Tag Archive: employer mandate

Utah: Medicaid expansion would save large employer penalties, use SHOP exchange for individual plans

Approval of its proposed Healthy Utah Medicaid expansion program would allow large employers of low wage workers avoid penalties when those workers enroll in subsidized individual health plans though the state’s health benefit exchange, according to a document describing the program. The proposed 3-year pilot program is pending approval of a Section 1115 waiver of Medicaid rules from the U.S Department of Health and Human Services.

Utah is served by a federally facilitated exchange (FFE) in the individual market and operates a state-based exchange (SBE) serving small employers of 1 to 50 employees under the Small Business Health Options Program (SHOP) of the federal Patient Protection and Affordable Care Act. A notable component of Utah’s proposed Medicaid expansion program is those in the expansion population would receive federal Medicaid share funding to purchase commercial plans sold via the state’s small business exchange, Avenue H, and not the FFE, healthcare.gov. Those earning more than 100 percent of federal poverty levels (FPL) are eligible to purchase coverage in the FFE.

“Beginning in 2016, large businesses in Utah will likely face $11 to $17 million less in tax penalties each year if their employees making between 101 percent and 133 percent FPL are enrolled in a state-sponsored program rather than a Health Insurance Marketplace plan with a tax credit,” the document states. Employers of 50 or more full-time employees must offer health insurance to 95 percent of their workforces starting in 2016.

In addition, children who currently receive Medicaid would have the option to enroll in the same commercial plan their parents select through Avenue H. “Medicaid would continue to provide cost sharing and wrap-around coverage for these children to ensure they continue to receive the same level of coverage they do today,” the Healthy Utah plan states. “It is hoped that having a single primary health plan for the family will simplify coverage for the family. The federal government has previously denied Utah’s requests to use Medicaid funding to purchase these private plans. However, through the Healthy Utah negotiations, Utah was able to obtain approval for this type of assistance.”

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Shift away from employer coverage would provide triple fiscal benefit to federal government

As a candidate in the 2008 presidential election, President Obama initially favored shifting to a single payer (government paid) system of universal health coverage but later altered his stance. Instead, Obama favored what he described as a less disruptive brand of health care reform that retains the current system of private insurance sponsored by employers that covers the vast majority of working age Americans.

Ironically, Obama’s Patient Protection and Affordable Care Act could have the opposite effect, according to one of the chief drafters of the law. Ezekiel Emanuel, former Obama administration official, foresees a shift away from employer-based coverage over the next decade, with few private employers offering health coverage by 2025. Amplifying Emanuel’s prediction was a Kaiser Health News report last week on a new paper by the Urban Institute strongly suggesting that one of the linchpins of the ACA to ensure the continuance of employer-sponsored coverage – the mandate that employers of 50 or more offer coverage to most of their workers – ultimately won’t have much of an impact in terms of expanding coverage and keeping people medically insured.

The reason: Adam Smith’s law of rational economic self-interest could trump any penalties these employers will face starting in 2015 if they don’t offer coverage. Some large employers could conclude it will cost them less to pay the penalty than provide coverage through a group health plan or self-insuring employee medical costs. Not only that, the Affordable Care Act ironically cuts against employer sponsored coverage by imposing a large excise tax beginning in 2018 on employers who sponsor overly generous plans.

Even without this tax on so-called “Cadillac” plans, the federal government stands to reap a triple fiscal benefit from increased revenues from any major shift away from employer-sponsored coverage. First, employers not offering coverage would of course be unable to take an income tax deduction for offering coverage. Second, any additional amount of money they provide employees as higher compensation or stipends to purchase individual coverage would generate higher individual tax revenues since they would be taxable to employees. Third, the large employer mandate penalties plus increased individual employee tax liability could also benefit the federal government by offsetting advance tax credit subsidies for plans sold in the public exchange marketplace to workers with household incomes below 400 percent of federal poverty.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Potentially problematic issues in ACA 2014 rollout for exchanges, employers

There are a couple of potentially problematic issues as major components of the Patient Protection and Affordable Care Act roll out now and into 2014 for state health benefit exchanges and large employers.

