Executive Order on the ACA – What does it mean for you?

On Inauguration Day, President Trump signed an executive order concerning the Affordable Care Act (ACA) and the White House issued an immediate regulatory freeze. This has caused a lot of confusion and misinformation.

It is important to understand that the executive order doesn’t change the current state of law as it relates to the employer shared-responsibility provisions of the ACA and employer reporting. The Executive Order does not in and of itself change the legal status of the ACA. Only Congress can repeal the law. Because the order does not specify actions to be taken, it is not yet clear how the order will be implemented by federal agencies. Applicable Large Employers (ALEs) that are subject to the ACA Employer Mandate are required to furnish to their full-time employees a Form 1095-C by March 2, 2017 and to file them with the IRS by February 28 (March 31 if filed electronically).

At this point, employers should continue to consult their legal counsel on how to comply with all current ACA rules and regulations as the IRS retains its ability to penalize employers that do not accurately and timely file all ACA forms. Do you have questions on whether or not you or your clients fall into the ALE category? Still unsure about reporting requirements? Give FreedomCare a call today.

Self-funded plans – How much can you really save?

We talk a lot about how much money you can save by self-funding your health plans, but when it comes to the dollars and cents, how much can you really save? Here is a scenario from one our actual clients. We’ve changed the company name for privacy.

ABC Hospitality has 139 individuals and is currently fully insured with a “fully insured” carrier.

  • Current Premium $650,000 annually.
  • Claims experience shows that only 40% of ABC’s annual health insurance premium is due to claims.

If ABC Hospitality, sets up its own Self-Funded Major Medical Plan, with a PPO, and better administration, why can’t they then retain the excess funding instead of paying it to the fully insured carrier?

Partially Self-Funded Healthcare Quote with Reinsurance for ABC Hospitality:

Specific Deductible: $25,000.00

Specific Contract Period: Incurred from [1/1/16] through [12/31/16], paid through [3/31/17]

Aggregate Contract Period: Incurred from [1/1/16] through [12/31/16], paid through [3/31/17]

Fixed Costs

Employee Only - $204.50

Family

Monthly fixed costs

96 Covered

43 Covered

$19,632.00

$8,793.50

$28,425.50

Maximum Claim Factors/Costs: (Aggregate Factors)

Employee Only - $212.97

Family

Monthly fixed costs (aggregate attachment point)     

96 Covered

43 Covered

$20,445.12

$9,157.71

$29,602.83

Conventional Equivalents: (total maximum monthly costs)

Employee Only  - $417.47

Family   

Total Maximum Monthly Costs    

96 Covered

43 Covered

$40,077.12

$17,951.21

$58,028.33

Maximum Annual Plan Year Cost (worst case scenario)  

$696,339.96

Fixed Costs includes: I.D. Cards & Electronic Provider Directories, Plan Document, Employee Only Booklets, Aggregate & Specific Reinsurance, Monthly Accommodation, TPA Admin Fee, PPO, HIPAA, EDI, Cobra & utilization review.

ABC’s worst case scenario is $696,339.16, ABC must reserve $58,028.33 monthly for claims. But this is only in a worst case scenario, which is rare. This can only happen with everything goes wrong with the self-funded plans and there are catastrophic medical conditions and illnesses.

Analysis: While ABC’s self-funded rates took a slight increase over this year’s premiums, they were facing a potential 6% increase from their current carrier. As you can see, the self-funded quote is slightly higher but if you analyze their claims trend over the past year, ABC Hospitability has the potential to get $166,788.00 back in claims funding.

Note: Not only can an employer potentially save money on their returned claims but they can roll their 1st years self-funded savings into reserves for their second year. When they increase their reserves, they can afford to take on more risk which lowers their fixed costs each and every year. This leads to an even greater reduction in their overall costs.

As you can see, the potential amount an employer can save can be significant but it also enables an employer to have more control over plans. A common misconception is that control only means you get to design your own benefits but you can also structure your plan to pay in different ways and incentivize employees to catch billing errors and lead healthier lifestyles. Let’s start the process today and get you and your clients self-funded.

Important – ACA 1095 update

With 2017 rapidly approaching, last week we received some good news from the IRS. The IRS released, notice 1015-70 which highlights some of the changes to come with ACA’s information reporting. One of the biggest changes is a date extension.

Form 1095-B for Health Coverage and form 1095-C have been extended from January 31st, 2017 to March 2nd, 2017.

aca-1095-update-graphic-01

This won’t affect the employees’ ability to file their tax returns, but it does delay their receipt of the forms for their own records.

