Viewing posts from: August 2014

EBRI Survey: Employee Satisfaction with Health Coverage and Care – PDF

Posted August 28, 2014 by Megan DiMartino

EBRI PDFThe overall satisfaction rate among consumer-driven health plan (CDHP) enrollees increased in most years … while it decreased in most years among traditional enrollees…. In 2013, 44 percent of traditional-plan participants were extremely or very satisfied with out-of-pocket costs (for health care services other than for prescription drugs), while 20 percent of high-deductible health plan (HDHP) enrollees and 31 percent of CDHP participants were extremely or very satisfied…. CDHP and HDHP enrollees were less likely than those in a traditional plan both to recommend their health plan to friends or co-workers and to stay with their current health plan if they had the opportunity to switch plans. Contact AP Benefit Advisors for an Employee Benefits Analysis.

Click on the image to view the PDF. From Employee Benefit Research Institute [EBRI] 8/13/2014

Infographic – Employers Act to Control Health Care Costs

Posted August 27, 2014 by Megan DiMartino

TW_NBGH-Infographic-Web600px-NA-2014-34364-v8.inddInsights from the 2014 Towers Watson/National Business Group on Health (NBGH) employer survey on purchasing value in health care. Key concepts:

Nearly all employers are changing their health care strategy.

  • Employers use account-based health plans to avoid excise tax.
  • Employers rethink support for spouses.
  • Best performers spend significantly less and deliver high-performance benefits.

Contact AP Benefit Advisors for an Employee Benefits Analysis.

Click on the infographic to view.

Employers Modify Health Plans to Control Rising Costs, Comply with ACA

Posted August 26, 2014 by Megan DiMartino

National Business Group On HealthEmployers project their health care benefits costs will increase by an average of 6.5% in 2015. That is slightly lower than the 7.0% increase employers would have experienced this year had they made no changes to their plan design. However, employers expect to keep increases to 5% next year after making changes to their plans, such as increasing cost-sharing provisions, implementing and expanding CDHPs, and broadening their use of wellness programs and Centers of Excellence. Health care benefit costs at large employers are expected to increase 6.5% in 2015, slightly lower than this year’s rate of increase. Most employers, however, say they will be able to stem increases even more as a result of changes they are making to their benefit plans, according to an annual survey released today by the National Business Group on Health, a non-profit association of nearly 400 large U.S. employers. The survey also found that the number of employers offering workers a consumer-directed health plan (CDHP) as the only health benefits option is expected to surge by nearly 50% next year.

According to the survey, employers project their health care benefits costs will increase by an average of 6.5% in 2015. That is slightly lower than the 7.0% increase employers would have experienced this year had they made no changes to their plan design. However, employers expect to keep increases to 5% next year after making changes to their plans, such as increasing cost-sharing provisions, implementing and expanding CDHPs, and broadening their use of wellness programs and Centers of Excellence. The survey, based on responses from 136 of the nation’s largest corporations, was conducted in June 2014. “Despite the many distractions that the Affordable Care Act (ACA) has created, large employers haven’t lost sight of the fact that rising health care costs remain a significant issue that needs to be constantly addressed,” said Brian Marcotte, president and CEO of the National Business Group on Health. “Our survey shows that many employers are, in fact, taking necessary steps to rein in costs. This includes partnering with workers to engage in health care decisions and educating them to be better health care consumers, as well as sharing more costs with workers and narrowing their benefit options.”

The survey found that employers are making numerous changes to their benefit plans in an effort to control costs as well as comply with the ACA and stay below the excise tax set to be implemented in 2018. Nearly three in four respondents (73%) are adding or expanding tools to encourage employees to be better health care consumers. More than half (57%) are implementing or expanding CDHPs while 53% will either add or expand wellness program incentives. Perhaps the most significant finding is the nearly 50% increase in the number of employers that plan to offer a CDHP as their only benefit plan option next year. Almost one-third (32%) plan to do this in 2015, compared with 22% this year.

