Researchers believe that certain provisions of the Patient Protection and Affordable Care Act (ACA) could affect employers’ future willingness to offer coverage, according to a new report from the Government Accountability Office (GAO), but as yet little consensus exists as to what the future holds for employer-provided coverage.
As noted in the report, Patient Protection and Affordable Care Act: Estimates of the Effect on the Prevalence of Employer-Sponsored Health Coverage (GAO-12-768), ACA provisions that could affect employer-sponsored coverage include the individual mandate, the establishment of health insurance exchanges, group market reforms, and the “Cadillac” tax.
Tasked with a review of the "research" on this topic, the GAO examined two types of data. First, it reviewed five microsimulation model studies (those which estimate the combined effects of multiple ACA provisions, based on multiple data sets and assumptions) Second, it consulted 19 employer surveys published between Jan. 1, 2009, and March 30, 2012. In both instances, GAO examined (1) estimates of the effect of the ACA on the extent of employer-sponsored coverage; (2) factors that may contribute to the variation in estimates; and (3) how estimates of coverage vary by the types of employers and employees that may be affected, as well as other changes employers may be considering to the health benefits they offer.
Microsimulation models. The GAO found that the microsimulation model studies generally predicted little change in prevalence of employer-sponsored coverage in the near term. The five microsimulation study estimates ranged from a net decrease of 2.5 percent to a net increase of 2.7 percent in the total number of individuals with employer-sponsored coverage within the first two years of implementation of key ACA provisions, affecting up to about 4 million individuals. Two of these studies also indicated that the majority of individuals losing employer-sponsored coverage would transition to other sources of coverage, the GAO noted.
Employer surveys. Among the 19 employer surveys examined, 16 reported estimates of employers dropping coverage for all employee types. Among these 16, 11 indicated that 10 percent or fewer employers were likely to drop coverage in the near term, but estimates ranged from 2 to 20 percent. Most surveys were of employers currently offering coverage and therefore did not also address whether other employers may begin to offer coverage in response to the ACA; however, the three that did found that between 1 percent and 28 percent would begin offering coverage as a result of the ACA.
Some of the 19 employer surveys indicated that the ACA may have a larger effect on small employers and certain populations and may prompt some employers to change benefit designs, according to the GAO. For example, four surveys found that smaller employers were more likely than other employers to stop offering health coverage in response to the ACA, and five found that employers in general were more likely to drop coverage for retirees than for all employees. Nine surveys also indicated that employers are considering key changes to benefit design, some of which may result in greater employee cost for health coverage.
Friday, August 17, 2012
Wednesday, August 15, 2012
Mercer: ACA challenges acute for firms with part-time, low-wage workers
Companies with the greatest number of part-time and low-paid employees will face the greatest challenges from the reforms provided in the Affordable Care Act, a new Mercer survey has determined. Although 60 percent of the 1,203 employers Mercer surveyed expected some increase in cost as a result of the key ACA provisions effective in 2014, nearly half (46 percent) of retail and hospitality industry firms and two-fifths (40 percent) of health care industry employers anticipated cost increases of at least 3 percent. These industries have large part-time employee populations. Only 31 percent of service industry employers expected such an increase.
"With health benefit cost already rising at twice the rate of general inflation, an additional increase of 3 percent or more will be very tough for employers to absorb," said Sharon Cunninghis, leader of Mercer’s U.S. Employee Health & Benefits business.
Also, in companies where pay is low, employees who are eligible for coverage are more likely to opt out of enrolling, Mercer noted. For example, among large wholesale/retail and health care employers, opt-out rates average 19 percent and 18 percent, respectively, compared to just 8 percent among transportation, communication, and utility companies, where pay is higher. Once the individual mandate requiring all individuals who can afford coverage to obtain it (or pay a penalty) goes into effect, employers with high opt-out rates could experience a significant increase in enrollment.
Beginning in 2014, employers with at least 50 full-time employees working at least 30 hours weekly must extend health care coverage to these employees or pay a penalty. One-fourth of the respondents to Mercer’s survey said they will have to act to avoid penalties—ranging from 16 percent of financial services employers to 46 percent of retail and hospitality industry employers. Firms with low populations of part-time employees likely will make those employees eligible for the full-time employee plans or add new, low-cost plans (68 percent). However, employers with large part-time employee populations that do not currently offer coverage to these workers are more inclined to change their workforce strategy so that fewer employees would be eligible (67 percent of these employers, compared with 41 percent of manufacturing industry firms).
Employers counting on the ACA-provided Medicaid expansion for some of their low-paid employees may be foiled by the Supreme court decision that allows states to opt out of this expansion. One-fifth of survey respondents, but half of companies with large part-time employee populations, have employees that could qualify for coverage under the Medicaid expansion.
"Because state Medicaid eligibility already varies greatly, it’s difficult to predict what states will do about expanding their programs to more individuals, and the impact of their decisions on employers," said Branch McNeal, leader of Mercer’s Government Consulting business.
Source: Press release, www.mercer.com.
"With health benefit cost already rising at twice the rate of general inflation, an additional increase of 3 percent or more will be very tough for employers to absorb," said Sharon Cunninghis, leader of Mercer’s U.S. Employee Health & Benefits business.
Also, in companies where pay is low, employees who are eligible for coverage are more likely to opt out of enrolling, Mercer noted. For example, among large wholesale/retail and health care employers, opt-out rates average 19 percent and 18 percent, respectively, compared to just 8 percent among transportation, communication, and utility companies, where pay is higher. Once the individual mandate requiring all individuals who can afford coverage to obtain it (or pay a penalty) goes into effect, employers with high opt-out rates could experience a significant increase in enrollment.