“This deadline was especially challenging because it coincided with Form 1099 and W-2 processing schedules,” said Mike Downey, executive vice president of BenefitScape. “A 30-day extension, while short, moves the printing and distribution to a more opportune time.”

It’s important to note, the filing deadlines remain unchanged, this is just an extension to furnish the forms to employees.  It’s still just as important for employers to get the rest of their filings completed on time, and trust me, this extra month will fly by.

There are only 21 business days left in 2016 and its filled with holiday closures. Your clients need to make their ACA compliance a top priority.

6 overlooked requirements of ACA reporting

6-overlooked-requirements-of-aca-reportingWith 2017 right around the corner, it’s almost time for employers to submit their paperwork for their 2016 plans. Unfortunately, the leniency that was given last year is no longer available. In order to seek a waiver of penalties for the 2016 filings an employer will need to meet a standard of reasonable cause and that they acted “responsibly”.

Unfortunately, “responsibly” can be very subjective so employers need to be prepared to demonstrate the same level of quality assurance and audit rigor that is applied to other governmental reporting. To help your clients accomplish this, here are some very important details of ACA reporting:

  1. File on time – Failing to file the required forms to the IRS and provide them to employees can lead to significant penalties. These penalties are NOT tax deductible.
  2. Don’t underestimate the IRS digital data environment – The IRS is increasingly working in conjunction with other Federal agencies, so they have the ability to identify contradictory data submitted on both individual employee forms and across multiple employees, this can lead to audits. The government is projecting employer mandate penalties of $228 billion. There is clear anticipation that revenue will be generated and violations will be ascertained through information reporting filings.
  3. Communication with employees is critical – Employers need to ensure accurate names, social security numbers, dependents, waiver information, eligibility determinations and offers of coverage are documented and up to date. Employers need to remind their employees to report any name changes due to life events such as marriage or divorce to both the Social Security Administration and their human resources department.
  4. Use proper worker classifications – A key requirement under the ACA is properly identifying full time employees and equivalents to determine if an employer is an applicable large employer under the employer mandate. Applicable large employers must cover the requisite 95% of all full time employees or they are risking exposure to penalties. It was only 70% last year which meant employers had a lot more leeway they won’t have this year.
  5. Correct errors – Errors could be identified by an IRS error message, internal audit or by an employee. A corrected return corrects an inaccurate return, if a transmission or submission was REJECTED by the IRS then that rejection requires a replacement.
  6. Keep accurate records – It is important to document and retain proof to substantiate responses on ACA information reporting forms. Among the records employers should retain are:
    1. Records of employees who are provided with an offer of coverage and corresponding dates
    2. Eligibility methodology and determinations
    3. Signed waivers or opt out forms
    4. SSN solicitation records
    5. Controlled group determinations
    6. Participant communications
    7. Affordability calculations

This can get overwhelming very fast but I have some good news, FreedomCare is here to help. Give us a call, we can answer any questions and walk you through the steps you need to take.

Self-Funded health plans, the new standard

self-funded-health-plans-the-new-standardDue to rising health insurance premiums, more and more employers are opting to self-fund their employee health benefit plans. According to a report done by the Employee Benefit Research Institute (EBRI) the percentage of U.S. private sector employers offering at least one self-funded health plan rose from 28.5 to 89 percent from 1996-2015. Small and midsize employers all over the country are opting out of their traditional benefit plans in favor of self-funding their employee health plans.

It is important to note that just from 2013 to 2015:

Small Employers rose from 13.3% to 14.2% and Midsize Employers rose from 25.3% to 30.1%.

self-funded-increase-graphic-01

self-funded-increase-graphic

It’s hard not to draw a connection between the implementation of the Affordable Care Act (ACA) and the increase in self-funded employers. Under the federal Employee Retirement Income Security Act of 1974 (ERISA), which provides the legal framework for the uniform provision of health benefits by employers doing business anywhere in the country, state laws (other than insurance laws) are generally pre-empted. This means that self-funded health plans may not have to satisfy state health insurance laws, including state-mandated reserve, benefit, claims, premium, and other requirements, which results in ease of administration and lower expenses. In contrast, fully insured plans are required to cover state mandated benefits and pay state insurance premiums.

Not only that but the ACA identifies 10 benefit categories that must be included as essential health benefits for fully insured small-group market plans. But self-funded plans are not required to cover each of these essential health benefits.

When self-funded arrangements are properly designed, like the ones FreedomCare offers, there are several ways an employer can benefit.

