On June 24, 2019, President Trump issued an Executive Order intending to develop price and quality transparency initiatives to ensure that healthcare patients can make well-informed decisions about their care. This is part of the consumer-driven healthcare initiative, which has been a focus of government and patient groups alike to have more transparency regarding the cost of services from hospitals and other healthcare providers, as well as expanding the ability to use certain pre-tax health spending arrangements. The goal is to help consumers to make better informed decisions regarding their healthcare. It is also intended to address so-called “surprise billing,” which can expose patients to unexpected medical bills. The Executive Order directs federal agencies to promulgate regulations and issue guidance to meet these objectives.
Transparency in Prices
The Executive Order instructs the Department of Health and Human Services (HHS) to promulgate regulations requiring hospitals to publicly post standard price information for services rendered in an easy-to-read format. The regulations should mandate the disclosure of standard charge information for services, supplies, and any other fees that apply to the hospital and its employees. HHS may also use the Executive Order to create regulations for other providers and self-funded health plans to also post standard costs for services and supplies. The objective of such disclosure is to allow patients to make more informed decisions about the cost of services and goods if the patient goes to a certain healthcare facility. If a patient understands the cost and quality of services, they could avoid unexpected costs. It could also facilitate further analysis regarding the cost differentials between facilities and providers. The standard costs posted must be regularly updated, in order to provide accurate, up-to-date pricing. The Executive Order also requires the agencies to monitor the hospitals, providers, and plans for compliance.
Increased Access to Healthcare Information
The Executive Order directs applicable agencies to increase de-identified claims data to give researchers, providers, and other parties more information and access to taxpayer-funded healthcare programs. Such parties could create better educational materials for consumers by being able to access more aggregated public data.
Enhancing Patient Control over Healthcare
This provision of the Executive Order directs the Secretary of Treasury to propose regulations to help patients who have high deductible health plans (HDHPs). Part of the guidance would allow HDHPs to cover low-cost preventive care, before the deductible, for medical care that helps maintain health status for individuals with chronic conditions. Currently, drugs or medications used to treat other existing illnesses, injuries, or conditions are not considered permitted “preventive care” for Health Savings Account (HSA) purposes.
The directive also includes expanding the definition of eligible medical expenses under the Internal Revenue Code to include expenses related to certain types of arrangements, such as direct primary care and healthcare sharing ministries. Furthermore, the carryover allowance for health flexible spending arrangements would also be increased, from the current $500 limit. This could enable consumers to better reserve pre-tax money to help further fund their own healthcare costs.
Building upon the proposals already occurring in federal agencies and Congress, the Executive Order further directs the agencies to report to the President any additional steps that can be taken to help control surprise billing issues. Surprise billing often occurs when an individual goes to a facility that is in-network with his or her plan, but a provider giving certain services is not part of the facility contract. This means that the patient could be charged for out-of-network provider services because it is not covered under their health plan, regardless of the facility being in-network. The patient is then responsible for an unexpected bill. Some of the previously proposed changes for surprise billing include changes to out-of-network reimbursement when a facility is in-network under the health plan, especially for emergency services.
Current Impact on Employers
The Executive Order does not make any changes to existing regulations; it directs agencies to propose and create regulations associated with the Executive Order. Employers, plan sponsors, and administrators should be ready to implement new changes as they occur in the future. Consumers, plan sponsors, and employers alike may benefit from these regulations as the increase of information provides further education to plan participants and help them make more well-informed decisions concerning their healthcare.
|About the Author. This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at email@example.com or firstname.lastname@example.org.|
|The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2019 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.
DEERFIELD, IL – Alera Group, a national employee benefits, property & casualty, risk management and wealth management firm, appointed Mark Englert as national Property & Casualty Practice Leader.
Englert will be responsible for continuing Alera Group’s path toward building world-class property & casualty solutions. He will work closely with firms across the nation to enhance client experiences, build out new capabilities and coordinate services and resources between firms. Englert will look for additional capabilities already in existence within Alera Group, as well as identifying areas to enhance moving forward.
“We are very excited about the new depth and breadth that Mark’s expertise will bring to Alera Group’s Property & Casualty team,” said Jim Blue, President of Alera Group. “Mark will work closely with the entire leadership team on a collaborative basis to assist with many exciting initiatives.”
Englert comes to Alera Group from a national insurance broker, where he was a Managing Director. He brings more than 25 years of experience to his role with Alera Group.