Beginning in 2014, employers with at least 50 full-time employees working at least 30 hours weekly must extend health care coverage to these employees or pay a penalty. One-fourth of the respondents to Mercer’s survey said they will have to act to avoid penalties—ranging from 16 percent of financial services employers to 46 percent of retail and hospitality industry employers. Firms with low populations of part-time employees likely will make those employees eligible for the full-time employee plans or add new, low-cost plans (68 percent). However, employers with large part-time employee populations that do not currently offer coverage to these workers are more inclined to change their workforce strategy so that fewer employees would be eligible (67 percent of these employers, compared with 41 percent of manufacturing industry firms).
Employers counting on the ACA-provided Medicaid expansion for some of their low-paid employees may be foiled by the Supreme court decision that allows states to opt out of this expansion. One-fifth of survey respondents, but half of companies with large part-time employee populations, have employees that could qualify for coverage under the Medicaid expansion.
"Because state Medicaid eligibility already varies greatly, it’s difficult to predict what states will do about expanding their programs to more individuals, and the impact of their decisions on employers," said Branch McNeal, leader of Mercer’s Government Consulting business.
Source: Press release, www.mercer.com.
Monday, August 13, 2012
ACA rebate: you could get a check
In an effort to boost the overall popularity of the Affordable Care Act, the White House is touting the August mailing of a projected $1 billion in rebates that are required by the medical loss ratio provisions of the ACA.
Under the MLR provisions in the ACA, health insurance companies are now required to spend at least 80 percent (85 percent for large group plans) of premiums directly on health care, as opposed to advertising, administrative costs and executive salaries. Companies not meeting this requirement were required to send rebates to customers by August 1.
A White House e-mail, sent from info@messages.whitehouse.gov and captioned "Did you get your check," states that "nearly 13 million Americans will receive more than $1 billion from insurance companies this summer."
Group plan participants: don't get your hopes up. "There may be many employees who are expecting to receive a rebate check in the near future, but will receive nothing in hand," Garrett Fenton, Miller & Chevalier Chartered, Washington, D.C., told CCH. With respect to group health insurance coverage, even where an employer receives a rebate check from its insurer, that does not necessarily mean the employer will pass through the rebate directly to its employees, Fenton observed. He added, “In the context of ERISA plans, Department of Labor guidance provides employers with some discretion as to how to use or dispose of their MLR rebates, as long as they ‘act prudently, solely in the interest of the plan participants and beneficiaries, and in accordance with the terms of the plan.’”
And, of course, if you do get a rebate, you have to consider potential tax consequences.
In April 2012, the IRS posted FAQs addressing the federal tax consequences of MLR rebates. The FAQs explain that rebates are generally taxable if the individual policyholder previously deducted them on 2011 Form 1040, either on Schedule A or on line 29 as a self-employed individual. Rebates are also taxable if previously pre-tax premium payments are refunded to an employee participating in a group health plan, whether in a check from the insurance company, in a check paid through the plan’s administrator, or in the form of a premium reduction for the current 2012 year. The MLR rebates in those cases are considered a return to the employee of part of untaxed compensation that is no longer being used to pay for health insurance. MLR rebates are not taxable in cases of 2012 premium reductions based on 2011 premiums that had been paid on an after-tax basis. In such cases, the MLR rebate is considered a purchase price adjustment that reduces the cost of the participant’s 2012 insurance premiums.
Under the MLR provisions in the ACA, health insurance companies are now required to spend at least 80 percent (85 percent for large group plans) of premiums directly on health care, as opposed to advertising, administrative costs and executive salaries. Companies not meeting this requirement were required to send rebates to customers by August 1.
A White House e-mail, sent from info@messages.whitehouse.gov and captioned "Did you get your check," states that "nearly 13 million Americans will receive more than $1 billion from insurance companies this summer."
Group plan participants: don't get your hopes up. "There may be many employees who are expecting to receive a rebate check in the near future, but will receive nothing in hand," Garrett Fenton, Miller & Chevalier Chartered, Washington, D.C., told CCH. With respect to group health insurance coverage, even where an employer receives a rebate check from its insurer, that does not necessarily mean the employer will pass through the rebate directly to its employees, Fenton observed. He added, “In the context of ERISA plans, Department of Labor guidance provides employers with some discretion as to how to use or dispose of their MLR rebates, as long as they ‘act prudently, solely in the interest of the plan participants and beneficiaries, and in accordance with the terms of the plan.’”
And, of course, if you do get a rebate, you have to consider potential tax consequences.
In April 2012, the IRS posted FAQs addressing the federal tax consequences of MLR rebates. The FAQs explain that rebates are generally taxable if the individual policyholder previously deducted them on 2011 Form 1040, either on Schedule A or on line 29 as a self-employed individual. Rebates are also taxable if previously pre-tax premium payments are refunded to an employee participating in a group health plan, whether in a check from the insurance company, in a check paid through the plan’s administrator, or in the form of a premium reduction for the current 2012 year. The MLR rebates in those cases are considered a return to the employee of part of untaxed compensation that is no longer being used to pay for health insurance. MLR rebates are not taxable in cases of 2012 premium reductions based on 2011 premiums that had been paid on an after-tax basis. In such cases, the MLR rebate is considered a purchase price adjustment that reduces the cost of the participant’s 2012 insurance premiums.
