CalCPA ProtectPlus

First in a series of interviews that will be displayed across the CalCPA Protect Plus social media sites. In this clip, Mr. Chuck Gielow, Chairman of the Board of the Group Insurance Trust, interviews Ms. Patricia Cochran, Co-Chair of the Health Care Conference and member of the Board of Trustees of the Group Insurance Trust. The Health Care Conference was held on January 30, 2013 by the Education Foundation of the California Society of CPAs. Ms. Cochran discusses the importance of the Health Care Conference to California CPAs and how the Group Insurance Trust can be of benefit to members of CalCPA in the health care field.

January 2013

The Group Insurance Trust of the California Society of CPAs has helped California CPAs and their employees and families with health care insurance needs since 1959 and its operations have grown over the years. In 2012, the Trust offered self-insured medical, dental and vision plans and health savings arrangements with total premiums of approximately $50 million.

As we enter 2013, the Trust is watching developments on both the federal and state levels in health care reform. There has never been a time of greater uncertainty in the health care marketplace.

The Trust’s new CEO, Ron Lang, follows health care reform proposals closely and has identified a number of proposals that may affect the Trust and those it serves. His understanding of this complex subject is very impressive. He is backed in his efforts by our experienced staff and contractors and keeps the Board of Trustees up to date on developments. As proposals become more tangible, the Trust will continue to monitor developments and take appropriate actions.

December 2012 was a bitter sweet time for me personally since I retired at the end of the year as Chairman of the Board after 15 years in that role. I became Chairman of the Trust in 1997 right after finishing my term as President and Chairman of the Board of CalCPA. This month caps off over 30 years of leadership in CalCPA, including the last 15 with the Trust. I suspect I will miss it. Thank you for the opportunities you have provided to me.
The Trust is in good hands. The 12 CPAs who make up the Board of Trustees have experience with the Trust ranging from two to more than 40 years.

I wish you all good health and prosperity in 2013 and the years ahead.

Gale L. Case, CPA, CFE
Chairman of the Board
Group Insurance Trust of the
California Society of CPAs

Many people are familiar with chickenpox and may have had it as a young child. But are you aware the virus that causes chickenpox remains in your body in an inactive state for years and can reactive and cause a condition called shingles? It is called the varicella zoster virus. To give you an idea of how common shingles is, according to the Centers for Disease Control, almost 1 out of every 3 people in the United States will develop shingles and there are an estimated 1 million cases each year in the United States (CDC.gov).

People that are at risk of developing shingles are:

• Anyone at any age who has recovered from chickenpox
• People over 60 years of age have a higher risk (about half of all cases are among people over 60 years old)
• People with weakened immune systems – such as certain cancer and human immunodeficiency virus (HIV)
• People who receive immunosuppressive drugs (i.e. steroids)

Symptoms

WebMD lists the following three stages of shingles:

Prodromal stage (before the rash appears)

• Pain, burning, tickling, tingling, and/or numbness occur in the area around the affected nerves several days or weeks before a rash appears. The discomfort usually occurs on the chest or back, but it may occur on the belly, head, face, neck, or one arm or leg.

• Flu-like symptoms (usually without a fever), such as chills, stomachache, or diarrhea, may develop just before or along with the start of the rash.

• Swelling and tenderness of the lymph nodes may occur. (continue reading…)

The California Society of Certified Public Accountants Education Foundation is offering a conference dedicated to explaining the changing environment of the health care industry – covering financial factors as well as regulations and guidelines from the federal government.

One session of the conference will be presented by Ron Lang, CEO of the Group Insurance Trust of the California Society of Certified Public Accounts (CalCPA) and Steve Kapper, Director of Business Development for the Group Insurance Trust. They will discuss the Patient Protection and Affordable Care Act (PPACA) and its effects on CPA firms and their small employer clients. They will explain why costs are rising and why there are fewer benefit plan choices. Also, they will talk about California Health Benefit Exchanges and employer tax credits and individual subsidies.

The Health Care Conference is filled with an impressive panel of speakers that will help guide you through what the future holds for the health care industry.

Representatives from the Group Insurance Trust will be at the conference to answer any questions you may have about the CalCPA ProtectPlus health care plans that are endorsed by the California Society of CPAs. Please stop by and visit!

For the event location and more information, visit calcpa.org.

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The following information was released by the U.S. Department of Health and Human Services (HHS.gov) on October 25, 2012.