“I look forward to continuing to develop Alera Group’s property & casualty resources within each individual firm, as well as a collaborative whole,” said Mark Englert. “Our ongoing leverage of property & casualty expertise allows us to design unrivaled national solutions for each of our firms, creating even more exceptional experiences for our clients.”
As Property & Casualty Practice Leader, Englert joins Alera Group as the latest member of an industry-leading team of professionals who are dedicated to Alera Group’s collaborative growth across the United States. For more information about Alera Group, visit www.jmjwebconsulting.com.
About Alera Group
Based in Deerfield, IL, Alera Group’s over 1,500 employees serve thousands of clients nationally in employee benefits, property and casualty, risk management and wealth management. Alera Group is the 15th largest independent insurance agency in the country. For more information, visit www.jmjwebconsulting.com or follow Alera Group on Twitter: @AleraGroupUS.
You want to save money on health care benefits and you’ve heard there are some great alternatives to traditional insurance. But which option is right for your company?
CDHP or HDHP? And do you need an HSA, HRA or FSA account?
Here’s a quick look at what each plan and account offers so you can determine with the assistance of your broker if one or more of them would be a good fit for you and your employees.
Consumer-Directed Health Plans (CDHP)
Consumer-Directed Health Plans (CDHP) use high deductibles, combined with a tax-advantaged health savings account (HSA), health reimbursement account (HRA), or flexible spending account (FSA). Employers and employees make pre-tax contributions throughout the year and pay routine medical expenses from the account.
Money not spent can be rolled over to the following year — if the account is an HSA or HRA. This is not true for FSAs. The high-deductible health insurance plan pays for care once the deductible is met.
The difference between a traditional plan and a CDHP is that members pay higher monthly premiums for a traditional plan, but the insurance company covers many of the costs. With a CDHP’s lower premiums, members have more money for funding a health savings account. Keep in mind, though, that the plan can be expensive in the long run if the member needs a great deal of care because much of the cost will come out of their savings or bank accounts.
One of the biggest advantages of a CDHP is that members have the motivation to find the lowest prices and use health care services carefully. The Centers for Medicare and Medicaid Services found that, by increasing out-of-pocket costs, consumers become better health care shoppers because they have “more skin in the game.” In comparison, members who have traditional coverage pay a flat rate for services and therefore don’t have the same incentive to save money.
Currently, consumers who seem most interested in CDHPS are millennials, people born between 1981 and 1996. The Employee Benefit Research Institute (EBRI) has found that millennials want more say over their health care decisions. Millennials also had a higher likelihood to engage in wellness and preventive health behaviors.
One negative, according to researchers from the Indianapolis University and the Center for Health Reform in Dallas, is that CDHPs often encourage members to use fewer health care services as a way to save money. Research conducted by the National Business Group on Health (NBGH) revealed that consumers enrolled in CDHPs and HDHPs often are more worried about saving money than seeking adequate health care.
High-Deductible Health Plan (HDHP)
An HDHP is a specific type of CDHP and there are several regulations that a health plan must meet in order to be considered as an HSA-eligible HDHP. Generally, if a plan is a CDHP with an HSA, and the deductible is $1,350 (for a self-only plan) or $2,700 (for a family), most likely it is an HSA-eligible HDHP.
Total yearly out-of-pocket expenses, including deductibles and cost-sharing (co-pays, coinsurance) for an HDHP can’t surpass $6,750 for an individual or $13,500 for a family.
CDHPS, in addition to having lower premiums, can save employers money in taxes.
The Kaiser Family Foundation’s 2018 Employer Health Benefits Survey revealed that employers who elect a CDHP can save an average of $1,722 compared to a traditional plan. And, employers who incentivize employees by matching HSA contributions through pre-tax payroll deductions can save on FICA tax (7.65%).
If you would like help finding the right plan to fit your firm, please contact us.
Due to the lack of actuarial data, it’s been difficult to price cyber liability insurance. This is one reason Insurers depend so much on evaluating each insured according to its risk management procedures and risk culture. As a result, cyber risk coverages are more customized and, therefore, can be more costly, depending on the vulnerabilities of the system and the environment.
The type and cost of cyber liability coverage offered by insurers is based on the type of business, its size and geographical scope, the number of customers it serves, its web presence, the type of data it collects and stores and other factors, including its risk management and disaster response plan.
Cyber liability policies might include one or more of the following types of coverage, according to the National Association of Insurance Commissioners:
• Liability for security or privacy breaches. This would include loss of confidential information by allowing, or failing to prevent, unauthorized access to computer systems.