Help your clients join these savvy employers from around the country and take control over their plan by self-funding their employee health benefits. By choosing FreedomCare, we take the leg work out of self-funding, we handle all administration, paying of claims and reinsurance. The ease of a traditional plan with the value of self-funded.

How to prepare for earlier reporting in 2017

How to prepare for earlier reporting deadlinesLast December, most employers were relieved when the IRS provided extensions of employee notifications and filing deadlines for Affordable Care Act (ACA) reporting. Unfortunately, this may have set up those same employers for failure as it will seem like these deadlines are coming 2 months earlier in 2017. To prevent this from happening, here are 4 ways to prepare for earlier reporting in 2017.

1. Give yourself plenty of cushion to submit required filings on time.

This year employers must provide 1095-Cs to employees by the end of January, indicating month-by-month coverage provided through the end of the previous December.

ACA Reporting Deadlines_with citationThese forms are required of most employers;

  • Employers of any size that sponsored a self-insured health plan providing minimum essential coverage must distribute to enrolled employees and file with the IRS Form 1095-B, showing a health plan enrollment.
  • Applicable large employers with 50 or more full-time employees or equivalents must distribute to enrolled employees and file with the IRS Form 1095-C, showing compliance with employer shared responsibility/minimum essential coverage requirements.

2. It’s now 95%, not 70%.

Unfortunately, last years extended reporting deadlines may not be the only things that trips up employers this year. Starting in 2016, all organizations with 50 or more full-time employees or equivalents must insure 95 percent of their full-time employees to avoid liability under the ACA’s shared responsibility provisions, and the resulting penalties.

The thing is, some employers may not understand that it’s not a 95% average for the year, it’s 95% for each month. If an employer had a month where they fell below 95%, then the employer is exposed. The employer could be facing penalties for the months when they were below the threshold.

The IRS will ask for payroll and benefits data, this will help them determine whether the indicator codes used on Form 1095-C are accurate. With last year’s 70% threshold, employers had a lot more leeway.

3. Exchange notices have been arriving.

Employers also need to be on the lookout for exchange subsidy notices. Notices pertaining to 2015 coverage, are now being sent from the ACA’s Health Insurance Marketplace. These notices allege that a full-time employee received subsidized coverage on an exchange because the employer failed to provide qualifying coverage.

4. Determining eligibility is an on-going effort.

The coverage provided to each full-time employee needs to be tracked and recorded every month. This needs to be an ongoing process for employers to get ready for the next year’s annual reporting. Employers can find relief by working with companies who offer tracking services that work in conjunction with payroll companies as part of their coverage. FreedomCare is one of the only options that provides this integration.

Employers that were close to the 50 or more full-time employee threshold last year need to make sure they stay on top of their eligibility. They need to run the numbers each month to make sure they aren’t on the hook. It would be terrible to find out too late and be liable for penalties for the whole year.

Reach out to FreedomCare, we can help you calculate and determine whether or not an employer needs to offer coverage. Trust us, it’s much less expensive than paying the penalties.

ACA Compliance Enforcement Begins!

ACA Compliance enforcement beginsEmployers are out of excuses and delays; ACA compliance enforcement has begun and they need to be compliant now. If you or your clients are an employer that decided not to choose a compliant plan or didn’t offer anything at all, the employer may be subject to penalties under the Employer Mandate.
May has been a big month for the Department of Health and Human Services (HHS). They’ve made two major announcements regarding the process for determining if an employee is eligible for a subsidy under the Affordable Care Act (ACA). Earlier this month, HHS announced that they hired a third-party contractor to conduct an “employer verification study” where the contracted company will be calling employers and asking about the health insurance coverage they offer. The purpose of these calls is to determine whether employers have successfully offered an affordable plan that meets the minimum value requirements to their employees.
The need for these calls goes back to the ACA Exchanges, a person must state that they were not offered a plan that was affordable and meets minimum value by their employer. If they were indeed offered an eligible plan, this person would be ineligible for a subsidy.
CMS also released a sample notice that the Federal Exchange will send to employers that one of their employees has submitted an application for a subsidy and claims they haven’t been offered compliant coverage.
So why does this matter to you and your clients?
Well, some employers did everything they needed to do and chose a plan that was compliant, like the ones FreedomCare offers but the Exchange did not discover that fact during the verification process. The employer will have the opportunity to contact the Exchange and provide documentation that they offered a plan that is affordable and meets minimum value requirements. After the Exchange receives this info, they will re-determine the employee’s eligibility and discontinue any premium subsidy payments.
Let’s talk about our 100% compliant ACA solutions, give FreedomCare a call asap.

