Viewing posts from: September 2012

Keys to Successful Benefits Administration

Posted September 26, 2012 by Megan DiMartino

When it comes to benefits administration and consulting, having an edge with technology is important, but it is also essential to retain the human element, supported by talented people and a personalized approach. This means having access to experts in the benefits administration process who will walk you through the latest technology and automated processes to develop the best system for your company. Enrollment support, consolidated billing services, dedicated account management, and a customer service call center all provide critical solutions to optimize services for your employees.

Our administrative, design and systems experts will work with you and your staff to develop a benefits enrollment plan that fits your organization and is convenient and easy for your employees. For most employers, that means a web-based system, bringing technology and automation to the process. This results in lower cost, better results, and improved productivity. Whether you choose a technology solution, a paper process or a combination, our people will be with you every step of the way.

Contact us to learn about how AP Benefit Advisors’ benefit administration services can work for your business.

Popular Group Health & Employee Benefits Blogs

Posted September 19, 2012 by Megan DiMartino

Over the last several weeks we’ve covered a lot about the recent flurry of healthcare legislation changes via Obamacare and their impact on companies and individuals. These are issues that genuinely affect the lives of most Americans and the benefits strategies for many American businesses. Here are some of our most popular blogs on these issues:

Ambiguity in Health Law Could Make Family Coverage Too Costly for Many

Posted September 11, 2012 by Megan DiMartino

By Robert Pear, New York Times

WASHINGTON — The new health care law is known as the Affordable Care Act. But Democrats in Congress and advocates for low-income people say coverage may be unaffordable for millions of Americans because of a cramped reading of the law by the administration and by the Internal Revenue Service in particular.

Under rules proposed by the service, some working-class families would be unable to afford family coverage offered by their employers, and yet they would not qualify for subsidies provided by the law.

The fight revolves around how to define “affordable” under provisions of the law that are ambiguous. The definition could have huge practical consequences, affecting who gets help from the government in buying health insurance.

Under the law, most Americans will be required to have health insurance starting in 2014. Low- and middle-income people can get tax credits and other subsidies to help pay their premiums, unless they have access to affordable coverage from an employer.

The law specifies that employer-sponsored insurance is not affordable if a worker’s share of the premium is more than 9.5 percent of the worker’s household income. The I.R.S. says this calculation should be based solely on the cost of individual coverage for the employee, what the worker would pay for “self-only coverage.”

Critics say the administration should also take account of the costs of covering a spouse and children because family coverage typically costs much more.

In 2011, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,430 a year for single coverage and $15,070 for family coverage. The employee’s share of the premium averaged $920 for individual coverage and more than four times as much, $4,130, for family coverage.

Under the I.R.S. proposal, such costs would be deemed affordable for a family making $35,000 a year, even though the family would have to spend 12 percent of its income for full coverage under the employer’s plan.

The debate over the meaning of affordable pits the Obama administration against its usual allies. Many people who support the new law said the proposed rules could leave millions of people in the lower middle class uninsured and frustrate the intent of Congress, which was to expand coverage.

“The effect of this wrong interpretation of the law will be that many families remain or potentially become uninsured,” said a letter to the administration from Democrats who pushed the bill through the House in 2009-10. The lawmakers include Representatives Henry A. Waxman of California and Sander M. Levin of Michigan.

Bruce Lesley, the president of First Focus, a child advocacy group, said: “This is a serious glitch. Under the proposal, millions of children and families would be unable to obtain affordable coverage in the workplace, but ineligible for subsidies to buy private insurance in the exchanges” to be established in each state.

Businesses dislike the idea of insurance mandates and penalties, but said the I.R.S. had correctly interpreted the law.

“Employers who offer health coverage do so primarily on behalf of their employees,” said Kathryn Wilber, a lawyer at the American Benefits Council, which represents many Fortune 500 companies. “Although many employers do provide family coverage to full-time employees, many do not.”

The I.R.S. issued final rules for the health insurance premium tax credit in May, but deferred its final decision on the affordability of family coverage.

Sabrina Siddiqui, a Treasury Department spokeswoman, said, “We welcome comments from stakeholders and consumer groups and look forward to continuing to work with them to implement these rules and to ensure families get the affordable care they need.”

The administration is trying to strike a balance. If the rules allow more people to qualify for subsidies, it would increase costs to the federal government. If the rules require employers to provide affordable coverage to dependents as well as workers, it would increase costs for many employers.

Wayne Goodwin, a Democrat who is the insurance commissioner of North Carolina, said the proposed federal policy would create a hardship for many state employees.