People with Medicare save $4.8 billion on prescription drugs because of the health care law

Over 20.7 million with Medicare also receive free preventive services in the first nine months of 2012  

As a result of the Affordable Care Act, 5.6 million seniors and people with disabilities have saved $4.8 billion on prescription drugs since the law was enacted, Health and Human Services (HHS) Secretary Kathleen Sebelius announced today.  This year alone, 2.3 million people  in the Medicare prescription drug coverage gap known as the “donut hole” have saved an average of $657.  During the first nine months of 2012, over 20.7 million people with original Medicare got at least one preventive service at no cost to them.

This news comes after last month’s estimates that the health care law will save the typical person with original Medicare $5,000 from 2010 to 2022.

“I am pleased that the health care law is helping so many seniors save money on their prescription drug costs,” Secretary Sebelius said. “Medicare is stronger thanks to the health care law, offering new benefits at no cost to seniors.”

The health care law includes benefits to make Medicare prescription drug coverage more affordable. In 2010, anyone with Medicare who hit the prescription drug donut hole received a $250 rebate. In 2011, people with Medicare who hit the donut hole began receiving discounts on covered brand-name drugs and savings for generic drugs. For 2013, people with Medicare in the donut hole will receive about 53 percent on the cost of brand name drugs and a 21 percent savings for the cost of generic drugs. These savings and Medicare coverage will gradually increase until 2020, when the donut hole will be closed. (continue reading…)

For Immediate Release – May 15, 2012

HHS launches new web-based tool to track performance of

nation’s health care system

Public can view data by age, income level, ethnicity, and other factors

Health and Human Services (HHS) Secretary Kathleen Sebelius today announced the launch of a new web-based tool that will make it easier for all Americans to monitor and measure how the nation’s health care system is performing.

The web-based tool, known as the Health System Measurement Project, will allow policymakers, providers, and the public to develop consistent data-driven views of changes in critical U.S. health system indicators.

”I am pleased that this tool will allow people to have better access to data about our health care system,” Secretary Sebelius said. “Ensuring all Americans have access to these data is an important way to make our health care system more open and transparent.”

The Health System Measurement Project brings together datasets from across the federal government that span topical areas, such as access to care, cost and affordability, prevention and health information technology. It presents these indicators by population characteristics, such as age, sex, income level, insurance coverage, and geography.

Using the Measurement Project, one can quickly view data on a given topical area from multiple sources, compare trends across measures and compare national trends with those at the state and regional level. For example, an individual could use the Measurement Project to monitor the percentage of people who have a specific source of ongoing medical care or track avoidable hospitalizations for adults and children by region or ethnic group. 

The measures included in the Health System Measurement Project, developed and selected by the HHS Office of the Assistant Secretary for Planning and Evaluation, are aligned with the HHS Strategic Plan, the National Quality Strategy, and other departmental strategic planning efforts. The measures are drawn primarily from existing publicly available datasets. The tool contains information on how the measures were calculated and provides users with direct links back to the original data sources.

To access the Health System Measurement Project, go to HealthMeasures.aspe.hhs.gov.

For more information about the Affordable Care Act, visit www.HealthCare.gov.

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Banyan Administrators continues to provide us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.

The following information is from Banyan Administrators:

News

W2 Reporting IRS Releases Notice 2012-09

On January 2, 2012, the IRS released Notice 2012-09 which updates and amends Notice 2011-28 regarding the reporting of employer-sponsored group health plan on the 2012 W-2 Forms as required by the Health Care Reform Act.  Notice 2012-09 does not change the reporting requirement for employers, but, does provide additional guidance and clarification on certain topics.  Some highlights of the new Notice includes: 

• Clarification of the interim relief reporting requirement for employers filing fewer than 250 Forms W-2.
• The cost of coverage for employee assistance programs (EAP), wellness programs, or on-site medical clinics do not have to be reported if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary.
• Employers may include the cost of coverage for benefit programs, such as Health Reimbursement Accounts, that are excluded from the reporting requirement and clarification on how to calculate the cost.
• Clarification on other unique situations such as if a pay period extends over the end of the tax year on December 31^st, if a composite rate is charges for active employees but not for COBRA qualified beneficiaries, if certain related employers are not using a common paymaster, etc. 

To view IRS Notice 2012-09, please click here.

Health Care Reform W2 Reporting Interim Final Rules

What You Need to Know Now About: W-2 Reporting

On March 31, 2011, the Internal Revenue Service (IRS) released the 19-page Interim Final Rules on the Health Care Reform W-2 reporting requirements. The IRS is still taking comments on the rules for the next 60 days. 

