The proponents of the PPACA talked up the facts that underwriting and pre-existing conditions would go away.  They did.  Premiums have rocketed up.  It is NO LONGER insurance but rather a punitive money transfer where those that have insurance pay for those who don't and the poorest people will get fined.

• The requirement that the insurance companies write all "comers" took away the insurance element and now the premiums reflect that.  
• The requirement that everyone have insurance will be, could be, enforced with the 1095 filings and from the thousands that have come across my screen in the past weeks, the poorest will be punished.

The Centers for Medicare and Medicaid Services (CMS) recently announced that they have retired certain qualifying life events for consumers searching for coverage outside of the Affordable Care Act's nationwide open enrollment period. CMS has also made it more difficult to qualify for some of the special enrollment opportunities that are still available (1).

Qualifying Life Events - And How to Prove You Are Eligible
The following describes common qualifying life events that may allow you to enroll in a major medical health insurance plan after open enrollment ends, as well as the paperwork you may need to provide in order to show that you're eligible.

• Loss of qualifying employer coverage: Some insurers require a letter from your former employer that confirms your loss of coverage as well as the date and the reason it occurred. The letter should include the names of the employee and dependents affected. Some insurers will accept a letter showing eligibility for COBRA if it provides the same details listed above.
• Loss of COBRA coverage: If you were previously insured through COBRA, some insurers require you to provide a copy of the letter you should have received stating that your COBRA coverage has now been exhausted.
• Birth or adoption of a child: Some insurers require a copy of the child's birth certificate and/or placement or adoption papers, with a court seal.
• Adding a new dependent: When a child moves in with you for reasons other than birth or adoption, you may need to provide a copy of a court order (in case of a divorce or custody settlement) or school admissions documentation or transcripts.
• A permanent move to a new coverage area: You may be required to show copies of utility bills from both your former and the new residence, dated within sixty days of the date of your move. Mobile phone bills and bank statements are typically insufficient.
• Marriage or divorce: A copy of the marriage license (translated into English, if necessary) or a court-stamped copy of the divorce decree may be required.
• Change of income that alters your eligibility for assistance: You may be required to provide documentation of your eligibility for subsidies. This is generally obtained through the government health insurance exchange serving your state.

What to Expect When Enrolling in Coverage with a Qualifying Life Event
You may have questions about what to expect when enrolling in coverage outside of the nationwide open enrollment period. Here are a few things you should know:

• You have sixty days to enroll. If you experience one of the qualifying life events described above, you will typically have a sixty-day window to enroll in a new health insurance plan.
• Loss of prior coverage due to lack of payment is not a qualifying life event. If your old plan was cancelled because you failed to pay your monthly premiums, this is not considered a qualifying life event and will not allow you to enroll in a new plan outside of the nationwide open enrollment period.
• Not all major life events are considered "qualifying" life events. For example, pregnancy is not considered a qualifying life event, though the birth of a child is. If you were previously uninsured at your old address, moving to a new coverage area is not considered a qualifying life event. Cancelling coverage under your old plan because it is too costly or cancelling your COBRA coverage because it is too costly are not qualifying life events. Loss of coverage under a short-term health insurance plan is not a qualifying life event.
• Having your paperwork handy can speed things up. It can be difficult to obtain the paperwork you may need from former employers or utility companies proving that you have experienced a qualifying life event. Work to obtain these things as quickly as possible after your qualifying life event so that your sixty-day special enrollment window doesn't close before you can sign up for a new plan.
• It can take a few weeks to confirm your eligibility: The time required for an insurance company to confirm your eligibility to enroll may vary from insurer to insurer. It may take 2-3 weeks in some cases, or even longer at busy times of year. Note that your coverage will generally not take effect immediately after approval, but may require 2-6 weeks from the date your application is approved.

Notes:
(1)  Refer to the January 19, 2016 CMS announcement on retired special enrollment periods and to the January 19, 2016 CMS clarification on residency requirements for special enrollment periods.

Ok, you get one guess the "purpose" of the Cadillac Tax.  One Guess.

I could give you a thousand guesses and you will never get this right.  Maybe two thousand.

NPR is a great source for news and has a broad scope of topics that play down the BIG headlines that get pounded on most broadcast news on TV and Radio.  They have segment called Marketplace.

