Health Care Reform News

2019 Labor & Employment Law Update for California Employers

January 24, 2019 by CorpStrat News Leave a Comment

California Governor, Jerry Brown, recently signed into law several bills that will have a significant impact on California employers’ workplace obligations. Effective January 1, 2019, the new laws will restrict nondisclosure agreements and certain settlement agreements covering harassment and discrimination claims.

These changes significantly expand harassment training obligations (including for employers of under 50), require female quotas on California-headquartered boards of directors, and potentially require updating lactation accommodations.

New 2019 Affordable Care Act Guidelines and Their Effects on Businesses

January 17, 2019 by CorpStrat News Leave a Comment

Laws change all the time and it’s important for employers to stay up to date on employment-related news as they come along. The Affordable Care Act (ACA) has seen annual changes since it began nearly a decade ago. The new year 2019 is no different, especially since the tax reform act from 2017 featured a few ACA changes that take effect in 2019.

Companies must keep track of these changes in the ACA law or face fines, penalties or even worse. Here are a few major changes to look out for in relation to the Affordable Care Act in 2019:

Companies with 50+ full-time employees must offer affordable health coverage

Requiring that health coverage is offered to employees at large businesses has been a goal of the Affordable Care Act since the start. In 2018, the rule went into effect that requires companies with 50 or more full-time employees to at least have health care offered to them by their employer. This rule goes unchanged for 2019.

While affordable care must be offered, and the plans must be of high enough quality to fulfill the ACA’s coverage requirements, employees are not required to accept.

However, most employees do accept an offer of coverage, if for no other reason than to avoid the tax penalty for going without coverage. But that changes in 2019 as well.

The individual mandate for healthcare has been suspended

Up until now, if an individual did not carry ACA-approved healthcare, they would be charged an extra tax come April 15^th. This included anyone who had coverage that did not qualify for ACA, as well as anyone who lacked coverage for any amount of time during the year.

However, in 2019, this mandate has ended. Now if an individual chooses to go without coverage, they will not be penalized for doing so. This could affect employers as they may see a decline in employee enrollment in the company’s group plans.

The health insurer tax is suspended again

The Health Insurer Tax is a fee placed on healthcare providers based on the premiums they brought in throughout the year. In 2017, the fee was suspended, but it was brought back in 2018. Now it is suspended again for 2019.

The hope is that the health insurance companies will be able to control the cost of premiums now that they do not have to pay this extra fee, which could lead to better rates for employers and employees.

The affordability threshold has risen to 9.86%

In order for there to be affordable care, there must be a definition of the term “Affordable”. According to the law, the lowest-cost self-only coverage option made available to employees cannot exceed 9.86 percent of an employee’s household income.

For example, plans that use the Federal Poverty Line for affordability can’t charge more than $99.75 per month to their employees who choose to sign up for a health plan.

These are the major changes that could have an impact on many businesses around the country. Be sure to consider how these changes will affect your organization when budgeting for the next year.

California Puts up a Fight Against Association Health Plans

November 27, 2018 by CorpStrat News 2 Comments

California Ban

California is the first state to legislatively ban some of its residents from taking advantage of a Trump administration rule that expanded access to small business health plans. No associations seem to be the key to this legislature.

The state now bans sole proprietors from joining what’s known as cheap, short-term health insurance plans (association health plans). The plans were recently expanded under a Labor Department regulation that allows more small businesses, including self-employed individuals and independent contractors, to band together and buy-in on health plans as a large group. So far, they have yet to make inroads across the country.

The move by California will mean real estate agents, and others who operate as sole proprietors, won’t be able to join association health plans. The National Association of REALTORS is a major supporter of the DOL’s expansion of the plans.

California is one of a dozen states that went to court to sue the Labor Department, though the case is still pending.

For those who have been hoping to form association health plans, this CA law comes as a blow. For employers, it means more of the same and no new options for care or insurance.

History of Fraud

California’s law comes in response to years of fraud and insolvency it experienced with similar plans known as multiple employer welfare arrangements that were around before enactment of the ACA. Between 2000 and 2002, those plans left 200,000 people throughout the U.S. without coverage and racked up $252 million in unpaid bills, according to a 2004 Government Accountability Office report.

