The Affordable Care Act’s provisions on expatriate health insurance

​On June 30, 2015, the Internal Revenue Service (IRS) and Treasury Department issued Notice 2015-43. The notice provides transition relief and interim guidance based on the application of particular provisions of the Affordable Care Act (ACA) to expatriate health insurance issuers, expatriate health plans, and employers in their capacity as plan sponsors of expatriate health plans, as defined in the Expatriate Health Coverage Clarification Act of 2014 (EHCCA).

The Departments of the Treasury, Labor, and Health and Human Services aim to publish proposed regulations on the requirements for expatriate health plans, plan sponsors, and health insurance issuers. The departments are welcoming comments on defining the terms “expatriate health plan” and “qualified expatriate,” in addition to the interaction of the EHCCA with existing relief for expatriate health plans.

The Cadillac Tax and its implications for employers

The Affordable Care Act (ACA) includes an excise tax, called the Cadillac tax, scheduled to take effect in 2018. It was created in response to Congress’s notion that the unlimited, tax-free nature of healthcare causes inefficiencies and increased healthcare costs. The tax will be levied against employers who offer benefits programs that are deemed too excessive.  Its intended purpose is to slow the growth of healthcare costs, and generate revenue to balance out the ACA’s hefty $1 trillion price tag.

The IRS has been in a comment period regarding the Cadillac tax and is currently in a review process of the copious amounts of comments it has received.  Among the comments, the Council of Insurance Agents and Brokers (CIAB) “urges the IRS to keep in mind the overarching policy goals of the ACA, the potential adverse consequences of the tax for employees and their families, and the potential financial and administrative challenges for employers that seek to comply with the various (and sometimes competing) pieces of the ACA.”

Can Staples manage employee hours to avoid offering ACA required health coverage?

The spotlight has been on Staples in recent weeks due to accusations that the company is purposefully reducing employee hours to avoid offering health coverage per the Affordable Care Act (ACA). The ACA requires employers with 100 or more full-time employees to offer health coverage to full-time employees, defined as those working 30 or more hours per week.

Staples employees have voiced frustration against a long-standing company policy that states part-time employees cannot work more than 25 hours per week. Employees allege that strict enforcement of this policy clashes with the ACA’s employer mandate. Surely the intent of the ACA is not to drive employers to reduce employee’s hours, however, there may be temptation to do so. Are policies which enable an employer to skirt the law – whether intentionally or not – legal?

“Dumping Sick Employees” – it’s legal but is it right?

A minor but potentially significant omission from the voluminous ACA regulations may result in a material adverse impact on the risk mix and rate stability of the individuals signing up for health insurance under state and federal exchanges. As written, the ACA regulators will allow an employer who can identify their sickest chronic employees to potentially incent those members to drop their group coverage and sign up for the local state exchange. Nothing in the federal regulations today prohibits an employee from waiving their group health care and buying individual coverage on the exchange – an omission that may prove costly for the government exchanges.

It works like this: an employer has a medical plan where a handful of employees are identified with upcoming or ongoing claims in excess of a threshold, say $75,000 a year. These employees traditionally drive 70%-80% of the overall plan cost and contribute to a high rate renewal and the inability of the employer to shop for a different more affordable plan. The employer approaches those employees

Extensions for individual policies under the ACA: Will it really help?

Last week, under political pressure to save his historic legacy health care legislation, President Obama announced a one-year extension for insurance policies that were due to be canceled in 2014. Rather than smoothing out the already rippled waters caused by the difficulties of the Exchange roll out, the latest move may have opened the floodgates for more disruption and confusion.

State regulators and insurance companies have been developing plans to meet the Affordable Health Care (ACA) rules for the last three years, and overnight the game has changed. State regulators (who are a key group in deciding the direction the extensions will take) were not kept in the loop and were simply caught off-guard by the latest announcement. Questions and concerns now abound over this unforeseen and surprising announcement by the President.

Working through the Medicare and ACA information overload

Confusion is abundant in the Medicare world due to the Affordable Care Act. Advertising for state exchanges, media coverage about employers moving their retirees to private exchanges and Medicare Open Enrollment all overlapping have resulted in much confusion for Medicare beneficiaries.

Both national and regional carriers are offering plans to both Medicare beneficiaries and to the non-Medicare population on the exchange platforms. In years past, only Medicare eligible plans have been advertised in the fall. With the new state exchanges launching their open enrollment on October 1st for under 65ers, advertising has commenced for a wide variety of plans. Medicare beneficiaries are not eligible for these plans, but this distinction is not evident to many Medicare consumers. In addition to that, IBM and other mega-employers have been in the press

Early renewals under the Affordable Care Act: Are they right for you?

On January 1, 2014 certain rating changes under the Affordable Care Act will impact how individual and small group plans (under 50 lives) will be priced. In accordance with the ACA rules only four factors will be permitted when setting rates: Age, tobacco use, family composition and geography. Factors no longer permitted include health status, claims experience, gender, industry, and group size.

As a result of these changes it is anticipated that some groups could experience large rate increases in 2014. Vendors are anticipating increases in a 20% to 40% range. However, they are also quick to point out that not all groups will experience these large increases. In fact, some groups may benefit

Obamacare provisions set to hit small business hard

It is discouraging to realize that key provisions of the Affordable Care Act (ACA) that were supposed to integrate with the Massachusetts reform law instead threaten to accelerate the already burdensome cost of health insurance for small employers.  As a result, there is a third ACA-related bill being debated in the Commonwealth that would force Governor Deval Patrick and his administration to file a federal waiver to avoid the adverse effects of rating and rule changes to the Massachusetts merged market (1-50 employees).  The move could lead to some turmoil for the Obama Administration as the ACA seems to be forcing significant changes to a state law that they claimed acted as a model in Washington.

Specifically, the provisions in question are those around the ACA-required changes to rating factors which could have a substantial impact on premium costs for small businesses in the 1-50 marketplace