I am writing this before the audio has posted but the host interviewed one of the PPACA Authors regarding the recent two year delay of the Cadillac Tax provision.  Let me say that my current plan is VERY close to invoking the Cadillac Tax as stated in the law.  The HSA contributions AND total Premium count to the calculation of the tax.  Yes, I have a high deductible plan ... $12,000 deductible ... thank you.  And for the record, my total plan costs are only about $1,000 less than the threshold for the tax.  Crazy.

Now, for the "purpose" of the tax, taking my current costs (and probably many of you) into account.  The expressed purpose of the Tax is to punish or try to reduce "excessive spending" in the health care insurance market.  WHAAAAT?

How in the WORLD does that work?  The IRS assesses a 40% TAX to put me (and you) is a plan worse than what I have now.  Wait, pinch me ... no hit me ... no wake me when this is over.  Never have I had a nightmare worse than this.  But, in a government where Tax Cuts are called "spending" and every budget line item gets an annual increase of 10% or it is called a cut, I guess that makes sense.  I just want to know where the line is forming that allows my business to increase prices 10% every year, or I get to scream foul!

Whew!  I feel better.

We need an HONEST discussion about how this works.  What is best.  Not just to grow government but to reduce real costs for care and insurance to protect our assets.

"It has been said the smart people often disagree but only one is right."

Like most people in our industry today, I get a lot of e-mail linked to blog posts and many are focused on the current "hot topic" ... 1095 Filing.

Here are two answers written by two law firms to the same question about how to report COBRA events on the 1095-C.  What am I missing?

This one can be found at this LINK
Q5:  How is COBRA coverage reported?
​A5:  Under recent IRS guidance, for the first full month of COBRA coverage, Code 1H applies (No Offer of Coverage) in Line 14 and Code 2A (Employee not employed during the month) applies in Line 16.  If the plan is self-insured, the same codes apply for the period of COBRA coverage, however, for the applicable months of coverage, Part III is completed showing the months the individuals are covered under the plan – either as employees or COBRA beneficiaries.

This one can be found at this LINK
Now let’s assume that our full-time employee, who previously enrolled in coverage, transfers to a part-time position on July 1, and remains a part-time employee for the balance of the year. The employee would qualify for an offer of COBRA coverage. For January through June, the reporting treatment would be the same as the previous example involving termination. For the balance of the year, Line 14 would continue to be coded 1E (an offer of COBRA coverage to a former employee is ignored, but an offer of COBRA coverage to an ongoing employee counts as an offer of coverage). On Line 15, the employer would report the self-only COBRA coverage rate. If the employee accepted the COBRA coverage, Line 16 would be coded 2C; if declined, Line 16 would be coded 2B (Employee not a full-time employee).


Yes, the second example is for an employee that moves to part-time but they lost eligibility and no offer can be made.  We could fill volumes with the fuzzy nature of these reporting requirements. There are dramatic differences between what the IRS said in July and September.  Our plan remains to process early and file the IRS versions a week or so before the deadlines.  That gives us the best chance of complying with the last version of the interpretations of the codes and filing requirements.

Thank you to all those that have entrusted these filings to our care!

Most of the brokers officially have their collective tongues hanging out as to the national payroll vendors ... but for clearly different reasons.

Brokers have been shackled to the Affordable Care Act ... the Federal "Fix" for the health insurance industry.  "Fix" is a very loose term and if it means the industry is now under the burden of being under the scrutiny of the "masters inside the beltway" then it is very true.  In addition to the 20-50% premium increases that nearly everyone has had to tolerate to pay for all the "free stuff" promised in the rhetoric, now employers that have 50 or more FTE's are stuck with getting gouged by the confusion and costs of the ACA required filing of 1094 and 1095 forms.  It is very very strange that our attorneys are telling us that the IRS is still fluid on how the codes will be interpreted by the IRS but the payroll companies seem to have it all together ... especially charging thousands of dollars setup for giving their clients access to screens where the client is allowed to key in all the information needed for the forms.  

So, the brokers' tongues are hanging out because they are being pushed to the limit every day because of the high volume of December renewals ... thus really working hard just to keep up.  But the national payroll companies are wagging their tongues at the smorgasbord of new fees that get to be piled into January in addition to the W2's.  