The move to ban said plans are part of a broad effort, at the state level, to dull actions by the Trump administration to untangle the federal health care law after President Donald Trump and Congress failed last year to repeal and replace Obamacare.

Finding dominance in an evolving industry is never easy. What should you invest in to make sure you keep up to date with the competition but also find a competitive edge?

CorpStrat can provide an outside perspective to help companies assess their internal operations in Insurance, Employee Benefits, HR, and Payroll.

Soaring Prescription Drug Costs

July 5, 2018 by CorpStrat News Leave a Comment

Riddle me this: What is $325 BILLION in size, nearly 2% of the GNP of USA, almost 10% of the total health expenditure of the USA, and growing at a rate of 6% a year? If you guessed prescription drug costs, you are right on the mark!

President Trump announced his plan to overhaul and address the spiraling and skyrocketing costs of prescription drugs, a problem that affects every consumer, young or old. While he stopped short of suggesting the government would regulate and negotiate directly with the industry, he did lay out a foundation that may bring some relief to consumers, in time.

The Costly Consequence

It’s a challenge to an industry that was overturned just 8 years ago, when the ACA mandated plan structure and eliminated plans that had narrow drug formularies, and limited consumer selection to generic drugs only.

The plan also stops short of seeking drastic changes to the health care industry that would more directly overhaul the costly path drugs take from development to Americans’ doorsteps.

Taken together, the administration’s strategy —which mixes new policy ideas with proposals already laid out in the White House’s 2019 budget request — reads as an ambitious attempt to alter a drug development and distribution system that both Republicans and Democrats have derided as too expensive and burdensome for patients.

While everyone on both sides of the political spectrum agree that the costs of drugs and the high-cost impact to the healthcare system is a problem, there is no consensus on “how” to address this problem and this plan leaves much room for clarity.

Public attention to pharmaceutical costs has risen in recent years, spurred by the steep price hikes some manufacturers have imposed for crucial drugs. In one of the highest-profile cases, Turing Pharmaceuticals hiked the price of its lifesaving drug, Daraprim by more than 5,000 percent in 2015 to $750. The company’s founder, Martin Shkreli, ultimately landed in jail on unrelated security fraud.

No More Modest Monthly Copays For Pricey Drugs

Under the copay accumulator programs introduced by some health plans in 2018, accumulator programs target specialty prescription drugs, which a manufacturer provides copayment assistance for. Accumulators shift a majority of drug costs on consumers and manufacturers.

Unlike conventional benefit plans, the manufacturer’s payments no longer count toward a patient’s deductible or out-of-pocket maximum. In turn, this will discourage the appropriate utilization of specialty treatmentsand many consumers won’t understand their new “benefit” plan.

Until market prices come down, consumers need to continue to be vigilant in purchasing, ask for lower cost alternatives, seek out discount programs, consider non-pharmaceutical approaches to their health, and work with their physicians / seek guidance on the most efficient way to obtain their drugs.

We understand that navigating the changes in health care can be challenging. CorpStrat will keep you appraised as the clarity of reform becomes available. Stay tuned…

Get Informed on Rising Health Care Costs

March 26, 2018 by CorpStrat News Leave a Comment

Association Based Health Insurance – A Cure For Small Group?

Under the Affordable Care Act (ACA), employers that do not meet the 50 or more full-time or full-time equivalent employee threshold to be Applicable Large Employers (ALEs), are not required to offer health coverage. Nor do they face penalties. Not surprisingly, as a result, smaller businesses often do not offer coverage.

New regulations proposed by the U.S. Department of Labor (DOL) want to change that dynamic. And in a thriving economy, where unemployment means retention is key, health insurance is a key driver in employee acquisition and retention.

Up to 11 million Americans working for small businesses or who are sole proprietors and their families lack employer-sponsored insurance. The DOL hopes new rules on HOW healthcare plans are purchased will close the gap of uninsured Americans; without eliminating options available in the healthcare marketplace.

New Rules

The proposed regulations will allow small business health plans—known as Association Health Plans (AHP)—to expand under The Employee Retirement Income Security Act of 1974 (ERISA). This may allow the self-employed and other small businesses to band together to form their own associations for the purposes of providing healthcare coverage.