For the exchanges, it’s verification of household income of applicants for individual coverage. Eligibility for both advance tax credits used to subsidize the purchase of qualified health plans (QHPs) and for Medicaid benefits are means tested based on family size and household income. The rub here is like that standard investment caveat: past performance does not necessary predict future performance. The same principle applies to household incomes, particularly in a sketchy economy still trying to regain solid footing five years after the 2008 economic downturn. What households earned in 2013 does not necessarily mean that’s what they will earn in 2014, the time frame that determines their eligibility for Medicaid and QHP premium subsidies. Timothy Jost describes the problem in this post at the HealthAffairs Blog:

[V]erification in advance of how much lower-income American families will earn over a year is a fantasy. Lower-income Americans often work in part-time, intermittent, or seasonal jobs and are paid hourly wages, making predicting income exactly a year in advance simply not possible.

The agreement to end last month’s federal government shutdown requires state health benefit exchanges pre-verify the eligibility of individuals applying for premium tax credits and cost sharing reductions. By January 1, 2014, the federal Department of Health and Human Services must describe to Congress the procedures used by the exchanges verify eligibility for premium tax credits and cost-sharing reductions. This summer, HHS issued guidance informing exchanges to attempt to verify income using Internal Revenue Service and Social Security income data provided state exchanges via the federal data services hub.

The income verification issue could end up further complicating an already difficult first year rollout of the exchange marketplace. It may also be overblown in terms of concern that those seeking premium and cost sharing assistance and Medicaid will get more than they are entitled. There are well established income tax planning practices enrollees can keep in mind when they sign up for coverage through the exchange marketplace. Employees know if they claim too many withholding exemptions, they could get stuck owing taxes when they file. Most err on the side of caution and declare too few in order to get a refund of what amounts to an interest free loan to the government. Self employeds pay quarterly estimated taxes and know if they pay too little, they face a big tax bill the following year and possible penalty for underpayment of quarterly amounts due. Enrollees can be counseled to keep these comparative examples in mind to avoid a big tax bill as well as potential penalties if they fraudulently misrepresented their incomes in order to qualify for subsidies or Medicaid.

Employers face potential legal hazard in 2014 as they prepare for the large employer mandate that takes effect in 2015. Those that reduce employees’ average weekly hours to less than 30 in order to avoid having them counted as full time employees for the purposes of the Affordable Care Act’s requirement that employers of 50 or more full time employees provide them health coverage could find themselves in court. Employment law firms warn these employers could face legal exposure under Section 510 of the Employee Retirement Income Security Act of 1974 (ERISA), which bars employers from firing, disciplining or discriminating against employees for the purpose of interfering with their access to employee benefit plans. Adam C. Solander and Elizabeth B. Bradley of the law firm Epstein Becker Green explain at Law360:

In the context of the employer mandate, plaintiffs are likely to argue that an employer’s workforce management efforts interfered with an employee’s right to health coverage. The most likely ERISA 510 claim would seem to involve an employee who averaged 30 hours a week previously. If such an employee’s hours were capped below 30 hours a week, arguments could be made that such a change was made with the intent to deny that individual a right to which he or she would have been entitled. While this scenario seems to be the most likely Section 510 claim, arguments could be made that an employer’s workforce management practices could violate Section 510, regardless of the number of hours the employee worked previously.

Provider networks. For health plan issuers, maintaining networks that offer access to a sufficient number of medical providers to people in their communities could prove challenging, particularly as plan issuers narrow their networks in order to hold down premium rates. Exchanges will also be put to the test to ensure revamped provider listings for Qualified Health Plans are accurately listed on the exchanges.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

ACA mandates, exchange marketplace could be temporary, 3-year phenom under state waiver provision

Partisan disagreement over the Affordable Care Act’s individual and employer mandates and state health benefit exchange marketplace has jammed the gears of the federal government machinery, leading to a partial government shutdown that began this week. All the strum und drang over these ACA provisions, however, could end up being over a temporary circumstance lasting only three years in at least some states.

Beginning in 2017, ACA Section 1332 titled Waiver for State Innovation allows states to petition the U.S. Department of Health and Human Services for — as the title suggests — a waiver allowing them to opt out of these requirements. The waiver also extends to premium tax credit subsidies and cost sharing reductions for plans sold on the exchange marketplace.