• The costs associated with a privacy breach, such as consumer notification, customer support and costs of providing credit monitoring services to affected consumers.
• The costs associated with restoring, updating or replacing business assets stored electronically.
• Business interruption and extra expense related to a security or privacy breach.
• Liability associated with libel, slander, copyright infringement, product disparagement or reputational damage to others when the allegations involve a business website, social media or print media.
• Expenses related to cyber extortion or cyber terrorism.
For more information about cyber security insurance, please contact us.
On June 13, 2019 the Department of Labor, the Department of Health and Human Services, and the Treasury Department (the “Departments”) released the final rule concerning health reimbursement arrangements (HRA) for individual market coverage and excepted health benefits. The rule, based on an executive order from President Trump in 2017, is intended to increase choice in plan options, which could lead to greater flexibility in choice and provide more affordable healthcare. The final rule impacts many different entities and individuals, including employers, health plan issuers, employees, plan sponsors, and those who purchase individual health plans. This rule is effective for plan years starting January 1, 2020.
An HRA is an account-based health plan that allows employers to reimburse employees for medical care expenses. It is funded solely by employer contributions. Amounts reimbursable under an HRA are typically limited to a certain amount during a certain period (for example, $500 for expenses incurred during a calendar year). Under prior IRS rules issued as part of Affordable Care Act (ACA) implementation, HRAs offerings were limited to an extent. Under those rules, an employer may offer an HRA to employees only if the HRA is “integrated” with a qualifying group health plan. Under the new final rule, some of the restrictions have been eliminated, and the Departments have determined that other types HRAs can be integrated with individual market coverage and Medicare in a way that meets statutory requirements.
Notably, under the final rule, an employer of any size could offer an Individual Coverage HRA that can be used to pay for Medicare (e.g., Parts B and D) and Medicare Supplement premiums, as well as other medical care expenses, without violating the Medicare Secondary Payer rules. However, if the employer offers the Individual Coverage HRA to full-time employees it cannot offer group health plan coverage to that class of employees.
What the Rule Does
The final rule essentially adds two new types of HRAs: The Individual Coverage HRA and the Excepted Benefits HRA.
Individual Coverage HRA
Overall, an Individual Coverage HRA is funded exclusively by the employer and may reimburse employees for medical care expenses, including individual market health insurance premiums. The difference under the new rule is that the employee must be enrolled in individual health coverage (or Medicare) and not group health plan coverage. This includes plans purchased on the Marketplace Exchange. It does not include plans that only cover certain excepted benefit, such as dental or vision, or short-term limited-duration plans. An Individual Coverage HRA cannot be offered to employees who are also offered a traditional group health plan. An employer may offer this HRA to different classes of employees (e.g., full-time vs. part-time, salaried vs. hourly) within certain prescribed limits.
While the rule is meant to primarily benefit small and mid-sized employees, large employers may also offer an Individual Coverage HRA. This type of HRA will also be considered an offer of coverage under the ACA for employer mandate purposes. An Individual Coverage HRA can impact eligibility for a premium tax credit; therefore, the employee must have the option to waive or opt-out of future reimbursements. To comply with the employer mandate, the employer should make the determination that the Individual Coverage HRA provides enough contributions for certain Marketplace coverage to meet affordability requirements. Additionally, an employer should have processes in place to verify an employee (and family, if applicable) has individual coverage.
Excepted Benefit HRA
An Excepted Benefit HRA means that an HRA can be offered as an “excepted benefit” by an employer. An “excepted benefit” is an insured or self-insured plan that meets certain requirements but is usually not integral to a major medical health plan. An Excepted Benefit HRA can be used to reimburse medical care expenses in addition to other excepted benefits. The HRA itself is considered an excepted benefit because it is neither integral to a health plan nor is it a health plan itself.
Certain requirements must be met to offer this type of HRA, including that it must be offered to employees along with an option to enroll in a non-excepted group health plan, although enrollment in a group or individual health plan is not required to participate in the Excepted Benefit HRA. This is a significant improvement to HRAs under the final rule. These HRAs cannot be used to reimburse health plan premiums, including Medicare and individual coverage, and can only be used for medical care expenses, COBRA coverage, or premiums under an excepted benefit (e.g., dental, vision or short-term limited duration insurance). Finally, the annual HRA contribution cannot exceed $1,800 (adjusted for inflation starting in 2021).