AHPs would be required to accept all applicants and could not deny individuals with pre-existing conditions or charge more for people who are sick. However, they could reduce prescription drug coverage and increase coverage in other categories to compensate for the reduction, the effect of which would be to increase costs for chronic care patients.

The employer members of these plans would need to be in the same trade, industry, line of business, profession, or to have their principal place of business in the same state, or, if in multiple states, in the same metropolitan area.

Under the current regulations, an AHP is considered a single plan only if the association has a purpose or function unrelated to offering healthcare benefits and the employer members have a common economic interest. So, few options exist and all have to comply with the ACA’s “essential benefit rules”.

The end result of these new rules, or so the thinking goes, is that this will make premiums more affordable. The trade-off is that these health insurance plans would be less extensive then what is usually required by health insurance plans offered by the current marketplace. Lots of review and legislation await the proposed offering of new association plans. However, they offer a glimmer of home to the problem of rising health insurance costs.

Trump Signs Executive Order Amending ACA – Will it Help?

October 12, 2017 by Marty Levy Leave a Comment

October 12, 2017 – Today, President Trump issued an executive order allowing the purchase health insurance across state lines. From the White House:

EXPANDING ACCESS TO MORE AFFORDABLE OPTIONS

President Donald J. Trump is taking action to increase the healthcare choices for millions of Americans, potentially allowing some employers to join together across State lines to offer coverage.

* President Trump signed an Executive Order to reform the United States healthcare system to take the first steps to expand choices and alternatives to Obamacare plans and increase competition to bring down costs for consumers.

* The order directs the Secretary of Labor to consider expanding access to Association Health Plans (AHPs), which could potentially allow American employers to form groups across State lines.

o A broader interpretation of the Employee Retirement Income Security Act (ERISA) could potentially allow employers in the same line of business anywhere in the country to join together to offer healthcare coverage to their employees.

It could potentially allow employers to form AHPs through existing organizations, or create new ones for the express purpose of offering group insurance.

o By potentially making it easier for employers to band together, workers could have access to a broader range of insurance options at lower rates in the large group market.

o Employers participating in an AHP cannot exclude any employee from joining the plan and cannot develop premiums based on health conditions.

* The order directs the Departments of the Treasury, Labor, and Health and Human Services to consider expanding coverage through low cost short-term limited duration insurance (STLDI).

o STLDI is not subject to costly Obamacare mandates and rules. One study found that on average STLDI costs one-third the price of the cheapest Obamacare plans.

o Despite its low cost, STLDI typically features broad provider networks and high coverage limits.

o The main groups who benefit from STLDI are people between jobs, people in counties with only a single insurer offering exchange plans, people with limited coverage networks, and people who missed the open enrollment period but still want insurance.

* The order directs the Departments of the Treasury, Labor, and Health and Human Services to consider changes to Health Reimbursement Arrangements (HRAs) so employers can make better use of them for their employees.

o HRAs are employer-funded accounts that reimburse employees for healthcare expenses, including deductibles and copayments.

o The IRS does not count funds contributed to an HRA as taxable income.

o Expanded HRAs could potentially give American workers greater flexibility and control over how to finance their healthcare needs.

OBAMACARE IS FAILING: The status quo is not delivering quality healthcare options for the American people, who are facing higher premiums and fewer options.

* The percentage of workers at small firms receiving coverage through their employer has declined from nearly half in 2010 to about one-third in 2017.

* In 2018, more than 1,500 counties (nearly 50 percent of all counties) are projected to have only one option on their individual insurance exchanges, according to the Centers for Medicare and Medicaid Services.

o This means 2.6 million Americans, or nearly 30 percent of exchange participants, will be left without a choice of insurers.

* From 2013 to 2017, average premiums for individual health insurance plans have doubled, increasing by $2,928 according to the Department of Health and Human Services.

o During this period, every State using www.healthcare.gov saw individual insurance premiums increase.

* Americans are departing the Obamacare exchanges and millions are choosing to pay the law’s penalty instead.

o 500,000 fewer Americans enrolled in an Obamacare plan in 2017 compared to the prior year.

o Current exchange enrollment is 60% below what the Congressional Budget Office expected when the law took effect.

o 6.7 million Americans chose to pay the Obamacare penalty in 2015 rather than purchase insurance on the exchanges. 37% of penalized households made less than $25,000, and 79% of penalized households made less than $50,000