Now, reporting is important, and MoneyWise is on the wagon to help with these crazy and in someways stupid requirements.  One example.  If an employee is there for all 12 months, is on an affordable plan and the plan meets the minimum requirements the ONLY additional entry on the entire form for a fully funded plan other than the identification information in Part I is the entry 1A in the first box on Line 14 of the 1095-C.  That's it.  1A  So, for that an employer gets to pay a couple of thousand dollars in setup and they get the forms to distribute with the W2's for a mere $7 each ... Oh yeah, the national payroll companies are also charging a "buck or two" to "track the hours" as well.  Crazy!  

Whew.  I feel better now.

Ignorance can be expensive.  All I am saying is this.  Pay attention and learn what this is all about.  We have already talked to dozens of companies that will do these themselves.  Why not?  The filing standard is "good faith effort" ... so if you make a mistake, and it was based on something that was reasonable, you get the chance to fix it.  So, you fix it and move on ... move on with a few thousand dollars extra in your bank account.

Besides, who thinks these things are here forever?  By next year, it will probably be a new box on the W2 ... and why not?  FLEX, 410(k), HSA and HRA's are already there!

According to the June 26, 2015 Supreme Court decision in Obergefell v. Hodges, 2015 WL 213646, the court held that the 14th Amendment’s Due Process and Equal Protection Clauses prohibit state laws from banning same-gender marriage. Furthermore, it requires that states recognize same-gender marriages performed in other states, as well. That means that same-gender spouses are now entitled to all of the same rights bestowed upon opposite gender spouses under both federal and state law, which opens up a whole new list of potential qualified beneficiaries.

Previous to this decision, the court had ruled in the case U.S. v. Windsor, 133 S. C t. 2675 (2103) to invalidate a portion of the federal Defense of Marriage Act when they required that same-gender marriages must be recognized for federal law purposes. Unlike the recent Supreme Court decision, the Windsor case did not mandate that states allow same-gender marriages, nor did it force states to recognize such marriages performed in other states. However, after the Windsor decision, this did cause the need for federal agencies to clarify how this would impact various laws. For instance, the IRS deemed the word “spouse” would now include both same-gender and opposite- gender people who were legally married – based on the laws in the state where the ceremony was performed. But now with Obergefell case, states must recognize same-gender and opposite gender marriages equally across the board.

As for the ramifications of this ruling in terms of health and welfare benefits, it will still generally depend on whether the benefits are issued under an insured health plan or a self-insured health plan. Since state governments are now required to acknowledge the term “spouse” to include same-gender individuals in regards to their insurance laws, means that employers who sponsor insured plans will need to offer coverage to both types of spouses as well. However, because self-insured plans are not mandated by state laws, the impact is not so clear. Keep in mind, under ERISA, which all self-insured plans must adhere to, does not mandate that employers cover any spouses – whether same gender or opposite gender for that matter. Therefore, currently, it appears that sponsors of self-insured group health plans may continue to exclude coverage for same-gender spouses, however there is much controversy over whether this could result in claims of discrimination.

In terms of COBRA Laws, it appears that this recent ruling will require that group health plans now offer coverage as well as the applicable COBRA rights to an expanded group, namely same-gender spouses. As for an effective date for those insured plans that previously excluded same-gender spouses, the court did not specify an enforcement deadline. However, it is anticipated that federal agencies may issue guidelines as a result of the Obergefell case such as they did after the Windsor case: the date was determined to be effective on the day the decision was handed down, however, employers were allowed to apply this rule prospectively.

Every day e-mails and phone calls come our way with questions about the PPACA as it applies to specific situations.  The ball of confusion is compounded by years of minor and undiscussed changes over the pass 10-15 years in group contracts and broad assumptions based on guesses rather than facts.

Now, everyone is supposed to be covered.  Additional taxes and fees are built into the premium paid to cover all that apply but that may not be enough for lots of reasons.  The additional money is being gobbled up by a bureaucracy that is so vast and unguided it may never be fully understood.  Rules are proposed and published breeding further confusion and more questions about topics that have real gravity in the lives of plan participants. 

Here is one recent example.