1.       What needs to be reported on the W-2 form?

Employers must report the costs for a group health plan. This does not include dental and vision plans unless the plans are integrated in the group health plan. Disability and long term care plans are also excluded from the reporting requirement.

2.       How do I determine the cost for the group health plan?

The cost includes both the employee contribution and employer contribution. Employers with fully-insured health plans should use the monthly premium rate. Employers with self-funded health plans should use the COBRA premium equivalent rates less the 2% administrative fee. Employer contributions into Medical Savings Accounts (MSA), Health Savings Accounts (HSA), Health Reimbursement Accounts (HRA) and, in most instances, Flexible Spending Accounts (FSA) are excluded.

3.       Where do I enter this information on the W-2 Form?

The information is entered in Box 12 on the W-2 form using code DD.

4.       Will the amount be included as taxable income for my employee?

No it will not. The first page, first bullet of the IRS Interim Final Rules state, “This reporting to employees is for their information only, to inform them of the cost of their health care coverage, and does not cause excludable employer-provided health care coverage to become taxable.”

5.       When do I have to be ready to comply with the new W-2 reporting requirement?

If you issue more than 250 W-2 forms for tax year 2011, you are required to comply with the new requirement for the 2012 tax year W-2 forms that are distributed to employees in January, 2013. You do have the option to comply earlier, if desired. However, remember that a terminating employee in calendar year 2012 can ask for an early W-2 so, in reality, you will need to be ready to comply as early as January, 2012.

Employers that issue 250 or fewer W-2 forms for tax year 2011 can receive “transition relief” from this requirement until January, 2014.

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Banyan Administrators continue to provide us with beneficial information about several different aspects of the Health Care Reform and how it affects us as well as other interesting health care facts. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.

The following information is from Banyan Administrators, LLC:

What You Need to Know About: Enhanced Women’s Preventive Services

On 7/14/2010, the Department of Health & Human Services (HHS) released the list of A and B services determined by the US Preventive Services Task Force. These preventive services were categorized by adult, women and pediatric services. In the Department of Labor’s (DOL) Interim Final Rules released on 7/19/2010, the DOL also stated that additional preventive services for women were still being debated for inclusion. On 8/1/2011, the DOL issued Interim Final Rules on Enhanced Women’s Preventive Services resulting in considerable media coverage particularly concerning oral contraceptives now being payable with no cost share, such as a copay. However, the actual implementation of the new preventive services provisions is more complicated and the rules are still subject to change.

1.  Does this health care reform provision apply to “grandfathered” plans?

No, grandfathered plans do not need to comply with this provision. If, in the future, your health plan loses its grandfathered status, this reform will apply to your plan.

A grandfathered plan can voluntarily choose to comply with the provision and when the 2010 list of preventive services were released in July, 2010, some grandfathered plans did choose to comply and provide some, if not all, of the preventive services on the list with no cost share to the participant. The DOL rules for enhanced women’s preventive services does not address this scenario so the opinion is that a grandfathered health plan can still voluntarily decide to provide some, or all, of the services listed with no cost share to the participant.

2.  What are the enhanced women’s preventive services?

In addition to the 15 women’s preventive services issued on 7/19/2010 that included anemia screenings, mammography screenings, cervical cancer screenings, etc., 8 additional preventive services have been added:

• Well-woman visits, annually
• Gestational diabetes screenings for pregnant women between 24 and 28 weeks of gestation and at first prenatal visit for pregnant women at high-risk of diabetes
• Human papillomavirus testing beginning at age 30 and no more frequently than once every 3 years
• Counseling for sexually transmitted infections, annually
• Counseling and screening for HIV, annually
• Contraceptive methods and counseling, as prescribed
• Breastfeeding support, supplies and counseling in conjunction with each birth
• Screening and counseling for interpersonal and domestic violence, annually (continue reading…)

Banyan Administrators continue to provide us with beneficial information about several different aspects of the Health Care Reform and how it affects us as well as other interesting health care facts. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.

The following information is from Banyan Administrators, LLC:

Despite Potential PPACA Problems on the Horizon…HSA Enrollment Continues to Rise

Since health savings accounts (HSAs) were first authorized in January of 2004 as a tax-advantaged portal for medical savings, America’s Health Insurance Plans (AHIP), which is a trade association representing the health insurance industry, has conducted an annual survey of the HSA market. According the 2011 AHIP survey, HSA plan enrollment in the United States has almost doubled over the last three years, going from 6.1 million participants in 2008 to 11.4 million participants in 2011. From 2010 to 2011, the number of Americans covered by HSAs linked to high-deductible plans (HDHPs) increased by 14%.

