance industry…” (No Self-Driving).

Smart cars, what’s next smart homes?

Companies like Vivint and The SOHO Shop are bringing the future closer by integrating smart home technology. The SOHO Shop, founded in St. Charles Missouri, was created with the idea of a trusted and reliable home/commercial automation. Their products range from automated shades and central VAC, to industrial building automation, IT, security and video surveillance. These companies are bringing their software and skills to individual homes along with bigger living areas like retirement communities. Introducing products such as intelligent window and door monitors can make people living alone feel safer. They also offer products that can monitor oven temperatures, water use, bed, chair, and bathroom usage for those living by themselves that may need assisted care. This technology is helping keep patients with medical need comfortable and safe, but what does this mean for insuring the modern home?

The insurer, American Family, has a model home where they are testing out the automated features such as water and temperature sensors. These sensors prevent leaks and notify homeowners before a pipe burst or an appliance malfunctions causing damage. Data from these sensors may eventually be used to profile some customers as being more/less likely to let small disasters occur. American Family and USAA are both exploring this technology. State Farm and Liberty Mutual both offer discounts on your home policy if you decide to begin transforming your home into a smart home (Home Automation Giant). The federal government has already started designing a functional way to access utility data. The Green Button Initiative is a nonprofit project that allows businesses and homeowners to access their energy use data in an industry standardized format (The Green Button). This initiative was a response to a 2012 White House call-to-action to provide utility customers with easy and secure access to their information (Giving Consumers Access).

Senior Managing Director, at Accenture, Jogn Cusano claims that turning customers’ homes into data hotspots will increase the risk of data breaches. Cusano believes that underwriting will change to reflect the new risk of cyber-attacks (Why Insurance Companies). Only time will tell if insurers will save enough by preventing leaks to make up costs from ransomware.

We have drones and reinsurance, what can possibly go wrong?

Being ahead of the game means taking the proper precautions to keep changing technology from disrupting your business. While we now have the ability to lock office doors without relying on the janitor, and send flying robots to do our dangerous jobs, we are also becoming more vulnerable to cyber-attacks than ever before. According to The State of SMB Cybersecurity Report, “…a staggering 50 percent of small and midsized organizations reported suffering at least one cyberattack in the last 12 months…” (State of Cybersecurity). A cyber-attack on a large company can ruin their reputation, but a cyber-attack on a small business or a household can cause detrimental financial damage. The worst part is that many people don’t know what to do about it: “52% of organizations that suffered successful cyber-attacks in 2016 aren’t making any changes to their security in 2017” (Barkly Blog). Companies need to find innovative ways to address this. Limited access and cut ties are a great place to start. No one person in the company should have access to everything. There should also be fewer passwords and more identity verification requirements. If someone knows your email, what city you live in, and your birthday, it is not difficult to gain access to one of your online accounts (banking, social media, email, etc.…), which will only make it easier to gain access to the rest of your accounts.

On May 17th 2017, the House of Representatives passed the Modernizing Government Technology Act (115th Congress). This legislation will allow the federal government to improve and replace existing information technology systems to strengthen cyber security. Not only does this affect individuals but it is also a national problem. A study performed by the Ponemon Institute in June of 2016 shows that the average cost per stolen record is $158 (2016 Cost of Data). Multiple government agencies have been breached, releasing vital information about government employees and programs. In a recent preventative measure, the Department of Homeland Security decided to increase its Federal Cybersecurity programs by expanding EINSTEIN and Continuous Diagnostics and Mitigation programs. In Missouri, these laws are interpreted to require that any company notify every individual that is affected by a cyber breach and must offer one year of credit monitoring for the individuals.

What is your company doing? In today’s world, multi-factor authentication is a must. It simply adds another layer of security by texting a code to your mobile device after you sign in with a password. Many companies have created software like the Google Authenticator app that gives you a randomly generated code. This generated code regenerates every ten seconds, adding another level of security. Every company should also have a policy in place to deal with cyber-attacks when they occur, along with a way for employees to report any problems anonymously. According to a study done by Pricewaterhouse Coopers, “the most widely used advanced-authentication technologies are hardware and software tokens, followed by biometrics such as fingerprint and iris scanners” (Global State of). Smartphone tokens are becoming more popular due to security compromises of business phones and work tablets. If a password-less authentication is the route you wish to go, your organization may want to rethink your approach to identity management. Most important is an intuitive process for the end user. PwC recommends the IAM, Identity and Access Management, a web service by Amazon Web Services that helps you securely control access to AWS resources for your users. You use IAM to control who can use your AWS resources (authentication) and what resources they can use and in what ways (authorization). Although products like Google Cloud IAM and AWS IAM are not a replacement to Active Directory or OpenLDAP, they are becoming a necessary add-on.