While no employers have or intend to eliminate health benefits coverage for their active employees next year, interest in private exchanges is growing, albeit slowly. By next year, 3% of large employers will provide their active employees with health insurance through a private exchange while 35% said they are considering doing so for 2016 or beyond. Meantime, 14% of respondents are partnering with a private exchange for their retirees, an increase from 10% last year. Another 7% are planning to move retirees to private exchanges next year. The survey, however, revealed mixed views from employers in their confidence that private exchanges will perform better than their own benefit plan. For example, 77% are confident in the exchanges’ ability to provide more choice of plans while 51% said exchanges will do a better job complying with regulations. However, only 17% are confident that exchanges do a better job of engaging employees in better health care decision making and only one in 10 believe exchanges will control costs better than their own plans. “Employers, including many of our members, are clamoring for information and help in understanding private exchanges and whether they make sense for their organizations. The proliferation of private exchanges is presenting employers with an option but one that employers need to ask questions and study carefully. For example, employers will want to determine whether a private exchange can manage costs and care more efficiently than what they are currently doing,” said Marcotte.

  • Narrow Networks: Despite recent attention, only one-fourth of employers (26%) include a narrow network in any of their plans. Half of those (13%) offer a plan that incents employees to use a narrow network within the plan.
  • Specialty Pharmacy Benefits: Some employers are adopting techniques specific to specialty medications to help control costs. One third (33%) use a freestanding specialty pharmacy while 29% only approve coverage for a 30-day initial supply.
  • Weight Management: Nearly three-fourths of respondents (73%) will cover surgical interventions for the treatment of severe obesity while 41% will cover FDA-approved medication. Both are increases from the percent of employers that cover these this year

Contact AP Benefit Advisors for an ACA Compliance Review.

Article from press release.

High Performance Networks Entice Health Plan Sponsors

Posted August 19, 2014 by Megan DiMartino

SHRMIn a recent SHRM article, it was reported that Health plan sponsors are taking a closer look at high performance networks—also known as “narrow networks”, an exclusive groups of high-value health care providers and health professional organizations recruited to serve a defined patient population.

High performance networks among employer-sponsored plans is growing because they promote higher-quality health care services while delivering increased value. Employers anticipate that by choosing the highest-quality providers, they can better meet the health care needs of employees, improve individual outcomes and enhance personal satisfaction with the employee benefits package. Some HR professionals question how fewer doctor and hospital options can benefit patients, and they may face employees who are critical of smaller networks that limit their choice of health care providers. However, research conducted by McKinsey & Co. found that the size of a plan’s network is not correlated to its performance as measured by the U.S. Centers for Medicare and Medicaid Services, in terms of outcomes, patient experience and clinical process.

Moreover, less choice in a health plan typically means lower costs for employers and employees for two reasons:

  1. A health plan can decide to sign contracts only with the hospitals that charge lower prices.
  2. Health plans that work with fewer providers have the ability to negotiate lower prices.

According to a National Business Group on Health poll of 46 large U.S. employers, 17 percent already had a high performance network in place, while an additional 24 percent were considering it for 2015 and another 20 percent for 2017. A University of Chicago survey found that 57 percent of small employers would opt for a high performance network if it would lower costs by 5 percent or more. About 77 percent said they would choose the high performance network if it lowered costs by at least 10 percent. The trend toward establishing high performance networks stems from the realization that a given health plan has access to vital data—from claims, prescriptions and clinical settings—that can be used to identify and “weed out” physicians who tend to order more tests, prescribe more brand-name drugs or take on more complex patients.

But for new high performance networks to thrive, they must also have these important features:

  • Defined population.
  • IT infrastructure.
  • An incentive-based payment model. Approximately 11 percent of payments to physicians and health systems are based on performance or cost reduction.
  • Employer-provider alignment.
  • Consumer choice and transparency.

Contact AP Benefit Advisors for an Employee Benefits Analysis.

Click here for the full article

IRS Comments (even informal ones) Help Clarify PPACA's Employer Penalties

Posted August 13, 2014 by PHaynes

ABA_and_IRSAnnually, the American Bar Association’s Joint Committee on Employee Benefits (“JCEB”) meets with representatives from the IRS and Treasury for a question and answer (“Q&A”) session. While the responses are informal and cannot be relied upon, they provide helpful clarification on a number of issues. In this year’s meeting, the agency highlighted the employer shared responsibility provisions under Code § 4980H, as described below.

Large Employer Determination

IRS officials stated that for purposes of determining large employer status (whether the employer is subject to Code § 4980H), the statute requires employers to use 120 hours as full-time. In other words, each employee who works at least 120 hours in a month counts as one full-time employee (“FTE”). Employees who worked less than 120 hours in a month are counted as a fraction where the numerator is the employees’ actual hours worked and the denominator is 120. This response has caused some confusion as, under a fair reading of statutory provisions and final regulations, full-time status is based on 30 hours of service in a week or 130 hours a month. Those working less than 30 hours of service a week are considered full-time equivalents. Regardless of which approach used, the net result remains the same. (Q/A-24)

Variable Hour and Seasonal Employees

The comments of agency officials in Q/A-25 contain various helpful hints in understanding the appropriate categorization of an employee.