Other key findings from the AHIP survey are:

• Large-group coverage was the fastest growing market for HSA plans between 2010 and 2011, with a growth of 26%.

• Individual market coverage was the second fastest growing market for HSA plans, with a growth of 15%.

• Over 6.3 million individuals were enrolled in HSA plans in the large-group market.

• Around 2.8 million individuals were enrolled in HSA plans in the small-group market.

• Approximately 2.4 million individuals were enrolled in HSA plans in the individual market.

The Impact Of The Patient Protection and Affordable Care Act On HSAs

As it relates to HSA plans, AHIP has noted that some of the provisions in the Patient Protection and Affordable Care Act (PPACA) could create some potential unintended consequences that might disrupt, if not limit, the availability of HSA plan coverage. Three of the main problems noted by AHIP include:

1. Medical loss ratio regulation.

This requires an insurer to spend 80% or more of a consumer’s premiums on direct, non-administrative patient care and improvements to such care’s quality. AHIP asserts that medical loss ratio regulations will be especially problematic for HSA-eligible HDHPs. Participating in a qualified HDHP is a requirement to participate in an HSA. HDHPs provide individuals with a low-premium, high-deductible alternative to traditional health plans. These plans might have lower benefit costs, but they certainly aren’t always cheaper to administer from a per-enrollee standpoint. As a result, they may naturally have lower medical loss ratios. (continue reading…)

Banyan Administrators have been providing us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.

The following information is from Banyan Administrators:

Health Care Reform W2 Reporting

What You Need to Know Now About: W-2 Reporting

On March 31, 2011, the Internal Revenue Service (IRS) released the 19-page Interim Final Rules on the Health Care Reform W-2 reporting requirements. The IRS is still taking comments on the rules for the next 60 days. 

1.       What needs to be reported on the W-2 form?

Employers must report the costs for a group health plan. This does not include dental and vision plans unless the plans are integrated in the group health plan. Disability and long term care plans are also excluded from the reporting requirement.

2.       How do I determine the cost for the group health plan?

The cost includes both the employee contribution and employer contribution. Employers with fully-insured health plans should use the monthly premium rate. Employers with self-funded health plans should use the COBRA premium equivalent rates less the 2% administrative fee. Employer contributions into Medical Savings Accounts (MSA), Health Savings Accounts (HSA), Health Reimbursement Accounts (HRA) and, in most instances, Flexible Spending Accounts (FSA) are excluded.

3.       Where do I enter this information on the W-2 Form?

The information is entered in Box 12 on the W-2 form using code DD.

4.       Will the amount be included as taxable income for my employee?

No it will not. The first page, first bullet of the IRS Interim Final Rules state, “This reporting to employees is for their information only, to inform them of the cost of their health care coverage, and does not cause excludable employer-provided health care coverage to become taxable.”

5.       When do I have to be ready to comply with the new W-2 reporting requirement?

If you issue more than 250 W-2 forms for tax year 2011, you are required to comply with the new requirement for the 2012 tax year W-2 forms that are distributed to employees in January, 2013. You do have the option to comply earlier, if desired. However, remember that a terminating employee in calendar year 2012 can ask for an early W-2 so, in reality, you will need to be ready to comply as early as January, 2012.

Employers that issue 250 or fewer W-2 forms for tax year 2011 can receive “transition relief” from this requirement until January, 2014.

If you have any questions on this health care reform provision, please discuss with a member of your Banyan Consulting team.

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A year after the President signed the Patient Protection and Affordable Care Act (ACA) into law, it is very clear that Americans are still unsure of the law and they just do not understand it. It is visible by reading the news articles, watching the news on television and by just talking to people around you – that there is still confusion – despite the attempts to educate Americans via such sites as www.healthcare.gov.

The latest Kaiser Family Foundation tracking poll shows that “more than half (53%) of Americans continue to report that they are confused about the law”. This same report done last April just shortly after the bill was signed, showed that 55% were confused about the law – so the numbers really haven’t improved much. Also the recent poll said that 52% of the public feel that “they do not have enough information about the health reform law to understand how it will impact them personally”.

According to the Kaiser poll, people are still split on their feelings about the law – 42% favor it and 46% view it unfavorably. The poll shows the strong divide between partisan lines – showing that 71% of Democrats support the law, 82% of Republicans oppose the law and independents have a split vote – 37% favor and 49% do not favor the law.

