American Workers Don’t Understand Their Benefits – October 2015

While most Americans understand the importance of their personal finances and employee benefits, 40% say they know little or nothing about these benefits, according to a study from MassMutual. Most people seemingly have their financial house in order, saying they prioritize understanding their personal finances (77%), having enough medical insurance (74%) and being on track to retire comfortably (65%). Yet 38% say they know little or nothing about their employer-provided benefits, such as healthcare, life insurance, 401(k) retirement plans, and other benefits. Forty-two percent say they are clueless about whether or not they are on track to retire comfortably.

While many people say they do just fine managing their finances, 37% find doing so somewhat or very difficult and 40% say personal financial problems are a distraction at work, according to the study. Some groups find personal finance more difficult than others, including Millennials (58%), parents (50%), Generation X (47%), women (44%) and those with annual incomes of $50,000 or less (44%). Baby Boomers were the least likely to encounter difficulty in managing their finances (28%) or being distracted at work by financial issues (24%).

Eighty percent do not use an online financial tool to manage their retirement, healthcare and other forms of insurance. However, 73% say they would be likely to use such a tool if it were available free, especially if it were provided by a trusted and respected financial services company.

Millennials (82%), parents (80%) and Gen Xers (78%) are especially interested in using an online financial tool. Thirty-two percent said they would be more likely to enroll in their employee benefits if they could use an online tool to help them figure out their needs.

HEALTHCARE
How the FDA Is Driving Drug Price Hikes October 2015

The FDA’s backlog of 4,000 generic drug applications is hindering competitors who could hold prices down, according to a study by the National Center for Policy Analysis (NCPA). Also, older generic drugs are often made on aging production lines, which are sometimes shut down for maintenance. Lines can be stopped after the manufacturer is warned by the FDA that the facility is out of compliance with good manufacturing practices. The resulting shortage often drives prices higher.

Thousands of drugs predate the FDA’s approval process required under the 1938 Food Author and Drug & Cosmetics Act; many were grandfathered, but never officially approved. NCPA senior fellow Devon Herrick says, “The FDA wants these cheap drugs off the market and replaced with more costly approved versions from any drug makers willing to conduct clinical studies on them.”

State regulations also bite consumers in the wallet. Generic substitution laws in some states make it harder for consumers to save. In the face of rising drug prices, many states have passed laws that worsen the situation, such as banning efficient pharmacy networks, restricting mail-order pharmacies, and restricting maximum allowable cost lists.

The NCPA study highlights several ways to lower America’s drug bills, including the following:
•Clear the FDA’s backlog of applications to manufacture generic drugs.
•Resist passing perverse regulations designed to protect local business.
•Promote competition in the production of generic medications.

“Much of the recent rise in the price of generic drugs can be directly linked to regulatory and legal causes,” says Herrick. This study is Part II of Herrick’s in-depth examination of the rising costs of generic drugs. For more information, visit ncpa.org.

Under the Affordable Care Act (“ACA”), the definition of a small group for purposes of non-grandfathered insured coverage was set to change from an employer with 50 or fewer employees to an employer with 100 or fewer employees, effective for plan years beginning on or after January 1, 2016.

On October 7, 2015, the President signed into law bipartisan legislation, the Protecting Affordable Coverage for Employees
(“PACE”) Act, which maintains the “50 or fewer” definition of a small employer. The PACE Act contains language that permits a state to use the expanded small group definition (employers with 100 or fewer employees). At this point, it is unclear whether states will retain the “50 or fewer” definition or opt to expand the small group market.

What does this mean?

If a state follows the federal government and retains the existing small group definition (50 or fewer employees), employers with insured non-grandfathered plans in the 51-100 employee market will not be subject to the following:

• The requirement that all of the essential health benefits are provided under the group health plan and the actuarial
value of coverage cannot fall below a Bronze level plan (60% actuarial value); and
• New underwriting requirements that limit rating variations to:
• The benefit level and tier of coverage (e.g., single vs. family);
• Geographic area;
• Age (shall not vary by more than a 3 to 1 for adults); and
• Tobacco use (shall not vary by more than 1.5 to 1).