Cyber Insurance is a special product that addresses the emerging coverage gaps in traditional insurance policies that result from our increased use of technology and reliance on the risk that comes with storing sensitive data. Cyber perils range from network outage, data theft, and even cyber extortion demands. Although you may not think it is necessary yet, a paper released from the R Street Technology Policy Fellow Anne Hobson, argues that it’s in the governments best interest to hold vendors and contractors that do business with the federal government, financially responsible for any cybersecurity issues on their part that costs U.S. taxpayers (Aligning Cybersecurity Incentives).

Old industries tend to lag in financial technology. “67% of risk professionals are not aware of their organization having processes and procedures in place to trigger a risk assessment of a modern technology before it is actually used. And more than half of the correspondents said their company had not undertaken risk assessments around disruptive technologies (technology innovation).

Blockchain technology is almost here.

On July 24th of 2017, innovative leaders from across the states got together at Washington University in St. Louis to talk tech. The topic was trade and everyone was talking about how blockchain technology can revolutionize supply trade management. Brigid McDermott from IBM was on stage explaining how inefficient and unprotected most supply chains are. She explained how every company, every port, and every person along a supply chain has a unique way of recording and securing a transaction which leaves too much room for corruption. “Less than 0.5% of all data is ever analyzed and over $130 billion is spent on bid data and business analytics globally.” Supply chains being inefficient and expensive, seemed to be the theme. “Blockchain creates the trust necessary to address the end-to-end process,” she exclaimed. Being able to sort through a common ledger would save supply chains millions. Next in line was Soumak Chatterjee from Deloitte, who explained that a blockchain based system not only beats any other centralized ledger with its ability to authorize, and audit transactions, but excels in many fundamental security aspects. Next up was Kate Lybarger from Monsanto. Then was Farron Blanc from RGA to talk on blockchain in the Insurance world. But it wasn’t until Nick Williamson from Qad.re brought out a demo of his software that could be used as a decentralized ledger for shipping warehouses. He showed the audience how this blockchain based software could read, compile, and organize data from thousands of shipping containers with extreme accuracy. The goal is to stop fraud, counterfeit prescriptions to be exact, and Nick is going to do it with the support of smart contracts on the blockchain.

In the past month, Promoting Good Cyber Hygiene Act of 2017, a piece of cybersecurity legislation, was introduced into congress. This legislation would mandate the National Institute of Standards and Technology (NIST), the Federal Trade Commissions (FTC), and the Department of Homeland Security (DHS) to outline the steps necessary to establish baseline practices for good cyber security. A couple year back the National Cybersecurity Protection Act of 2014 became law to direct the goals of the DHS and stakeholders. This law pushed the private sector to provide incident response and cybersecurity information with public entities to enhance overall security. Reluctance from companies to share their security analysis lead to the Promoting Good Cyber Act. This highlights, regardless of location or industry, nine critical updates:

Critical Updates:

  • Old or unpatched networks
  • Quarterly cyber security training
  • Multifactor authentication
  • Regular backups
  • Extra security with older systems
  • Cloud or blockchain migrations
  • Detection and prevention system analysis
  • Manage service providers
  • Cyber insurance

These updates are mandatory with expanding connectivity. People often overestimate how much popular companies really know. For example, Wired released a video of two hackers remotely disabling a Jeep and killing the engine while it was on the highway. Not many understand that the computers in our cars are connected to the internet. Even recently Toyota has turned to MIT’s blockchain experts to explore possible systems for safer autonomous vehicles (Toyota Tech).