Click here to read the full Kaiser Family Foundation tracking poll.

The poll was performed between March 8^th to the 13^th and it covered a nationally representative random sample of 1,202 adults ages 18 years and older. The margin of error is plus or minus 3 percentage points.

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Among the features of the Patient Protection and Affordable Care Act (Health Care Reform) recently implemented, is the requirement that insurers cover a number of specific preventive health services without any additional cost-sharing requirements.

The law is designed to encourage individuals to get exams, screenings, and tests that detect health problems in their early stages. And while the law can’t get people to go get the recommended check-ups and tests, it is meant to remove their hesitations over cost by disallowing deductibles, co-payments, or co-insurance for the specified services.

At the time of passage, the legislation left blank the list of services and governing rules. Since then, the departments of Health and Human Services (HHS), Labor and the Treasury have issued regulations and a detailed description of covered services that must now be part of every plan begun after September 23, 2010. Already existing plans, where benefits and costs remain substantially unchanged from previous years, may be grandfathered and exempt.

Under the new rules, a list of routine recommended immunizations for both adults and children was adopted from the Centers for Disease Control and Prevention. The immunization list includes hepatitis A; hepatitis B; herpes zoster; human papillomavirus; influenza; measles, mumps and rubella; meningococcal; pneumococcal; diptheria, pertussis, and tetanus; and varicella.

Health care reform guidelines also include preventive care screenings for depression, alcohol misuse, high blood pressure, colorectal cancer, Type 2 diabetes, HIV, cholesterol, obesity, and syphilis. Adult men who smoke or have smoked can also receive a one-time screening for abdominal aortic aneurysms.

Women are eligible for free screenings for osteoporosis; breast cancer through mammograms; anemia; cervical cancer; hepatitis B; chlamydia and gonorrhea. Women who are pregnant can also receive screenings for Rh incompatibility and urinary tract infections.

In addition to the screenings and tests listed here, still others appear in the HHS guidelines. A complete list that was generated by the U.S. Preventive Services Task Force is available online by clicking here.

When clarifying its rules, the HHS declared that when these services are accessed through out-of-network providers, insurers may apply their usual out-of-network charges. In a related ruling, the agency determined that if a medical appointment is made for care not included in the covered list but covered care is given during the appointment, the co-payment or co-insurance may still be charged for the appointment. However, the insurer can not add an extra charge for the preventive care given during that appointment.

Finally, ProtectPlus subscribers should take note that all the preventive services newly mandated by health care reform were already covered by their plans. Though subject to some cost sharing in the past, these services are now 100% plan paid when obtained through in-network providers.

By Doug Hessel 

Are you confused about California’s tax situation for newly eligible children under the new Federal Health Care reform rules? Welcome to the club.

Some practical advice: Don’t sweat it, but know it can get complicated and will require some attention from HR and Payroll.

So here’s a little more information for those puzzled about imputing income requirements for newly eligible dependents covered by benefit plans.

First, a little background…

If one believes the press about California’s lead on implementing the new Federal Patient Protection and Affordable Care Act (PPACA) healthcare reform rules, it’s not a leap to assume that the state’s tax rules would work in step with the federal rules about making medical coverage tax-free for families with kids now covered.

But that didn’t happen, yet.

Last year, according to the Sacramento Bee, the California legislature decided not to act to coordinate the state and federal tax codes on this issue because the provision was included in broader tax legislation that didn’t even make it to the governor’s desk. So no state tax break for now. However, help may be on the way with AB 36, a bill currently proposed that would specifically exempt employer contributions to young adult coverage from state personal income taxes.

What are the practical consequences?

The current lack of  a coordinating law will force employers to impute state income tax for those covering newly eligible adult children under medical, dental and vision plans.

For the time being, the rules defining tax dependents under IRC 152 will continue to be the state’s position in determining whether benefits can be provided on a tax-free basis. If a child meets the definition under the code—link attached—no imputed income requirement exists.  Adoption cases and divorces can complicate the issue of whether a child is a tax dependent and may require the advice of a qualified CPA to answer.

Employers will need to impute income for employees covering adult children 24 or older for state tax purposes, unless the adult children meet the “qualifying relative test” under IRC Section 152. Also, employees covering previously ineligible children age 19-24 (because they didn’t meet the full-time student status defined in IRC 152) will need to be identified and imputed income allocated.