That means states that don’t like the ACA’s approach to restoring their individual and small group markets to functioning can devise their own programs after three years of complying with federal mandates.

The Section 1332 waiver comes with some provisos. States opting out of the ACA rules would have to demonstrate their programs would ensure individual and small group plans would offer coverage at least on a par with plans providing the 10 essential benefits prescribed by the ACA. State programs would also have to ensure residents and small employers have access to coverage with affordable premiums and protections against “excessive” out-of-pocket costs (such as annual maximums) like those for ACA plans and cover a comparable number of residents as ACA plans.

Section 1332 also provides federal funding to aid states opting out of the ACA rules to set up their own programs. States receiving a Section 1332 waiver would be eligible for “pass through” funding operating like an annual block grant. The funding would cumulatively represent what state residents would otherwise be eligible to receive under ACA rules for premium tax credits, cost-sharing reductions and small business credits if they are ineligible for them under the state programs.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

ACA’s individual, employer mandates aimed at frayed edges of U.S. private health coverage

Daniel Weintraub penned an opinion piece appearing in today’s Sacramento Bee that laments the likely continuation of employer-sponsored health coverage under the Affordable Care Act – notwithstanding the Obama administration’s decision this month to delay enforcement of penalties against employers of 50 or more who don’t offer their employees health coverage meeting minimum standards of quality and affordability.  Weintraub argues – and many across the political spectrum would agree with him – that employers shouldn’t be in the business of providing health coverage to their employees (and might not be, but for a 1940s quirk of history) and that it should be left to individuals and families to buy what’s best for their needs. In this vein, Weintraub favors a 2011 proposal to amend the ACA to allow employees of companies with 100 or fewer workers to take their employer’s health care contribution and buy coverage in the state health benefit exchange marketplace.

That sounds a lot like an existing provision at Section 10108 of the ACA that allows employers to provide “free choice vouchers” to their employees to buy coverage on the exchange marketplace.  Employers however would still have to offer their employees minimum essential coverage and could only offer the vouchers to employees whose share would be between 8 and 9.8 percent of their household income. Plus the employee’s household income could not exceed 400 percent of the federal poverty limit.

The debate over both the employer and individual mandate is heating up again, a little more than a year after the U.S. Supreme Court upheld the constitutionality of the latter in NFIB v. Sebelius.  Both mandates are aimed at the frayed edges of the pre-ACA health insurance market and don’t affect the majority of Americans covered through their employers or government programs such as Medicare and Medicaid. In the large group market, the employer mandate is directed at a small minority of large employers that pay low wages and provide little in the way of health benefits. At the other end of the market, the individual mandate hopes to help restore that market segment to actuarial and functional health. Both are governmental market interventions intended to trim these rough, problematic margins of the current system of private health coverage.  Whether they are ultimately successful won’t be known for several years.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

California bill aimed at deterring large employers from placing low wage workers on part time status to avoid ACA coverage mandate

California employers with 500 or more workers would be required to pay the state a penalty based on the average cost of coverage provided by large employers for those employees that enroll in Medicaid (Medi-Cal in California) coverage under advancing legislation.

According to an analysis of AB 880 prepared by the Assembly Health Committee, the bill is aimed at deterring large employers with sizable numbers of low wage workers from reducing their hours to less than 30 hours per week in order to avoid the Patient Protection and Affordable Care Act requirement to offer coverage to all workers employed at least 30 hours per week. “The author states this bill is designed to ensure that the largest employers in the state do not evade their responsibilities under the ACA by cutting hours and eliminating benefits so that their employees qualify for Medi-Cal,” the analysis states.  “This shifts costs onto the public and threatens the fiscal solvency of the state.”

As AB 880 moves forward, legislation stating intent to expand California’s Medicaid eligibility under the Affordable Care Act to households earning up to 133 percent of federal poverty level has bogged down over the extent to which counties should share in the cost and the Brown administration’s concern over the long term fiscal impact of the expansion and specifically whether California will remain obligated to honor it if federal cost share funding is cut in the future. Anxiety over Medicaid remains high among the state’s budget writers.  They viewed the state’s Medicaid cost share as a budget buster during years of fiscal shortfalls following the economic downturn that began in 2008.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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