Advances in technology are great for our society in many ways. We can expect to see fewer accidents, greater connectivity, and more wireless freedom. We have already seen great reduction in fatal accidents including falls and car crashes. While the Internet of things is expanding our abilities, it also carries a wake of disrupting characteristics and unpredictable events. Last year the Department of Homeland Security met to discuss interest in forming a cybersecurity data repository to better understand and visualize emerging cyber incidents. (National Protection) A secure repository would help collect and aggregate cyber incident information, acting as a reliable source for the cyber risk community. Disruptive technologies have a big influence on the way industries form and collapse and properly analyzing the data is important, but lagging regulation often prevents swift movements in the right direction. Although cyber risk is still a foreign territory for many, it is important to stay progressive through these changing times. Creating a more robust and efficient cyber insurance market has the potential to strengthen current industries by greatly reduce the number of cyber-attacks and steering clear of the many societal threats our nation has already faced.

About the Author

Brandon Bradshaw: Analytics Intern attending Missouri State University pursuing a Computer Information Systems degree. Plans to continue his education in the Management and Information technology Department Cybersecurity Graduate Program.

Works Cited

Castro, Daniel, and Henry Sherwin. “Giving Consumers Access to Water Data Promotes Smarter Use.” Brink – The Edge of Risk. N.p., 24 Sept. 2015. Web. 17 July 2017.
Comstock, Jonah. “PwC: 1 in 5 Americans Owns a Wearable, 1 in 10 Wears Them Daily.” MobiHealthNews. PwC Study, Mobihealthnews Article, 21 Oct. 2014. Web. 26 July 2017.
Coopers, Pricewaterhouse. “Global State of Information Security Survey 2017.” Toward New Possibilities in Threat Management, 2017, pp. 8–10., www.pwc.com/gx/en/issues/cyber-security/information-security-survey/assets/gsiss-report-cybersecurity-privacy-possibilities.pdf.
“2016 Cost of Data Breach Study: Global Analysis.” 2016 Cost of Data Breach Study: Global Study. Ponemon Institute & IBM, 17 June 2016. Web. 21 July 2017.
CyberAvengers*, The. “Cyber Hygiene and Government–Industry Cooperation for Better Cybersecurity.” Brink – The Edge of Risk. N.p., 11 July 2017. Web. 17 July 2017.
Danzon, Patricia M., and Mark V. Pauly. “Insurance and New Technology: From Hospital to Drugstore.” Health Affairs Org. N.p., 2001. Web. 17 July 2017.
“FACT SHEET: Cybersecurity National Action Plan.” National Archives and Records Administration. National Archives and Records Administration, n.d. Web. 17 July 2017.
Famakinwa, Joyce. “Drones Create Safety Opportunities, Raise Privacy Concerns.” Businessinsurance.com. N.p., 31 May 2017. Web.
“Fitbit Reports $574M Q416 and $2.17B FY16 Revenue, Sells 6.5M Devices in Q416 and 22.3M Devices in FY16.” Fitbit, Inc. N.p., n.d. Web. 18 July 2017.
Gale, Melissa. “Technology Innovation Is Disrupting Risk Management.” Brink – The Edge of Risk. Brink The Edge of Risk, 26 June 2017. Web. 17 July 2017.
Gammons, Brianna. “6 Must-Know Cybersecurity Statistics for 2017 | Barkly Blog.” Barkly Endpoint Security Blog. N.p., n.d. Web. 17 July 2017.
Gautham. “It Is Time for the English Insurance Sector to Adopt Blockchain Tech?” SafeShare Insurance. N.p., 18 May 2016. Web. 17 July 2017.
Gertrude Chavez-Dreyfuss. “Toyota, Tech Firms Explore Blockchain for Driverless Cars.” Reuters, Thomson Reuters, 22 May 2017, www.reuters.com/article/toyota-selfdriving-blockchain-idUSL1N1IO178.
“The Green Button – the Standardized Way to Get Your Energy Usage Data.” The Green Button – the Standardized Way to Get Your Energy Usage Data. N.p., n.d. Web. 17 July 2017.
Higginbotham, Stacey. “Why Insurance Companies Want to Subsidize Your Smart Home.” MIT Technology Review. MIT Technology Review, 12 Oct. 2016. Web. 17 July 2017.
Hurd, Will. “H.R.2227 – 115th Congress (2017-2018): MGT Act.” Congress.gov. N.p., 18 May 2017. Web. 17 July 2017.