A number of methods determining the imputed income amount can be used, though current guidance is to apply what the benefit would cost in an “arm’s-length transaction.”  Please remember imputed income applies to any medical, dental and vision plans in which the newly eligible child is enrolled. (continue reading…)

Banyan Administrators have been providing us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.  Over this past week, Banyan has provided answers to many questions regarding how the Health Care Reform Cadillac Tax will affect you. We are sure you will find the following information from Banyan Administrators valuable. This article is part 2 of 2. If you missed last week’s article, click here.

Health Care Reform Cadillac Tax

What You Need to Know Now About: The Cadillac Tax

Another component of the Patient Protection and Affordable Care Act (PPACA) commonly referred to as the Health Care Reform Act is a tax on benefit-rich or “gold-plated” insurance plans. This tax is often referred to as “The Cadillac Tax” and, although it is not scheduled to go into effect until 2018 and may see several revisions in design before then, some plan sponsors are beginning to develop strategies to address it.

1.  I sponsor a grandfathered health plan. Am I subject to The Cadillac Tax?

Yes. The Cadillac Tax is applicable to both grandfathered and non-grandfathered health plans. 

2.  Are there any exceptions for certain groups of employees such as collectively bargained union groups?

During initial debate about implementing The Cadillac Tax for 2013, there was debate about excluding federal employees and union groups from the provision; however that was abandoned when the implementation of the tax was delayed to 2018. At this time, union groups will also be subject to the tax in 2018.

There are some adjustments to the current 2018 Annual Value Amounts for certain groups. For example, insurance plans that have an above average population of older workers or female workers may have higher 2018 Annual Value Amounts based on a still to be determined formula. The reasoning is that the higher cost to insure these groups is due to risk factors and not to benefit-rich plan designs.

This line of reasoning is also responsible for higher 2018 Annual Value Amounts for retirees and workers in high-risk professions (firefighters, coal miners, etc.). The amounts for these professions are set at $11,850 for an individual and $30,950 for a family plan. 

3.  How many plan sponsors might be subject to The Cadillac Tax?

Initially, when the tax was scheduled to go into effect in 2013 the CBO estimated that by 2016 19% of all workers would be subject to The Cadillac Tax.

With the delayed implementation date of 2018, several studies and estimates have been performed and assuming just an average annual trend of 8%, the projection is in the range of 40%-60% of all plan sponsors will trigger The Cadillac Tax. Of course, all these projections assume the plan sponsor does not make any significant plan design changes like increased deductibles and other employee out-of-pocket costs and that the details of The Cadillac Tax as currently constituted for 2018 remain unchanged. (continue reading…)

Banyan Administrators have been providing us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.  Over the next couple of weeks, Banyan will be providing answers to many questions regarding how the Health Care Reform Cadillac Tax will affect you. We are sure you will find the following information from Banyan Administrators valuable.

Health Care Reform Cadillac Tax

What You Need to Know Now About: The Cadillac Tax

Another component of the Patient Protection and Affordable Care Act (PPACA) commonly referred to as the Health Care Reform Act is a tax on benefit-rich or “gold-plated” insurance plans. This tax is often referred to as “The Cadillac Tax” and, although it is not scheduled to go into effect until 2018 and may see several revisions in design before then, some plan sponsors are beginning to develop strategies to address it.

1.  Why was “The Cadillac Tax” included in the Health Care Reform Act?

There are two primary reasons for the inclusion of The Cadillac Tax in the Health Care Reform Act. The first is to stem the rise of health care costs. One belief is that excessively benefit-rich plan designs encourages higher utilization, even overuse, of health care services by the plan participants and, as a result, have a greater influence in driving escalating health care costs.

The second reason is to generate revenue to help pay for covering the uninsured.   The Congressional Budget Office (CBO) estimates that The Cadillac Tax will generate $149B over a 10-year period.

2.  What plan sponsors and plan designs are subject to The Cadillac Tax?

Beginning in 2018, if a benefit-rich insurance plan has an annual value of more than $10,200 for an individual and $27,500 for a family, then the insurance plan is subject to a 40% excise tax. 

The 2018 annual value amounts of $10,200 and $27,500 include medical, prescription drugs, administrative fees and also include employee and employer contributions to flexible spending, health reimbursement or health savings accounts.  Stand-alone vision and dental plans are not included in the calculation. However, there has been some recent confusion on the topic as it appears that the cost for a self-funded dental plan must be added to the calculation whereas a fully-insured dental plan does not. More guidance from the IRS/DOL is needed.

