Category Archives: Health Coverage

Will Amazon, Berkshire Hathaway and JP Morgan Change Healthcare for Employers?

Contributed by Suzannah Wilson Overholt, February 19, 2018

What happens when you combine Amazon, Berkshire Hathaway and JPMorgan Chase? Apparently, a new non-profit health care company. That was the news last month when the three companies announced that they are forming their own health care company to increase transparency for their employees.

Health Insurance and Money

Health insurance policy and dollar bills on white background 

Anyone involved with employee benefits knows that one of the most dreaded moments annually is getting the renewal quote for the health benefit plans. The quote starts the agonizing dance of trying to get the astronomical increase to a manageable number while calming the budgeting folks, panicked by the opening salvo. The idea of somehow removing the mystery and agony of that process is incredibly appealing. But is it possible? Maybe.

The push for transparency appears to be aimed at the elimination of the overhead costs that are built into the health insurance expense. According to the Wall Street Journal, the new venture plans to help current vendors work better by focusing on technology solutions, improved patient experience and customer service.  Initiatives might include flat fees and using technology to provide more tracking and care outside traditional health-care settings. The final outcome could result in providers being adequately paid for the services they provide, new technology for streamlining services, and reduced costs due to elimination of unnecessary overhead charged by the insurance companies.

While the new company will be focused on the employees of its founders, its success will likely have a ripple effect. The companies hope the project will save them hundreds of millions of dollars and possibly be a blueprint for others.

The gain for employers would be a potential reduction in the cost of insurance, which, as reported by SHRM, currently consumes on average around 10% of operating budgets. While CNN reports that the rate of increase has slowed over the past few years, a recent study found that employers expect health care costs to increase by more than 5% this year. Thus, reduced costs could eliminate the annual debate between giving raises or keeping insurance contributions in check.

Don’t expect changes anytime soon, though. The existing insurance marketplace has big players with the infrastructure to provide services to millions of people. The new company will have to prove itself. We’ll keep you posted.


Final Rule on Health Plan Nondiscrimination

Contributed by Rebecca Dobbs Bush, March 21, 2017

Although bathroom use seems to be at the forefront with the media in regards to transgender issues; there are several other issues to consider, and the final rule on health plan nondiscrimination is no exception. Transgender related health services tend to deal with gender dysphoria, a medical condition where an individual’s gender identity is different from the sex assigned to that individual at birth.

12837750 - stethoscope wrapped around health insurance policies, soft focusThe final regulations implementing Affordable Care Act (ACA) Section 1557 is applicable to plan years beginning on or after January 1, 2017. Within the final rule, the following prohibitions apply to covered entities, such as insurance companies and insurance marketplaces:

  • A plan may not impose additional cost sharing on the basis of race, color, national origin, sex, age or disability. Such discrimination is also prohibited if based on the fact that an individual’s sex assigned at birth, gender identity, or gender otherwise recorded is different from the one to which such health services are ordinarily or exclusively available;
  • A plan may not have or implement a categorical coverage exclusion or limitation for all health services related to gender transition; or
  • Otherwise deny or limit coverage of a claim, or impose additional cost sharing or other limitations or restrictions on coverage for specific health services related to gender transition if such denial, limitation or restriction results in discrimination against a transgender individual.

In short, transgender related health services would need to be on par with other covered services to avoid claims of discrimination.

While employers are generally not “covered entities” and are not directly mandated to comply with the final regulations, the regulation affects insurance companies that market and sell health plans to employers. Some states, such as Illinois, have already incorporated requirements in their Insurance Code mandating coverage of transgender related services.

In any case, whether offering an insured plan or a self-insured plan, employers should give consideration to providing some level of additional transgender related benefit coverage to avoid potential claims of discrimination from participants or investigations from the EEOC. The Office of Civil Rights (OCR) has indicated that complaints of discrimination, such as plan design based discrimination, against non-covered entities (such as employers) will be referred to the EEOC as they will be outside the scope of the final regulation. For most employers, the employee population will provide a very low instance of those seeking to utilize coverage for transgender related services. With this in mind, the potential plan cost may be equivalent or less than the cost of defending a claim of discrimination, making it economical to incorporate such coverage in a plan. It remains to be seen whether employers will be able to avoid compliance on the basis of moral or religious reasons and whether any changes will be made by the newly elected administration.

New Guidance: A Reminder the Cadillac Tax is Still Looming

Contributed by Kelly Haab-Tallitsch

The Internal Revenue Service (IRS) recently released its second set of guidance discussing approaches to the excise tax on employer-sponsored health coverage, often referred to as the “Cadillac tax.” Starting in 2018, the Cadillac tax imposes a 40% tax on the cost of employer-sponsored health coverage in excess of $10,200 for self-only coverage and $27,500 for family coverage. Intended to target overly-generous employer-provided health plans, the Cadillac tax continues to be one of the most controversial parts of the Affordable Care Act (ACA) as dollar thresholds set in 2010 look increasingly too low for 2018 plan costs.

The Cadillac tax is extremely complex and we don’t expect final regulations any time soon. The guidance issued so far Health insurnce photodescribes “potential approaches” that may be incorporated into future regulations. Although this preliminary guidance cannot be relied on, it gives some insight into the direction the agency is going.

Notice 2015-52, released July 30, 2015, addresses employer aggregation and the payment of the tax, among other issues. The guidance suggests that related employers will be treated as a single employer for tax calculation and payment purposes. Annually, employers will calculate the cost of the coverage for each month of the calendar year to see if the ‘Cadillac’ threshold was exceeded. The employer will then inform the IRS and the coverage provider (insurance company for a fully insured plan) of their share of the tax. For multiemployer plans, the plan sponsor will make the calculations and provide notice to the IRS.

Notice 2015-16, released February 23, 2015, addressed the definition of applicable coverage, the determination of the cost of coverage and application of the annual statutory limits. Most notably, applicable coverage would include both fully insured and self-insured employer-sponsored health plans, regardless of whether the employer or employee pays for the coverage or whether it is paid for with pretax or post-tax dollars. This would include major medical coverage, employer and employee contributions to health flexible spending accounts (FSAs) and health savings accounts (HSAs), health reimbursement arrangements (HRAs), onsite medical clinics, retiree coverage and executive physical programs.

What is the bottom line? Although opponents of the Cadillac tax continue to fight to have the provision amended or repealed, employers should proceed with the expectation that the Cadillac tax will be implemented in 2018 as planned. Employers should review the coverage offered to employees and begin to take steps to reduce exposure to the tax. Further, employers should consider providing input into the regulatory process—directly or through trade groups—by providing comment on the preliminary guidance.