Institute, Ponemon. “Introduction.” 2016 State of Cyber Security in Small & Medium-Sized Businesses, doi:Sponsored by Keeper Security.
Laycox, Sandy. “Tech-enabled transparency is a major step in regaining control of healthcare costs.” Medical Exam pg 45, Leader’s Edge Magazine June 2017.
Lin, Patrick. “No, Self-Driving Cars Won’t Kill the Insurance Industry.” Forbes, Forbes Magazine, 25 Apr. 2016, www.forbes.com/sites/patricklin/2016/04/25/self-driving-cars-wont-kill-insurance-industry/#774d5c45746f.
Meola, Andrew. “IoT Insurance: Trends in Home, Life & Auto Insurance Industries.” Business Insider, Business Insider, 20 Dec. 2016, www.businessinsider.com/internet-of-things-insurance-home-life-auto-trends-2016-10.
Miller, Ron. “IBM Unveils Blockchain as a Service Based on Open Source Hyperledger Fabric technology.” TechCrunch. TechCrunch, 19 Mar. 2017. Web. 17 July 2017.
“Missouri Data Breach Laws: Notification Requirements.” TechInsurance. BIN Insurance Holdings, LLC, n.d. Web. 26 July 2017.
“National Protection and Programs Directorate; National Protection and Programs Directorate Seeks Comments on Cyber Incident Data Repository White Papers.” Federal Register. N.p., 28 Mar. 2016. Web. 17 July 2017.
Rader, Russ. “Death Rates Fall as Vehicles Improve.” IIHS, Status Report, Vol. 50, No. 1, 29 Jan. 2015, www.iihs.org/iihs/sr/statusreport/article/50/1/1.
Ralph, Oliver. “AIG Sets up Blockchain Policy for Standard Chartered.” Financial Times. N.p., 15 June 2017. Web. 17 July 2017.
Rorke, Catrina, et al. “Aligning Cybersecurity Incentives in an Interconnected World | R Street.” R Street Institute | R Street, R Street, 16 Feb. 2017, www.rstreet.org/policy-study/aligning-cybersecurity-incentives-in-an-interconnected-world/.
“Self-Driving Cars and Insurance.” Insurance Information Institute. N.p., July 2016. Web. 17 July 2017. http://www.iii.org/issue-update/self-driving-cars-and-insurance.
Shabat, Matthew. “National Protection and Programs Directorate; National Protection and Programs Directorate Seeks Comments on Cyber Incident Data Repository White Papers.” Federal Register, Department of Homeland Security, 28 Mar. 2016, www.federalregister.gov/documents/2016/03/28/2016-06856/national-protection-and-programs-directorate-national-protection-and-programs-directorate-seeks.
Vivint. “Home Automation Giant Vivint Partners with Liberty Mutual Insurance to Offer Its Customers Savings on Auto and Home Insurance.” PR Newswire: News Distribution, Targeting and Monitoring, PRNewswire, 3 Aug. 2017, www.prnewswire.com/news-releases/home-automation-giant-vivint-partners-with-liberty-mutual-insurance-to-offer-its-customers-savings-on-auto-and-home-insurance-234214571.html.
Weinstein, Mark. “What Your Fitbit Doesn’t Want You to Know.” The Huffington Post, TheHuffingtonPost.com, 21 Dec. 2015, www.huffingtonpost.com/mark-weinstein/what-your-fitbit-doesnt-w_b_8851664.html.

 

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Where is Health Care Reform Headed?

July 26, 2017

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“Roads? Where we’re going, we don’t need roads.” Back to the Future. (1985).

Yesterday, the Mitch McConnell-led Senate voted to open debate on the American Health Care Act (AHCA), the House of Representatives’ bill which repeals and replaces the Affordable Care Act (ACA). During the ensuing 20 hour debate, Senators will consider and vote on many amendments to the AHCA that will repeal or modify part or all of the ACA. There’s no roadmap for this process, and no identified final destination. But apparently where the Senate is going, they don’t need roads.

The Senate has already held one vote on one version of the Better Care Reconciliation Act (BCRA), which included amendments from Senator Cruz and Senator Portman. It was rejected 57-43. The Senate is anticipated to vote on several other amendments in the coming days. It’s impossible to predict what will happen during the debate process or the “vote-a-rama” that follows it, during which Senators can propose and vote on possibly hundreds of amendments.