What Employers Should Expect Next
If an employer wants to offer an Individual Coverage or Excepted Benefit HRA, it is suggested to consult with qualified ERISA counsel. There are additional requirements and guidelines an employer will need to meet in order to comply with the final rule. Special enrollment periods may need to be established in order to allow employees and employers to take advantage of the final rule. The Departments and other federal government agencies, including the IRS, will issue further guidance regarding this rule. Such guidance will be necessary in order to correctly implement either type of HRA under the final rule.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our employee or our clients. This is not legal advice and no client-lawyer relationship between you and Alera Group or any of its employees is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and the Alera Group are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
Your insurance may cover your losses, but will it be enough to meet new building code requirements if you rebuild?
A good insurance program will protect your business property from loss due to fire, theft, vandalism and more. But without certain important coverages, your property coverage could leave you short of the funds needed to rebuild and recover.
Do you own your business premises? Any building more than a few years old might not comply with current building codes, as well as additional regulations such as the Americans with Disabilities Act.
When property damage forces you to rebuild or remodel, you most likely will have to bring your construction up to current codes. Most property policies exclude coverage for loss due to complying with an ordinance or law regulating construction, repair or occupancy of any building.
So even if your building is properly insured to value, your policy will not cover the additional costs of bringing it up to current codes.
To make matters worse, after a portion of your building is damaged, local authorities will likely require you to repair undamaged portions of your building to bring them up to current codes. And since remodeling usually costs more on a square-foot basis than new construction, these repairs can be costly.
If a covered peril damages your building, or any part of it, you’ll probably have some trash and debris to remove before repairs can begin. Will your insurance policy cover these costs? The typical commercial property policy provides debris removal coverage as an “additional coverage” over and above your property policy’s limits. It will “pay your expenses to remove debris of covered property caused by or resulting from a covered cause of loss” and usually limits coverage to 25 percent of “the insurer’s liability for the direct property loss by a covered cause of loss, plus any applicable deductible (unless an additional debris removal limit is shown in the declarations),” according to Adjusting Today.
If the total of the direct physical loss costs and debris removal costs exceeds your policy limits, or if debris removal expenses exceed the debris removal “additional coverage” limits, most policies will provide an additional $10,000 in debris removal coverage per incident. In some instances, however, debris removal costs could greatly exceed the cost of the direct property damage. Debris removal can cost more than you might think. If your building is older, it could contain lead paint, asbestos and other contaminants that require special handling and disposal by law.
You might also have debris removal costs even without any covered property damage. For example, a flood or windstorm could deposit debris from another property onto yours. In that case, the debris does not come from “covered property” under the policy, which would not cover removal costs. Exceptions might exist when the debris itself is causing damage to covered property.
Increased Cost of Construction
A policy endorsement, or addition, called “ordinance or law coverage” or “increased cost of construction coverage” can help you cover some of the unexpected costs of disaster recovery.
This endorsement provides three types of coverage when laws or ordinances require you to spend more on reconstruction.
• Coverage A covers you for the cost of making required repairs to the undamaged portion of a building.
• Coverage B covers you for the costs of demolition and debris removal.
• Coverage C provides coverage for increased costs of construction, or your actual costs of bringing the damaged portions of the building up to current codes.
The standard property policy covers none of these costs, so without ordinance or law coverage, the building owners would have to pay these expenses. You can select the amount of additional coverage you need, which will vary with the age of your building, the stringency of applicable building codes, and your exposures to covered causes of loss, such as fire.
To obtain ordinance or law coverage, your property policy must be written on a replacement cost basis, rather than actual cash value basis. If you decide to relocate rather than rebuild after a total loss, your replacement cost coverage would pay the replacement cost of your building, but the increased cost of construction coverage would not apply, since no reconstruction actually occurred.
Does your property policy have these endorsements? If you’re not sure, give us a call.
Would you require or incentivize your employees to share data from their fitness trackers if it would significantly lower premiums and/or improve their health?
In exchange for discounts, many insurance companies now offer interactive policies requiring members to share health data captured through wearable devices, such as smartwatches. Life insurance company John Hancock Financial announced last fall that it now only sells interactive policies.
A National Association of Insurance Commissioners representative explained that insurance companies use data from devices such as Fitbit to adjust premiums or give discounts. If insurers find that employees’ risk profile is lower because of healthy fitness habits, future premiums may be lowered.
Wearable fitness technology can track an individual’s heart rate, sleep patterns and steps taken — although many insurance companies only track steps taken.
Of course, insurance companies benefit from insuring healthier members and believe that members will be more active if they know they are monitored. Many people in these programs say they are more active when they know their progress is being monitored.