Employment contract terms and variable status. The terms of an employment contract can be relevant in terms of how many hours a week an employer expects an employee to work for a specified period. If the employer does not know if the hours are going to be above 130 hours in a month, the employer can treat the employee as a variable hour employee.

Additional clarification on the definition of a seasonal employee. An employee is seasonal if his/her position tends to be reoccurring and is tied to a specific  season.  Examples include a lifeguard or ski instructor, but the FAQ clarifies that the definition is not limited to an individual whose job is affected by weather. Therefore, a seasonal employee may include a summer associate in a law firm or someone who works during a peak season in a hotel.

Short-term, non-seasonal employees.  An employer cannot treat a non-seasonal, short-term employee who is hired to work 40 hours a week, but only for a 6 month period, as a part-time employee because the average hours over a year are 20 hours per week. An employer always has until the beginning of the fourth month to get an employee who is reasonably expected to be full-time as of his/her start date on the plan. If the employee is a non-seasonal, short-term FTE employed for two months, the employer will not need to bring that employee on the plan.

Measurement Periods

Look Back Measurement Period
The length of the initial and standard measurement period (“IMP” and “SMP”) must generally be the same, subject to a limited exception. In using the look back measurement method, the length of the stability periods that are tied to the SMP and the IMP must be the same. The guidance clarifies a special rule for new employees. Under this special rule, the IMP may be a month shorter than the initial stability period. This means the employer can use an 11-month IMP with a 2½ month administrative period and a 12 month initial stability period. Other than this special one-month rule, the measurement period (IMP and SMP) must be the same length. (Q/A-26)

Monthly Measurement Period
In an example, the agency is asked how the penalty would be applied in the case of an FTE who was not eligible for the employer’s plan for his/her first calendar year of employment due to failure to satisfy a substantive eligibility requirement (for example, the employee had not obtained the required professional license). As of the first day of the second calendar year, the employee satisfies this eligibility requirement. The IRS responded that as long as the employee is brought  onto the coverage by the first day of the fourth month in the second year, the employer gets a pass for the first 3 months of the second year. However, there is no pass for the first year. (Q/A-27)

Different Measurement Methods
In what was a confusing question posed to the IRS, the agency restated that an employer may apply either the monthly measurement method or the look back measurement method.  However, one cannot apply two different methods to the same category of employees and certainly not to the same individual. (Q/A-29)

Counting Hours – On Call Employees
The IRS states that if an employee is getting paid for on-call hours, if the employee is required to remain on the employer’s premises or if the employee is  subject to “sort of severe restrictions” on what the employee can do, even where the employee receives a reduced hourly rate, the employee must receive credit  for all hours of service for the on-call time. There is no concept of partial hours. (Q/A-28)

Links / Notes form the Q&A session:


Tom Harte Featured on Fox News Special Report

Posted August 13, 2014 by Megan DiMartino

Immediate Past President Tom Harte (NAHU, National Association of Health Underwriters) was featured on Bret Baier’s Fox News Reporting special “Live Free or Die: ObamaCare in New Hampshire.” View the complete recording of the one-hour program below.

New rates for 'affordable coverage' under ACA announced

Posted August 8, 2014 by Megan DiMartino

Under PPACA (the PPACAAffordable Care Act), large employers are required to provide “affordable” coverage beginning in 2015 or they will face penalties of $3,000 for each full time employee that obtains a subsidy on a Federal or State Exchange (called Marketplaces).

The definition of affordability has been amended for 2015. The definitions are:

  • 2014: with 9.5% of family income, an employee must be able to purchase a plan at the single or employee-only tier.
  • 2015: with 9.56% of family income, an employee must be able to purchase a plan at the single or employee-only tier.

While the Affordable Care Act did include a provision to provide for an adjustment to the affordability numbers for the future, with Revenue Procedure 2014-37, the IRS has set the new limit at 9.56% of family income.

Do you recall the 8% vs 9.5% issues discussed in our November 2013 Webinar?