There should be some clarity on the ACA’s likelihood of survival in the coming days. Until then, the situation is incredibly fluid and it’s anyone’s guess what will come out of the Senate.

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Last Call for PCORI Fees

July 26, 2017

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Self-funded medical plan sponsors must calculate and pay PCORI fees by July 31. Click here for details on which plans are subject to PCORI fees, how to calculate them and which IRS forms to use.

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Health Care Reform Update

June 30, 2017

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If you were unable to attend this morning’s Health Care Reform Update webinar, you can access the recording by clicking this link. The presentation slides are available through this link.

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Senate Health Care Bill Released

June 22, 2017

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*Updated June 27, 2017*

The long-awaited Senate version of the House of Representatives’ American Health Care Act (AHCA) was released June 22. The Better Care Reconciliation Act retains many of the AHCA’s provisions and modifies others. The following provisions are noteworthy:

  • Phases out federal funding for Medicaid expansion under the ACA;
  • Cuts Medicaid spending;
  • Caps Medicaid block grants to states;
  • Cuts federal funding of Planned Parenthood for one year;
  • Repeals many Affordable Care Act (ACA) taxes on corporations and wealthy individuals;
  • Delays the Cadillac Tax until 2026 (currently scheduled to take effect in 2020);
  • Allows insurers to charge older adults up to five times more than the lowest premiums charged to younger adults for individual or small group plans (current ratio is 3:1);
  • Allows states to apply for waivers to essential health benefits so that insurers can offer plans with more limited coverage;
  • Allows children to stay on their parents’ plans up to age 26 (current ACA provision);
  • Eliminates the employer mandate penalty;
  • Eliminates the individual mandate penalty.

Unlike the ACA or the AHCA, the Better Care Reconciliation Act would not require Medicaid to cover mental health services after 2019. It also reduces the availability of federal subsidies available to purchase insurance. Currently, subsidies are available for those with incomes up to 400% of the federal poverty level; the Better Care Reconciliation Act reduces the threshold to 350%.

Of all the proposed changes to current law, however, the most notable for employers is the elimination of the employer mandate penalty. While Applicable Large Employers would still have an obligation to offer minimum value, affordable coverage to full time employees and dependents, there would be no consequence for ignoring those requirements.

The Senate is expected to vote on the Better Care Reconciliation Act next week.

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Senate Version of AHCA Still A Secret

June 19, 2017

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Julie Rovner, a reporter for Kaiser Health News, recently wrote about the secrecy surrounding the Senate version of the AHCA. It’s so secret, in fact, that “[n]o one knows what the final Senate bill will look like — not even those writing it.” In a June 16 article, however, she outlined 5 key topics that Senate Republicans are weighing as they craft their reform bill.

Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.

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IRS Updates “Affordability” Percentage

June 9, 2017

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Applicable Large Employers (ALEs) must offer affordable, minimum value coverage to 95% of their full time employees. The affordability of the offer refers to the amount the employee must pay to cover just himself or herself on the employer’s plan. And affordability is calculated by using three methods called safe harbors.

Two of the safe harbors compare the cost of self-only coverage to the employee’s pay – either the employee’s hourly rate or W-2 wages. To be “affordable” under the ACA’s definition, the cost cannot exceed 9.5% of the employee’s pay, but that percent is adjusted slightly each year by the IRS. For 2018, the IRS has set the threshold at 9.56%. This reverses a trend of increases in 2017 (9.69%) and 2016 (9.66%) and returns to the 2015 level of 9.56%.

Employers should take note of this when setting their contribution levels for their 2018 medical plan renewal. Failure to do so could result in making the employer’s offering “unaffordable,” which would expose the employer to a shared responsibility payment (employer mandate penalty) under current regulations.

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PCORI Fees Due By July 31, 2017

June 6, 2017

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As a reminder, the annual fee for the Patient Centered Outcomes Research Institute (PCORI) is due no later than July 31, 2017.  Self-funded medical plan sponsors are responsible for reporting and paying the using the Quarterly Federal Excise Tax Return from the IRS (Form 720, Part II line 133 (c) or (d) for the applicable plan year).  Detailed instructions on completion of Form 720 are available here.  (Fees for fully insured plans will be paid by the insurance carrier.)