This change has no effect on other aspects the ACA, including the Employer Penalty and reporting on Forms 1094-C and

October 2, 2015
Small Group Definition Will Not Change Nationally in 2016 –
States Have Flexibility

On October 1, Congress approved a bill repealing the Affordable Care Act (ACA) provision expanding the small group employer definition, which was scheduled to change from 1-50 to 1-100 employees on January 1, 2016. President Obama is expected to sign the bill into law next week.
The repeal legislation, the Protecting Affordable Coverage for Employers (PACE) Act, maintains the current 1-50 employee definition of a small employer and gives states flexibility to expand the small employer definition up to 100 employees if they determine market conditions necessitate the change.
The District of Columbia and several states – CA, CO, MD, NY, VA and VT – have enacted laws or issued regulatory guidance changing their small group definition to the 1-100 employee definition in 2016.* With the repeal of this ACA provision, these states may revise their laws/regulatory actions to, once again, conform to the federal definition of small employer. Until then, these laws/regulatory actions remain in effect.
Expansion of the small group definition subjects non-grandfathered insured plans of employers with 51-100 employees to the ACA community-rating standards and requires them to cover all Essential Health Benefits. These requirements result in higher costs and less carrier choice. Non-grandfathered insured plans of employers with 51-100 employees in states that keep their small group definition at 1-50 employees are not subject to these requirements.
It’s important to note that U.S-issued expatriate plans were already exempt from the ACA’s small group definition change. Plans of any group that employs more than 50 global lives will continue to be considered large group plans.

This is a reminder that all ALE’s (Applicable Large Employer’s) must comply with the “Pay or Play” rules outlined in the Affordable Care Act (ACA) beginning January 1, 2016 and the IRS Code Section 6056 reporting beginning in 2016, for the 2015 calendar year.

‘ALE’ is defined as an Employer who has an average of 50 or more Full Time Equivalent (FTE) employees during the prior calendar year (please see “Are you an ALE” ).

Note: A full time equivalent employee (FTE) is a combination of employees, each of whom individually is not a full time employee (has fewer than 30 hours of service per week) but who, in combination, are equivalent to a full time employee.

Pay or Play Rules for Groups 50-99 go into effect January 1, 2016
The Employer shared responsibility provision of the Affordable Care Act (ACA) requires ALE’s to offer affordable, minimum health insurance coverage to their full time employees, or pay a penalty. ALEs will face penalties if one or more of their full-time employees obtain a premium tax credit or cost-sharing reduction through an Exchange. An individual may be eligible for a premium tax credit or cost-sharing reduction either because the ALE does not offer coverage, or the ALE offers coverage that is either not “affordable” or does not provide “minimum value.”

IRS Code 6056 Reporting for 2015
The Individual shared responsibility provision of the ACA states that every person must have basic health insurance, also referred to as Minimum Essential Coverage (MEC), or face a penalty.

In order for the IRS to confirm if ALE’s and Individuals offer and/or has Minimal Essential Coverage (MEC), the IRS requires those who provide MEC to comply with IRS Code Section 6056 reporting.

Who

• ALE’s that offer MEC coverage

What

• MEC data to the IRS using Form 1095-C
• MEC statements to workers using Form 1094-B (Insurance Carriers will supply these directly to members)
o Due to members by January 31 (like W-2 or 1099)

When

• IRS reporting is due starting in 2016 for 2015 coverage year and every year there after
o February 28 due for paper filing
o March 31 due for electronic filing
 Mandatory electronic filing for groups over 250
o For the 2016 filing, the IRS has stated that they will not penalize employers who file, but have missing or inaccurate data.

Please click here to view the IRS guidelines on the 6056 Reporting. The tracking of the MEC data should be done through your payroll administrator, so please contact them to be sure they are tracking this data for you, if you haven’t already.

Although we know how many employees are covered under your group benefit plan, that may not represent how many actual employees you have. If you have more than 50 employees on payroll (part time, full time, etc.) please contact us so we can help determine if you need to comply with these guidelines.

Keep in mind that Corporate Strategies, Inc. now offers payroll services, and our low fees include MEC tracking. If you would like to learn more about our Payroll and/or HR services, please contact your Account Executive or Account Manager.

We strive to keep you informed of the ever-changing world of healthcare reform and relative legislation, and are always available to address any questions or concerns you may have.
We welcome your feedback, so please contact any one of us at any time!