3.  How is the 40% excise tax calculated and who pays it?

The 40% excise tax is calculated on the amount above the annual value amount. For example:

A.     2018 Annual Value Amount – Individual     $10,200

B.     Insurance Plan’s Actual 2018 Annual Value Amount – Individual     $11,200  

C.     Difference Insurance Plan’s Amount v. Allowed Amount (B – A)     $1,000 

D.     40% Excise Tax – “The Cadillac Tax” (C * 40%)     $400 

The excise tax is paid by the plan sponsor and is paid for each participant in excess of the 2018 allowed amount so, in this example, if the plan sponsor has 500 participants with Individual coverage in the insurance plan at an 40% excise tax of $400 each participant, then the plan sponsor would pay a Cadillac Tax of $200,000.

Of course, although the plan sponsor is responsible for paying The Cadillac Tax, many may pass on some, if not all, of the cost on to the plan participants in some form such as higher employee contributions. 

4.  Will the Annual Value Amounts for Individual and Family change after 2018?

Yes, it is anticipated that the Annual Value Amounts for subsequent years will be indexed and will increase. At the moment, the expectation is that the amounts will increase, annually, by the medical inflation rate. Usually, this rate averages between 3%-5%. 

It should also be noted that some plan sponsors might find in 2018 that they do not trigger the tax, however, because their insurance plan costs continue to rise faster on an annual basis than the medical inflation rate that in a subsequent year such as 2019, 2020, etc., they will trigger the tax.

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Maintaining a successful health plan demands constant attention to changing conditions and regularly updating plan designs. It means responding to an evolving market, adapting to public policy initiatives, and taking advantage of new medical developments. That’s why there are always changes for the Group Insurance Trust to announce during the annual open enrollment period. This year, with the passage of the Patient Protection and Affordable Care Act (“health care reform”) the number of changes are greater than usual and carry a more serious financial impact.

Following is an outline of the most important plan modifications subscribers will see this year. Some are in response to health care reform but not all.

Health Care Reform Mandates

Beginning January 1, every health plan must comply with the following provisions:

• All dependents up to age 26 are eligible for coverage
• No cost-sharing for in-network preventive services
• No pre-existing limitations for children under 19
• Prior authorization or higher cost-sharing disallowed for out-of-network emergency services
• New rules for appeals process
• Removal of lifetime maximum limits (copay and HSA plans)
• Removal of lifetime limits for hospice care (copay and HSA plans)
• Removal of annual limits on durable medical equipment (HMO plans)

Premium Rates

Naturally, all these mandated changes come at a price. Over the past seven years, the Group Insurance Trust has delivered single digit increases that were well below national and regional trends. However, a thorough analysis of the costs associated with these mandated benefits, plus unusually high claims experience in 2009, resulted in an increase to CalCPA ProtectPlus medical plan rates that is significantly higher than that of previous years.

Because each firm’s rates are based on a combination of factors, each firm’s increase is unique. Renewal packets, including rate information specific to each firm, were mailed to participating firms on November 1. If you did not receive your renewal package please contact Banyan Administrators, LLC at (877) 480-7923 immediately. (continue reading…)

Banyan Administrators have been providing us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.  Over the past few weeks, Banyan has provided answers to many questions regarding Medicare and how the reform affects you. If you missed the first two articles in this series, make sure to check them out – Article #1 and Article #2. We are sure you will find the information valuable.

The following information is provided by Banyan Administrators:

Arguably the greatest volume of reforms through the Patient Protection and Affordable Care Act (“Affordable Care Act”) signed into law on 03/23/2010 involve Medicare. Some of the provisions are direct reforms to Medicare while other provisions of the Affordable Care Act may have an indirect, but intentional, impact on the program. The following Q&A will give you an overview of the reforms to the Medicare program and how they are all intended to work together.

1.  What are the Medicare Part D reforms?

The first Medicare Part D reform is the closing of the “donut hole”. For Medicare Part D enrollees in 2010, coverage breakdowns as follows: 

• $2,830 – After the enrollee pays the first $310 in drug costs (the deductible), the plan pays 75% of the drug cost up to $2,830 with the enrollee paying the other 25%, then
• $2,831-$4,550 – The “donut hole” – The enrollee pays 100% of their drug costs up to $4,550, then
• $4,551+ – “catastrophic coverage” – The enrollee pays a $2.40 copay for generic drugs. For other drugs the enrollee pays either $6.00 or 5% of the drug cost, whichever is greater.