  • Remember, the 8% Household Income Rule tests whether an individual is subject to the individual mandate test. Beginning on 01/01/2014 if an individual does not have Minimum Essential Coverage (MEC) they are subject to a shared responsibility payment (otherwise known as the individual mandate tax). An individual may be exempt from the tax if the price of the lowest-priced bronze plan on the exchange is more than 8% of household income.
  • Whereas the 9.5% rule is used to test whether an individual is eligible for a subsidy. A plan is considerable affordable if the employee cost is less than 9.5% of family (household) income.

Turning back to Rev. Proc. 2014-37, the IRS also adjusted the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable MEC (Minimum Essential Coverage). Beginning with plan years in 2015, coverage will be deemed “unaffordable” for individual mandate purposes if it exceeds 8.05% of family (household) income (as opposed to the original 8%).

While this change was necessary (the IRS must adjust the percentages to reflect the disparity between the rate of income growth and the rate of premium growth), this change is not significant enough to alter a Plan Sponsor’s approach to ensuring that coverage is affordable. And, we suspect many plan participants will conclude that it doesn’t go far enough to actually make the plans truly “affordable” as that term is defined in America’s family rooms.

Minimum Essential Coverage (MEC) and Transitional Reinsurance Program Fees

Posted August 6, 2014 by Megan DiMartino

Many HR professionals are under the impression that Minimum Essential Coverage (MEC), also referred to as “skinny plans”, was subject to the same Transitional Reinsurance Program fees that are levied against traditional self-insured group plans. However, CMS has been subsequently quoted as saying, that these fees will not apply to MEC plans. The pertinent fees here amount to $63 per employee per year (for 2014), which could substantially add to the cost of self-insured MEC coverage.

Informational Draft Transmittal and Reporting Forms Released by IRS

Posted August 6, 2014 by Megan DiMartino

The Internal Revenue Service recently released initial drafts of forms for use in reporting health insurance coverage offered by applicable employers. Additionally, draft forms for minimum essential coverage by insurers and employers of self-insured plans were released, as well as a forum for public commentary. The draft forms are currently posted at as information only. Final versions for actual filing will come at a later date.

These transmittal and reporting forms were noted in the Final Rules released on March 5, 2014. Initial reporting is required in early 2016 for the 2015 calendar year, however employers are encouraged to voluntarily report coverage information in 2015 for the 2014 calendar year.

Both insurers and employers of self-insured plans must report annually to the IRS and all individuals named in the report regarding whether the individual had minimum essential coverage. Thus the IRS will be able to confirm that individuals have complied with the “individual mandate.” When employers self-insure their plans, they may report on compliance with both the individual and employer mandates on one form.

Employers with 50 or more full-time employees must report on all employees offered coverage during the prior calendar year. This information must be provided to the IRS and all employees identified as being offered employer-sponsored health coverage.

Insurers and employers have two forms they must provide the IRS. Each must provide a form that serves as a cover letter as well as forms providing data on the individual or employer mandate. The forms are to be completed and filed as follows:

Employers will file Form 1094-C (a transmittal/cover sheet) to the IRS only, and Form 1095-C to both the IRS and named individuals. If its plan is insured, the employer will only complete Parts I and II of Form 1095-C. Insurers will send Form 1094-B (a transmittal/cover sheet) to the IRS only, and Form 1095-B to both the IRS and named individuals for insured coverage only.

The IRS is open to comments on these forms, which should be submitted to the Comment on Tax Forms and Publications page on

For updates, return to our blog soon. To learn more, contact us.

Webinar: New Federal Appeals Court Rulings Impact On Subsidies, State Exchanges & Taxes

Posted August 5, 2014 by Megan DiMartino

Join AP Benefit Advisors Senior Counsel Patrick Haynes as he reviews recent Federal Appeals Court rulings and the potential impact on larger employer health plans. The D.C. Federal Circuit Court ruled that the Affordable Care Act only permits subsidies for individuals enrolling through state exchanges (not the federal exchange). The subsequent 4th Circuit ruling says that the rule issued by the Internal Revenue Service was “a permissible exercise of the agency’s discretion.” The conflicting rulings raise the possibility that the dispute will ultimately be resolved by the Supreme Court. In the interim employers need to help guide employees on the following questions:

PPACA2• How are individual subsidies impacted?
• What happens if the DC Appeals Court decision is upheld?
• Do employees need to file for a refund?
• What are the tax implications?

Open to all HR professionals – but not brokers, agents, TPAs

Date & Time: Wed, Aug 13, 2014 12:00 PM – 12:30 PM EDT

Space is limited. Reserve yours at

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