The ACA Undergoes a New Legal Challenge

Several states have lodged a legal challenge to the entire Affordable Care Act (“ACA”) on the basis that the lack of an Individual Mandate tax makes the remaining provisions unconstitutional. While the Administration is not intervening, several other states are, defending the ACA’s sustainability without the Individual Mandate tax. No resolution to the legal questions is expected imminently, although the uncertainty that it causes could result in higher premiums now.

How will this affect employers? 

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Trump Halts Cost-Sharing Reductions

On Thursday, October 12, 2017, the White House indicated that President Trump will end ACA cost-sharing reduction (“CSR”) payments to insurance companies effective immediately. This was followed up by a White House statement indicating that the payments had lacked appropriations and therefore the government could not lawfully continue making them. While the impact to insurance companies and individuals who obtain subsidized coverage in the Marketplace is expected to be significant, the direct impact to employers and employer sponsored health plans is expected to be minimal.

Implications for Employers

The direct impact of this decision is minimal. Applicable large employers (“ALE”) - those with 50 or more full time equivalent employees - are subject to ACA employer shared responsibility “A” or “B” penalties for failure to offer affordable and/or minimal value coverage to fulltime employees, if one or more of those employees obtain a subsidy or CSR in the exchange.

Even if CSRs are eliminated, since a prerequisite to an individual obtaining a CSR subsidy is to qualify for a premium reduction subsidy, there should be no change to an ALE’s “A” or “B” penalty exposure since premium reduction subsidies are not impacted by this White House decision.

Further, since an ALE must make an offer of affordable and minimum value coverage in order to avoid “A” or “B” penalties, we do not anticipate a significant increase in employees forgoing coverage in the Marketplace and enrolling in employer sponsored plans (since those individuals would generally have been ineligible for Marketplace subsidies due to the employer’s offer of affordable and MV coverage in the first place).

Additionally, if carriers exit the Marketplace or otherwise cancel plans in light of this change in policy, employers may see an increase in requests for special enrollment in their group health plans due to the loss of eligibility for Marketplace coverage.

The indirect implications are less clear. Stopping CSR payment will make individual insurance more expensive in the Marketplace. This may lead to carriers dropping out of the Marketplace, or if they remain, pricing plans beyond the reach of those individuals who previously benefited from CSR payments. This will likely result in an increase in the uninsured population. All payers in the health care system are affected by higher costs when there is a high uninsured population receiving uncompensated care.

Read more: http://www.capstonehealthreform.com/

New Executive Order and Insight on the Employer Mandate

President Trump signed an Executive Order (“EO”) on October 12, 2017, directing various federal agencies to take regulatory action that will “increase health care choices for millions of Americans.”

Employers should:

• Be aware that we are likely to see new regulations addressing AHPs, HRAs, and STLDIs in the coming months. While changes to existing AHP and HRA rules are unlikely to affect 2018 plan years, such guidance may create challenges for 2019 and beyond.
• As the Administration signaled its intent to enforce the Employer Mandate: • Plan for compliance with the 2017 ACA reporting. The final Form 1094-C, Form 1095-C and Instructions are available.
• Prepare to address any notices issued by the IRS regarding Employer Mandate assessments for the 2015 and 2016 calendar year.

Read More: http://www.capstonehealthreform.com/

Capstone launches site for real-time healthcare reform updates

Capstone Group is proud to announce the launch of a new webpage dedicated to keeping readers informed of recent compliance and health reform updates. Our Benefits Team is committed to providing the guidance needed to understand and make decisions based on the evolving future of our nation's healthcare legislation. 

Visit Capstone's Compliance page...

Four Ways Companies Could Adjust to Imminent Employee Benefits Tax

The Affordable Care Act's "Cadillac tax" is creeping into the picture, starting in 2018. This tax entails a 40 percent increase in employer-provided health care insurance for single plans costing more than $10,200 and family plans over $27,500. As a result, employers are currently working to cut costs that have been rising for years in order to avoid this tax. Therefore, you may be seeing some changes to benefits provided by your employer during this fall's open enrollment period:

1) Encouraging healthy living: A recent survey found that 42 percent of employers were contemplating adding or expanding programs to improve employee health. These programs begin with a health risk assessment and coaching, which may include help to quit smoking, eat better, or manage chronic health conditions, to help employees improve their well-being. All of this is done with the hope that it will ward off future medical expenses.

2) Adjust Coverage: Companies have been raising deductibles, the amount someone pays before insurance coverage kicks in, which lowers the premium or cost of coverage and could cause employees to shop around for better prices. Many companies are also adding surcharges to the cost of coverage for spouses who have other health insurance options. If your spouse is able to get coverage through his/her job, your employer will most likely encourage that option. 

It is also very possible that businesses will cut back on the usage of flexible spending accounts. These accounts allow workers to set aside money before taxes for out-of-pocket medical expenses.

3)  Offer new alternatives: More employers and insurers are attempting to shave costs by providing telemedicine options that connect people virtually with a care provider through a smartphone, tablet or computer for relatively minor conditions. These visits can cost half as much as a trip to the doctor's office, which can run around $100 for people with high deductible coverage.

Some companies also are considering moving their employees to a private insurance exchange. For that coverage, employers give workers a set amount of money and then send them to an exchange that offers several different plans.

4) Wait out the debate: Some employers are choosing to not take action yet until they see what happens with the tax.

Republicans and Democrats are both calling for the repeal of the Cadillac tax because of worries that the threshold that trigger the tax will grow more slowly than the actual cost of care, which means that each year more and more plans will be subject to the tax. 

Obamacare and the Cadillac tax

The Cadillac tax is already proving to be a pressing concern for employers although it does not come into effect until 2018.

The Affordable Care Act, more commonly referred to as Obamacare, has been controversial since it was signed into law in March of 2010. The controversy has not stopped since its major provisions took effect last January, with criticism coming from both political parties, as well as businesses whose health insurance and benefits coverage were affected. 

The latest worry about Obamacare is the "Cadillac tax" that is to take effect in 2018. The point of the Cadillac tax is to generate revenue to fund the federal government's expansion of health care to all American citizens. This tax on health benefits is the first of its kind and is estimated to impact one in four employers when the tax begins in 2018, and that number will steadily grow with time. A big concern with this tax is about flexible spending accounts, which allow people to save their money for certain out-of-pocket health care costs completely tax free and their use has been encouraged by many employers because of the cost effectiveness. However, FSAs will most likely be one of the first benefits cut as companies scramble to avoid the 40% excise tax applied to benefits worth more than $10,200 for individuals and $27,500 for families. Besides the possible cut of FSAs, employees might also be hit with other cost-saving strategies by their employers such as a decrease in the number of available health plans, an increase in deductible limits, and a narrower selection of doctors and hospitals offered...an overall cutback in benefits.

Although the tax is not going to take effect until 2018, pressure to change it is already coming from both politicians and business owners. A coalition of public and private employers called "Alliance to fight the 40" has come together to urge the members of Congress to repeal the Cadillac tax. Even though the tax faces a good amount of opposition from Democrats, and is universally opposed by Republicans, changes will most likely have to wait until President Obama leaves the White House. 

Read more here!

For more information on Obamacare taxes