Deadlines have passed – Penalties are coming

Filing deadlines have passed, penalites are comingAs we head into August with the 4th quarter rapidly approaching, the deadlines for the IRS required ACA form filings have passed. Unfortunately, a lot of employers still have questions or haven’t even filed yet.

Well back in July, the IRS held an Affordable Care Act Information Returns Program (AIR) webinar where they shared their publication, 1586. They covered a lot of information and clarified a lot of questions employers have been asking.

Just in case you aren’t sure what the AIR policies include;

Under the Affordable Care Act (ACA), insurance companies, self-insured companies, large businesses and businesses that provide health insurance to their employees must submit information returns to the IRS reporting on individual’s health insurance coverage.

ACA information returns include:  

  • Form 1094-B, Transmittal of Health Coverage Information Returns
  • Form 1095-B, Health Coverage
  • Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
  • Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

The 1596 publication made it clear that the penalties for incorrect forms or forms that haven’t been filed could devastate an employer’s bottom line.

IRS Penalties_logo_cite

With this type of reporting, it’s more than just proofing your documents and filing. Employers need to consult professionals who can help them ensure their compliance. I have some good news though, some of these penalties are still preventable.

According to the IRS, corrections or late forms need to be filed as soon as possible. It’s better to file late then to not file at all. Don’t let these fines hit your business or your clients.

Use our years of experience and expertise and contact FreedomCare today to protect yourself and your clients.

The opportunity you’re missing

The opportunity you're missingIn our continuously changing market, it can be difficult to guide your clients in what direction to go in when selecting benefits. With so many options available, it can get overwhelming very quickly. What if you offered them a solution that satisfies the laws, saves them money and allows for more control?

You’ve probably heard about the advantages of when a company chooses to self-insure their health benefits through a captive insurance company. They can save money on their premium contributions and more. But, what most people don’t know is that not only does a captive insurance company provide significant financial advantages, it also allows for control over a company’s benefits offering and the claims that come in.

The volume of claims data that can be accessed through a captive, in the right hands, can help employers target and improve their benefits offering for their employees and their families. Armed with the data of what their employees need, employers can develop wellness programs and incentives to keep their employees healthy and drive down the costs associated with their health plan. Traditionally captive insurance and self-insured plans were only available to larger employers and businesses. But through FreedomCare’s unique approach, we make them available to businesses of all sizes.

Our experienced self-insured team has developed seamless processes that allow our clients to manage their costs, plan for higher dollar claims and see great success with their plans.

Choosing FreedomCare allows you to have one place for everything you need to self-insure and form your captive solution. If you’re not offering this to your clients, you’re missing a huge potential opportunity.

3 Tips for keeping your clients trust under the ACA

3 tips for keeping your clients trust under the ACAYou are probably getting used to the impact that health care reform (the ACA) has had on the insurance market and the laws. But have you taken the time to think strategically about your clients and their futures? Undoubtedly, your time is consumed with all the day-to-day activities required to manage your business and the relationships with your clients.

With different updates happening constantly, it can be difficult to keep up, here are 3 tips you can use to help keep the trust of your clients when dealing with the ACA.

  1. Stay up to date on the laws and communicate updates asap.

    • Research and educate yourself on the ever changing laws and regulations by following reputable news sites and our blog. Forward articles to your clients, share the information you’ve learned. This will allow your clients to rely on and trust you, in turn they will be more likely to come to you when issues arise.
  2. Use the ACA as an opportunity.

    • Try not to think of the ACA as a bad thing or a burden, use the ACA as an opportunity to help your clients help their employees. Sponsoring a benefits program not only satisfies the ACA employer mandate but can greatly improve employee retention among other things.
  3. Present alternative options to traditional plans.

    • Expand your options to include things like self-insurance, ACA tracking, voluntary benefits, telehealth and other offerings your clients might not even know about. If you can devise a complete coverage package for your clients saving them time and money, you have the best chance of keeping their trust and their business.

Let’s face it, your role as a broker is changing. As healthcare reform keeps presenting more pressing dilemmas for small-business owners, employers are looking towards you and other agents not just as salespeople but expert consultants. Your clients need your expertise, advice and counsel. In these constantly changing times there isn’t a client organization out there that’s not willing to talk to an adviser who seems to have some information or a seamless process for coping with all of the change. This includes every one of your clients as well, even the ones that haven’t been interested in the past.

Look through our previous articles on the sidebar and share with your clients, remember FreedomCare is here for whatever you need.