North Carolina pays all or nearly all of the premium for health insurance covering state government employees, but it has never paid the cost for their dependents, Mr. Goodwin said.

“The average salary of North Carolina state employees is about $41,000,” Mr. Goodwin added, “and the cost of family coverage in the basic plan is $516 a month, which is not affordable for many state employees. Because employee-only coverage for this plan is provided at no cost to the employee, based on the proposed regulations, all family members would be prohibited from obtaining subsidies through the exchange.”

Dr. David I. Bromberg, a spokesman for the American Academy of Pediatrics, said, “The I.R.S.’s interpretation of the law could unravel much of the progress that has been made in covering children in recent years.”

The Service Employees International Union said the proposal “discriminates against marriage and families.”

Some of the most important provisions of the law will be carried out by the I.R.S. Besides offering tax credits to individuals and families, it will impose tax penalties on people who go without insurance and on businesses that do not offer it.

The agency said its reading of the law was supported by the Congressional Joint Committee on Taxation. The health care rules were drafted by “our legal experts — career civil servants who are some of the best tax lawyers in the world,” said Douglas H. Shulman, the I.R.S. commissioner.

The law says an employer with 50 or more full-time employees may be subject to a tax penalty if it fails to offer coverage to “its full-time employees (and their dependents).” However, more than two years after President Obama signed the law, the employer’s obligation to dependents is unclear.

In explaining how the penalty is to be computed, the law does not mention dependents. Employers pay a penalty only if one or more full-time employees receive subsidies.

Companies are less likely to offer or pay for coverage of dependents in industries with low wages and high turnover, like restaurants.

Some employers and members of Congress have suggested a possible compromise. The government would still look at the cost of “self-only coverage” in deciding whether insurance was affordable to an employee. If family coverage under the employer’s plan was too expensive, a family could get subsidies to buy insurance for dependents in the exchange, and the employer would not be penalized.

Checks Come as Surprise under ‘Obamacare’

Posted September 5, 2012 by Megan DiMartino

Your check really might be in the mail.

By August 1, health insurance companies have to refund $1.1 billion in premiums to about 12.8 million customers, thanks to the Affordable Care Act.

The “80/20 rule” in the ACA mandates that health insurers spend at least 80% of their customers’ premiums on health services, leaving no more than 20% for administrative costs and advertising. That means if an insurance company spends 78% of the money it collects on health benefits for customers, it has to send rebate checks for the additional 2%.

“The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars,” a letter accompanying the refund checks says.

Connie Kadansky recently received a $79 rebate check from her Arizona insurance company due to the rule.

“It was a surprise,” says Connie Kadansky, who is self-employed. “My insurance agent tells me that my insurance is going to skyrocket. He hates Obamacare. I read the letter and I said to myself, ‘So what’s wrong with this? This is good.'”

There’s no way to know ahead of time if you qualify for a rebate, and although checks average $151 per household, there’s a lot of variability. Check size depends on how your insurance company collected and spent premiums over the past year, specifically in your state.

In St. Louis, Rabbi Randy Fleisher received a $2,808 rebate check earlier this month for his synagogue, which pays 100% of the health insurance premiums for its ten full-time employees.

His Central Reform Congregation advocated for the Affordable Care Act and helped start “Missouri Healthcare for All.”

“There’s no doubt that it’s a positive family value for people to have assurance that medical care will be coming to them in a way that’s affordable and available, ” says Rabbi Fleisher. “When you’re sick, when there are health care challenges, that’s about as vulnerable as you can get.”

Not all rebates will come as checks in the mail. Companies have the option to refund credit cards used to pay premiums, or discount future premiums.

Insurers also decide under the health care law whether to charge customers more money upfront, knowing that they might have to refund that money later.

“The presence of a rebate should not be viewed as a sign that an insurer is deliberately over-charging its customers,” says Adam Powell, a healthcare economist who consults for insurance companies.

View our AP Benefit Advisors Article:


PPACA update: The IRS/DOL/HHS Issued Notices on Full-Time (30 hours), the 90-Day Waiting Period and Affordability

Posted September 4, 2012 by PHaynes

On the last Friday in August, the Departments of Labor, Treasury and Health & Human Services quietly issued two new notices that attempt to provide employers with some insight and guidance on how to determine which workers are “full-time employees” who must be offered coverage under PPACA (the Patient Protection and Affordable Care Act of 2010, often referred to by the Departments as the Affordable Care Act or “ACA” for short).