A COBRA qualifier who was terminated in May, properly accepts and pays his premium even before his coverage as an active employee ends at the end of that month.  He has claims that are paid in June and naturally assumes that his coverage has been reinstated under his COBRA rights.  Our staff properly notified the broker and the client that he should be reinstated and by the middle of June we received his July payment and August before the end of July ... a model COBRA participant.  So, the first week in July he is refused by the local pharmacy who indicates that his coverage has been cancelled.  Then he gets a letter from the carrier and so does the pharmacy saying that his coverage is cancelled for non-payment.  We have collected and forwarded 3 months of premium to the plan sponsor totaling nearly $6,000 and the carrier has not been paid?  Well, the reason the carrier has not been paid is two fold.  The carrier requires that the monthly invoice be paid as presented ... no changes allowed.  And, the carrier has yet to load the COBRA participant in their billing system and this could easily be the case until the September or even October invoices.  Wow!  How can a Plan Sponsor pay premium if these two circumstances exist?

It is obvious that this system puts the full reconciliation burden on the Plan Sponsors ... thus the pay as presented model ... but pending claim payments or refusing approval of services until the billing system catches up is not a helpful model at all.  This specific participant will have spent nearly $8,000 before the coverage is retro reinstated ... crazy ... and a lot of unnecessary worry, phone calls and math for COBRA participants.

And next we have the "retro rules' that seem to be written in the sand.  The delays in retro enrollments just outlined certainly favors the carrier and punishes those that exercise their rights under COBRA.  But the "retro rules" have other problems as well.  An employee quits in February and accepts a new job in March at an employer that has a waiting period of 60 days.  His wife needs an outpatient procedure that was already scheduled in early March and the carrier issues a pre-authorization which is valued at $16,000.  The Plan Sponsor terms his coverage in the carrier system the first payroll after his final check in mid-March.  The procedure is successful and the now former employee knows of no problems with the claim or the process he has followed.  The employer told him that he would have coverage until the end of the month ... the employer was thinking February and the former employee was thinking March, since he did get a paycheck in March.  Ha!

As it turns out, he refused COBRA and never looked back because the insurance company had authorized the procedure that was done in a month that he thought he had coverage and he even confirmed on the phone that his coverage was active AFTER the procedure was done ... why in the world should he not skip paying for COBRA for April and get on the new employer's plan April 1st.  Enter the "retro rules".  Even though the carrier authorized the procedure, the retro term back to the last day of February was imposed in early April and in June, the hospital has been reversed billed by the carrier and the former employee gets a bill from the hospital (including a nastygram saying that the payment is late) for the full $16,000.  The hospital would have only been paid around $1,600 through the copay and carrier responsibility but that does not seem to matter.  The hospital wants their $16,000 and they want it immediately.  By this time, it is too late to accept and pay for COBRA so the young family is stuck with a $16,000 bill that should have been only $1,600.  They just assumed that the dates on the COBRA letter were wrong because the carrier assured them on the phone that their coverage was active in March when it was later retro cancelled without their knowledge.

There are thousands of stories like these.  I deal with plan sponsors and plan participants every day and the compounding of the gradual drip if change in carrier procedures and the 40,000 pages of new regulations related to the PPACA is making a mess of a system that has worked well since the 1950's.  Sure it has a lot of holes that needed to be plugged, but soon I hope the pendulum starts coming back to a place where fairness and transparency can be the rule.  The ONLY way to do that is to let the market drive the process.  How long could a car dealer, grocery store or even an insurance company survive if their was not a way to do price comparison shopping?  That is the position of the hospital and providers now.  The insurance companies are often their exclusive payors, so there is no way to compare and get the "real price" for procedures.  How can an insurance company get a procedure for $1,600 and charge an uninsured person (who happens to be the same person) $16,000?  I asked this question and the answer will be in our next blog post.  Let me know if you know the answer or if you can figure it out.

Podcasts are probably the easiest way to learn.  Ever since being convinced that successful people are lifelong learners and focused on collaborating I have been committed to both.  The captcha images above tell a simple story of smart people and computer limitations and how learning and collaborating work as exponents to each of us.