Beginning in 2010, the reforms going into effect to address the donut hole are: 

• 2010 – Enrollees in the “donut hole” received $250 rebate checks from Medicare
• 2011 – If an enrollee reaches the donut hole, they will be given a 50% discount on the total cost of the brand name drugs while in the gap. Medicare also will phase in additional discounts on the cost of both brand name and generic drugs.
• By 2020 – Effectively close the donut hole so that the plan pays 75% of the drug cost with the enrollee paying the remaining 25%.

The second Medicare Part D reform is the elimination of the Medicare Part D Subsidy paid to employers who sponsor a retiree drug plan.  (continue reading…)

Banyan Administrators have been providing us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.  Over the next few weeks, Banyan will be providing answers to many questions regarding Medicare and how the reform will affect you. We are sure you will find the information valuable.

If you missed the first article in this series that was posted last week, click here.

The following information is provided by Banyan Administrators:

Arguably the greatest volume of reforms through the Patient Protection and Affordable Care Act (“Affordable Care Act”) signed into law on 03/23/2010 involve Medicare. Some of the provisions are direct reforms to Medicare while other provisions of the Affordable Care Act may have an indirect, but intentional, impact on the program. The following Q&A will give you an overview of the reforms to the Medicare program and how they are all intended to work together.

1.  What is the future of Medicare?

What could not have been foreseen in 1965 when Medicare was created was that the United States was coming to the end of the post-World War II “Baby Boom”. More “Baby Boomers” are reaching Medicare eligibility than are being replaced in the work force by younger workers.  With Medicare being funded by FICA taxes, at some point, it mathematically becomes impossible to fund all the benefits for all the Medicare enrollees. (continue reading…)

Banyan Administrators have been providing us with beneficial information about several different aspects of the Health Care Reform and how it affects us. Over the next months and years, employers will be faced with numerous changes, many of which require regulatory clarification. Banyan will continue to keep us up to date and on target with decisions that affect our plans.  Over the next few weeks, Banyan will be providing answers to many questions regarding Medicare and how the reform will affect you. We are sure you will find the information valuable.

The following information is provided by Banyan Administrators:

Health Care Reform – Medicare

What You Need to Know Now About: Medicare

Arguably the greatest volume of reforms through the Patient Protection and Affordable Care Act (“Affordable Care Act”) signed into law on 03/23/2010 involve Medicare. Some of the provisions are direct reforms to Medicare while other provisions of the Affordable Care Act may have an indirect, but intentional, impact on the program. The following Q&A will give you an overview of the reforms to the Medicare program and how they are all intended to work together.

1.  What is the history of Medicare?

As early as 1945, President Harry S. Truman proposed a government administered national social insurance program. It was not until the Social Security Act of 1965 signed into law by President Lyndon B. Johnson that the Medicare program was created. The first senior enrolled into the Medicare program was former President Harry S. Truman. Former First Lady Bess Truman was the second senior enrolled.

The first two programs created in 1965 were Medicare Part A and Medicare Part B. Since that time, Medicare Part C (1997) and Medicare Part D (2006) have been added.

Medicare Part A is hospitalization insurance providing coverage to the Medicare enrollee for inpatient hospital stays. Medicare Part A also pays for other facility-based skilled services such as care at a skilled nursing facility, but, on a limited basis. Most Medicare enrollees do not pay a premium for Medicare Part A coverage because they (or a spouse) have paid enough into the program through payroll taxes prior to retirement. Medicare enrollees do have to meet a Medicare Part A deductible before any benefits are paid. In 2010, the Medicare Part A deductible is $1,100 for an inpatient stay up to 60 days.

Medicare Part B is medical insurance providing coverage to the Medicare enrollee for outpatient services provided by a physician. Services include physician services, nursing services, x-ray, laboratory and diagnostic tests, vaccinations, renal dialysis, outpatient hospital procedures, etc. No benefit is provided for prescription drugs unless the drug is administered by a physician. Participation in Medicare Part B is voluntary if an eligible retiree wishes to participate; the premium amount will be deducted from his social security benefit. In 2010, Medicare Part B monthly premium, on average, is $100.50. The Medicare Part Benrollee also has to meet a $155 deductible and then pay 20% coinsurance.

In 2008, there were 45 million enrollees in Medicare making it the nation’s largest single health care payer in the nation. By 2030, it is expected that enrollment will reach 78 million. In 2008, Medicare spending reached $599 billion which was 20% of the total federal government spending. At $599 billion, Medicare is only surpassed by Social Security and defense spending. (continue reading…)