Another benefit to companies is that once members get used to using their smart devices, they tend to use other online services as well, including telemedicine for virtual doctor’s appointments instead of going to a clinic for minor issues.
But the question for companies is whether it’s worth it for employees to share this additional information, even if it does encourage them to be more fit if they feel it gives away too much of their privacy.
Data privacy is also a concern for companies. While insurance companies maintain they follow strict privacy guidelines to keep data safe, breaches are more frequent. The theft of medical data from 78 million Anthem insurance company customers in 2015 shows how valuable medical data is to thieves. Experts worry that when more insurers collect fitness tracker data, cyber attackers will target these companies.
HHS Proposes Revisions to ACA Section 1557 Regulations
At the end of May, the Department of Health and Human Services (HHS) released a proposed rule to revise regulations previously released under Section 1557 of the Affordable Care Act (ACA). The HHS goal with the proposed rule is to remove what the department views as redundancies and inconsistencies with other laws, as well as reduce confusion.
Changes in Compliance with Section 1557 Proposed Rule
ACA Section 1557 applies to “covered entities” – i.e., health programs or activities that receive “federal funding” from HHS (except Medicare Part B payments), including state and federal Marketplaces. Examples include hospitals, health clinics, community health centers, group health plans, health insurance issuers, physician’s practices, nursing facilities, etc.
Under current rules, “covered entities” include employers with respect to their own employee health benefit programs if the employer is principally engaged in providing or administering health programs or activities (i.e., hospitals, physician practices, etc.), or the employer receives federal funds to fund the employer’s health benefit program. Group health plans themselves are subject to the rule if they receive federal funds from HHS (e.g., Medicare Part D Subsidies, Medicare Advantage). In other words, employers who aren’t principally engaged in providing health care or health coverage generally aren’t subject to these rules directly unless they sponsor an employee health benefit program that receives federal funding through HHS, such as a retiree medical plan that participates in the Medicare Part D retiree drug subsidy program.
The most prominent proposed change is to the provision in Section 1557 which provides protections against discrimination on the basis of race, color, national origin, sex, age, and disability in certain health programs or activities. HHS’ proposed regulation would revise the definition of discrimination “on the basis of sex” that currently includes termination of pregnancy, sex stereotyping, and gender identity. The proposed rule, if finalized, would remove gender identity, stereotyping, and pregnancy termination as protected categories under Section 1557—though they will remain protected under other civil rights laws and regulations.
Certain compliance requirements on covered entities will also change, including the narrowing the scope of who Section 1557 regulates. Entities not principally engaged in healthcare will be subject to Section 1557 only to the extent they are funded by HHS. Entities whose primary business is providing healthcare will also be regulated if they receive federal financial assistance. A “health program or activity” specifically would not include employee benefit programs, including short-term plans and self-funded ERISA plans as long as they do not receive funding from HHS. The proposed rule also regulates insurance carriers only with respect to products for which the carrier receives federal financial assistance; the current rule regulates all products if the carrier received federal funding for at least one product.
Additionally, more flexible standards concerning individuals with limited English proficiency are proposed, including revising the “tagline” requirement. The tagline requirement requires distributing certain notices in 15 different languages in every “significant” publication associated with a health plan (anything larger than a brochure or postcard). HHS views this requirement as being too costly without data to back up that the taglines are beneficial. If the proposed rule is finalized, the tagline requirement will be eliminated.
Although there are provisions and definitions that will be changed or eliminated, parts of Section 1557 will remain intact. Likewise, HHS expects other agencies and departments to oversee and enforce nondiscrimination laws that will no longer be under HHS purview.
What to Expect Next
HHS is required to allow public comments of the proposed rule until approximately July 23, 2019. Once public commenting is closed and considered, HHS will likely release a final rule with answers to certain comments unless there are major changes to the proposed rule.
Until the proposed rule is finalized, employers who are covered entities (or whose plans are covered entities) should continue to treat termination of pregnancy, sex stereotyping, and gender identity as protected categories in relation to health programs and activities. Likewise, all other areas of Section 1557 should continue to be followed, including who is regulated and the tagline requirement. States and localities may give greater protections so it is important to keep in mind that there may be further requirements under those local laws and regulations.
About the Author. This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at email@example.com or firstname.lastname@example.org.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2019 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.
Alera Group: Philadelphia (formerly Pentra) supports Autism Speaks. This organization dedicated to promoting solutions for the needs of individuals with autism and their families through advocacy, support, increasing understanding and advancing research.