Security for online submissions had a simple solution.  Force the entry of characters that ONLY humans can read. Otherwise, a robocall (of sorts) could just fill up a database with corrupt data.  Captcha was born.  In fact, the programer that came up with the idea retired ... for one day.  He thought about the numbers of people that were doing a 10 second task when putting in the captcha code was a total waste.  But, what if that could be turned into a contribution instead.  In short order a way to use these tiny steps of entering a few letters or digits on hundreds of millions of keyboards, hundreds of millions of times each day because a free labor force that could transcribe books and put in number addresses for Google maps and is moving toward translating the entire content of the internet into all the major languages, one keystroke at a time by millions of people ... for free.  So, when you put in the captcha code, you are working and making a contribution to transcribing a classic book or a Google Streets image into a keyed address number.  Amazing.

How can this apply to us?  Think about it.  Henry Ford would be so proud.  He once said that he could train almost anyone to build almost anything because he broke each task into simple repeatable steps that were fully prescribed and measured for completion.  What efforts are being made around you and wasted?

How does this apply to me?  Harvesting all the wasted effort can yield huge rewards.  Little things add up.  Look at what we do each day.  We should ONLY do each thing once and be build something ... probably a database ... in the process.  I need to revisit, well, everything I do with the focus of building something useful with lasting value. 

Well, it depends on who you talk to and how you ask.  The tale goes that he challenged a machine to dig a tunnel and lay railroad track ... he won but died from a heart attack.  How much of it is true will remain part of what makes it a tall tale.

It has a LOT to do with us in the benefit and HR industry. Candles replaced light bulbs, cell phones replace land lines, and the Luddites lost.  Yes the Luddites.

We are driving ourselves crazy trying to keep up with the PPACA and companies like Zenefits seem to be flying past us.  The market is changing and brokers and landlines and HR managers and candles seem to be headed into the same history.

Being part of the past is not our collective desire for the future ... because it is NOT a future at all.  So, what are we to do.  What John Henry did in the tale is a short road to death.  The Luddites lost and many died with a mysterious leader who sought to stop the industrial revolution.

First, we need to recognize that this is a cycle and we cannot stop it.  The Luddites would have been far better off in so many ways had they learned that lesson first.  Next, consider finding a niche and get there first.  With an average of 65,000 brokers in each state on the east coast, many are going to be changing jobs.  There is not room for that many brokers in the new world of the PPACA.  Not quite to the level of being a candle maker or a Luddite or a John Henry but probably half way there ... because of the new rules and increased automation and integration.

The truth remains, that the trusted relationship between a broker and an HR professional is facing changing dynamics.  Benefits are certainly headed to being a commodity and just a "checkoff" on the list of things to do with enrollments and plan designs moving to clicks for employees to make.  Notifications and compliance still matter but that too will be put on the auto pilot of "clicks"  for all but the newest smallest employers.

That is another trend to remember.  The cycle includes a trickle down of abilities for administration and benefits.  Remember when only the large companies had multiple plan choices and 401(k) plans.  Now PayChex (whose average client is 5 employees) has more 401(k) plans in place than just about all the others administrators put together and it is rare for a company of 20 or so employees not to have at least two or three medical plans, two dental plans and vision coverage as well.  The cycle we need to see is simple ... what big companies have today, small companies will have soon.

Next ... more change.  If the Supreme Court throws out the subsidies in 36 states, something will plug that hole quickly and could even be worse for the current market situation.  If the subsidies are upheld, the markets should settle down for a season ... but not for long.  Premiums are far too high without a reduction of participation.  We moved from indemnity to PPO to HMO to High Deductible to Marketplace to ... (what ever is next)

The ONLY thing we have in our control are the two things that make all successful people successful.  These two things measure every successful person I have met and in a USA Today study 20 years ago it was true and remains true today.  Successful people are Life Long Learners and Effective Collaborators. 

Think about it ... that is what it takes to succeed.  We don't need some new law or plan or industry protection.  We need to be committed to learning and work well with others that make 1+1=3 or 5 or 10.

Instagram had 16 employees when it was sold in 2012 for $1 billion.  Wait.  2012 was a bad year right?  Not for Instagram.  Life Long Learning and Effective Collaboration ... $1 billion.  Now, there is a formula!

We are asked frequently about a list of DOL (Department of Labor) Audit items.  Following is a current list of items examined from actual DOL audits in most circumstances.  They can go deeper.  But if you have this list, you are far enough down the road to have little to worry about.