In addition to major medical plans, HRAs and FSAs that do not qualify as excepted benefits are also subject to the fee. An HRA/FSA integrated with other medical coverage may only be treated as a single plan if both have the same plan year and plan sponsor.  An insured major medical plan and self-funded HRA (e.g., deductible reimbursement plan) would be considered separate plans, which would each be responsible for payment of the fee.  No payment will be due for the following types of plans:

  • Stand-alone dental and vision coverage
  • Life insurance
  • Disability and accident insurance
  • Health FSAs with only employee contributions (or employer contributions up to $500 annually)
  • Health savings accounts (HSAs)
  • Hospital indemnity or specified illness coverage
  • Employee assistance and wellness programs that do not provide significant medical care or treatment
  • Stop-loss coverage

The amount of the fee changes annually and is tied to plan year. For this year, the fee will be $2.17 per covered life for plan years beginning February 1-October 1 and $2.26 for November, December and January 1 plan years.  That fee amount should be multiplied by the average number of individuals covered under the Plan during the applicable plan year (e.g., employee/spouse coverage would be considered 2 covered lives), although HRA/FSA plans can assume one covered life for each enrolled employee (or subscriber).  Retirees and COBRA participants should also be included in the covered lives calculation.

The average number of covered lives on which the fee is based may be determined using one of the following methods:

  • Actual count method–enrollment numbers on each day of the plan year are totaled and divided by total number of days in that plan year;
  • Snapshot method—Enrollment counts are taken from one consistent date each quarter (within 3 days) and divided by the number of dates on which a count was made;
  • Snapshot factor method—Participant counts are taken from one consistent date each quarter (within 3 days) and separated into 2 categories–self-only coverage and other than single-only coverage. The number of participants with other than single-only coverage is multiplied by 2.35 and then that product is added to number of participants with single-only coverage. That total is then divided by the number of dates on which a count was made; or
  • Form 5500 method (for plans that have actually filed the Form 5500 by July 31, 2017)—sum of reported participants covered at beginning and end of plan year; or if plan has self-only coverage, that sum divided by 2.Any erroneous payments should be reported using Form 720-X. The IRS has stated that plan sponsors may not reduce the amount reported and paid based on an overpayment from a prior year.
  • Plan sponsors must choose one method to use for each entire plan year, however they are permitted to change methods from year to year.
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CBO: AHCA Would Reduce Deficit But Increase Uninsured

May 25, 2017

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The Congressional Budget Office (CBO) released its assessment of the American Health Care Act (AHCA), which was passed by the House of Representatives on May 4. The CBO summarized its report by noting that the AHCA “would reduce federal deficits by $119 billion over the coming decade and increase the number of people who are uninsured by 23 million in 2026 relative to current law.” The deficit savings is $32 billion less than the CBO estimated for prior versions of the AHCA, and the number of uninsured is slightly lower than earlier projections.

The majority of the deficit saving would come at the expense of Medicaid spending, which would be reduced $834 billion over the next 10 years. The CBO estimated that in 2018, implementation of the AHCA would result in 14 million more people becoming uninsured. That number is projected to increase to 23 million in 2026.

Premiums have risen under the Affordable Care Act (ACA) but the CBO noted that most enrollees in individual policies were insulated from those rising premiums because “their out-of-pocket payments for premiums are based on a percentage of their income.” The CBO report estimated that the AHCA would increase premiums for individual policies by 20% in 2018, but stabilize by 2020 when new, albeit less generous, tax credits take effect. The report noted, however, that its estimates were uncertain because of the “ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals and other affected parties would respond to the” AHCA. A state’s decision to waive the essential health benefits required by the ACA, for example, would directly affect premiums in that state. Insurance companies could market plans with less coverage for various conditions, including addiction and mental illness. Those plans with slimmer coverage would be likely be cheaper because they would cover fewer conditions.

The AHCA is being debated and will likely be substantially modified by the Senate. Some reports indicate the Senate will write its own version of the bill. Senate Majority Leader Mitch McConnell said he “doesn’t know how” the Senate will secure the 50 votes needed to pass the bill. “But that’s the goal,” he said.

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