IRS Notice 2012-58 allows employers to rely on wages reported on employees’ W-2 forms to determine whether health care coverage is “affordable” under the Affordable Care Act.  “At least through the end of 2014,” the notice said, “for all employees, an employer will not be subject to an assessable payment under [tax code Section] 4980H(b) for an employee if the coverage offered to that employee was affordable based on the employee’s Form W-2 wages.”

As part of PPACA’s mandate to employers (for the 1st plan year on/after 01/01/2014), workers who meet the law’s definition of an FTE, “Full-Time-Equivalent” employee (working 30 hours per week), must be offered comprehensive, affordable coverage or the employer faces stiff penalties.  These penalties are referred to as “share responsibility” payments.  [Please note, these requirements only apply to employers with at least 50 full-time employees].

Notice 2012-58 confirms prior guidance, in Notice 2012-17, that if a newly-hired employee is reasonably expected to work full-time on an annual basis (at least 30 hours per week) and does work full-time during the first three months of employment, the employee must be offered coverage under the employer’s group health plan as of the end of that initial three-month period.   This period coincides with the maximum 90-day waiting period addressed in Notice 2012-59.

Still No Firm Guidance on Affordability Rules

Meanwhile, while employers are still waiting for definitions for “Essential Health Coverage” and how the application of the 9.5% of household income rule will be applied, we have some new hints on affordability.   While Notice 2012-58 mentions that plans will be deemed “unaffordable” if the employee’s cost share exceeds 9.5% of the employee’s household income, they have yet to clearly indicate whether that is limited to the employee-only-tier [single election, as the vast majority of analysts hold (since PPACA does not mandate coverage for any dependents at all)] or if it is applicable to the employee-spouse or family tiers.

Full-Time Guidance (30 hours per week/130 hours per month)

IRS Notices 2012-58 and 2012-59 provide a broader range of choices to employers when determining which employees are considered “full-time”.  Notice 2012-59, issued by IRS, as well as the departments of Labor (in DOL Technical Release 2012-02) and Health and Human Services, also contained administrative guidance on the PPACA requirement that waiting periods for group health plans and group health insurance not exceed 90 days.

Notice 2012-59, which also will remain in effect through 2014, gives employers up to 13 months to determine whether an employee will be Full-Time in situations in which the employee was initially hired to work part time or for seasonal work.  However, the eligibility requirement may not be designed to avoid compliance with the 90-day rule.  The employee must be permitted to enter the plan by the 91st day after satisfying the eligibility rule.  So long as the employee is permitted to enroll within 90 days, if the employee fails to promptly complete enrollment, there is no violation of the maximum waiting period on behalf of the employer.

The notices are available through the links above and below and the public may submit comments on them up until September 30, 2012. The Departments are looking for input on the following topics:

  1. whether, and what types of safe harbor methods should apply to short-term assignment employees, temporary staffing employees, employees hired into high-turnover positions, and other “special issue” categories of employees;
  2. whether further means should be developed to assist in classifying new employees as full-time or not-full-time, including further definition of variable hour employees;
  3. rules for coordinating differing measurement and stability periods following a business merger or acquisition; and
  4. how “seasonal worker” should be defined under shared responsibility rules (employers are permitted to use a “good faith” definition under the temporary guidance).

New Terminology to Tackle

  • Initial Measurement Period” = for variable hour & seasonal EEs, ERs are permitted to use an initial measurement period of their choosing.  It must be at least 3 months and no more than 12 months.
  • Standard Measurement Period” = Under the Safe Harbor testing provided for by HHS/IRS/DOL, an ER determines each EE’s full-time status by looking back at a Standard Measurement Period, defined as a time period of not less than 3 but not more than 12 consecutive calendar months.  ERs have the flexibility to determine the months in which the Standard Measurement Period starts and ends, provided that the determination is uniform/consistent for all EEs in the same category.  ERs may use different measurement periods for EEs in different categories:  a) collectively bargained and non-collectively bargained; b) salaried and hourly EEs; c) EEs of different entities; d) EEs located in different states.
  • Administrative Period” = ERs may need some time to do some math, send enrollment files, distribute enrollment forms (SBCs, SPDs, etc.), and so HHS/IRS/DOL provide for an Administrative Period (to follow the measurement period) which can last up to 90 days.
  • Stability Period” = If, during a Measurement Period, it is determined that an EE meets the “full-time” requirement (30 hours/week or 130 hours per month), then that EE is considered “full-time” during the “Stability Period” that follows.  You can end an EE’s health plan benefits, during the Stability Period, if they terminate employment.  You cannot reduce their hours in order to avoid giving them health benefits.

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