• Plan documents for each plan along with any amendments. (Content in all plan documents must comply with ERISA regulations.)
• Trust agreement (if any) and all amendments.
• Current SPDs.
• Form 5500 and accompanying schedules for most recent plan year and previous three years.  (IF the plan has 100 or more participants.)
• Listing of all current service providers and those from the past three years.
• All current contracts with administrative service providers on the plan and most current fee schedules.
• All insurance contracts between plan and service providers.
• Name, address and telephone number of plan administrator.
• Sample HIPAA certificate of creditable coverage and proof of compliance with on-time issuance of COBRA notices.
• Notice of special enrollment rights and record of dates when notice was distributed to employees.
• Written eligibility criteria for plan enrollment.
• Documentation regarding all mandatory employee notices, i.e., ERISA Statement of rights, Women’s Health and Cancer Rights Act notice, etc.
• Copy of most recent monthly bill for premiums (if any) from insurance carrier(s).
• Copy of check, wire transfer or other method of payment for insurance premium (if any).
• Enrollment form(s) for the plan.
• Employee handbook (if any).
• All documentation of claim adjudication and payment procedures.
• Fidelity bond (if any).

Costly Fines

ERISA’s reporting and disclosure requirements can result in fines of $110 per day, per person, per violation for every plan participant who was covered under a single contract. That fine jumps to $200 for plan participants covered by a family contract. ERISA fines represent just one flag from the DOL auditor and can cost the plan sponsor dearly. Most fines for noncompliance under the ACA are not tax-deductible, either.

Since Brokers are  licensed, clients often do not see the lines between ERISA and being the broker of record.  Those lines are quickly disappearing.  So, getting tuned up should be important to all benefit brokers.

Taking some time to catch up on the compliance rules and with your groups is a good idea ... now.  Because, the fear of audits will push them into talking to someone with answers.

A year and a half after Congress let a federal law expire that provided rich federal health insurance premium subsidies to workers who lost their jobs due to foreign competition or were enrolled in pension plans that failed, lawmakers are moving to renew the tax break.

Last week as part of a broader trade bill, H.R. 1314, the Senate agreed to renew the Health Coverage Tax Credit through the end of 2019. The subsidy expired at the end of 2013.

Until its expiration, the HCTC paid 72.5% of health care premiums for eligible beneficiaries: individuals who lost their jobs due to foreign competition, and retirees age 55 through 64 whose pension plans were taken over by the Pension Benefit Guaranty Corp.

Those subsidies could be used to offset premium payments for a variety of health care plans, such as COBRA coverage, and special trusts — known as voluntary employee beneficiary associations — that were organized for employees who lost their jobs in a variety of industries, including steel and auto parts, after their employers failed and went of business.

But Congress let the HCTC subsidies lapse at the end of 2013. Lawmakers saw less need for the subsidies with the 2014 start of health care reform law-created public exchanges and federal subsidies to eligible individuals to offset premiums they paid for exchange coverage.

But observers noted that the HCTC subsidies were, in many cases, more generous than the subsidies created by the Affordable Care Act.

Indeed, a 2013 Government Accountability Office report that found that the majority of individuals who had been receiving the HCTC would pay more for coverage in the public exchanges.

Under the Patient Protection and Affordable Care Act, premium subsidies, whose amounts decline with income, are available to eligible individuals earning up to 400% of the federal poverty level, which is set at $11,770 for an individual in 2015. By contrast, the full HCTC 72.5% premium subsidy had been available to eligible individuals regardless of their income.

“Two-thirds of the people who received the HCTC would receive either no subsidies or smaller subsidies under the Affordable Care Act,” said Alan Reuther, former legislative director for the United Automobile Workers union and now a consultant in Washington, referring to the appeal of the HCTC.

“For certain individuals, qualifying for the generous HCTC can be a better deal than purchasing through the public exchanges where they may or may not be subsidized and where they may be able to obtain coverage through a plan outside of the federal/state exchange,” added Frank McArdle, an independent benefits consultant in Bethesda, Maryland.

The House of Representatives is expected next week to begin consideration of the trade bill to which the renewal of the HCTC is attached.