Volume Eighteen, Issue One February 2015

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1 Volume Eighteen, Issue One February 2015 THE ACA IN 2015 The Affordable Care Act (ACA) has had mixed support ever since it passed in Many Republicans were opposed to it from the beginning. The decisive Republican win in the November elections means Republicans have retained the majority in the House and gained the majority in the Senate. What s more, a number of Republicans won governorships. What will this change in leadership mean to the ACA between now and the next presidential election in 2016? That remains to be seen but 2015 will be another pivotal year for the ACA. The 114 th Congress was seated on January 6, They got to work immediately. Two bills that may affect the ACA have passed the House: The Hire More Heroes Act of 2015 (Heroes Act) would amend the ACA so that veterans who are eligible for health care coverage from the U.S. Department of Veterans Affairs or Tricare are not counted when determining whether an employer is an Applicable Large Employer (ALE). ALE s with 50 or more full time equivalents must meet the employer mandate requirements. This bill is designed to encourage small businesses to hire veterans. The Save American Workers Act (40 Hours Act) would define full-time employment as working 40 or more hours a week. For many employers, a change in the full-time hour threshold would have a material impact. Currently, the ACA requires employers to either offer minimum essential coverage (MEC) to employees working 30 or more hours a week or face potential penalties. Until now, few employers considered 30 hours a week to be full-time. They believe the 30-hour threshold is too low and it creates employer liability. Employers have to either offer coverage or reduce work hours. An increase to 40 hours will benefit most employers. While you would think the Republican majority in both houses may have impact, it might not be the impact you would expect. The Republicans hold 54 seats in the Senate. To bring a bill for a vote in the Senate, sixty senators must support that vote. Republicans will need six Democrats to support voting on the bill to even bring it to a vote in the Senate. The Hire More Heroes Act of 2015 will likely have enough support in the Senate to prompt a vote. The Save American Workers Act is not likely to have enough support to even allow a vote in the Senate. Continued on Page 2 We welcome your comments and suggestions regarding this issue of our Viewsletter. For more information, please contact your Account Manager or visit our website at WORLD CLASS. LOCAL TOUCH.

2 Volume Eighteen, Issue One February 2015, Page 2 The Republicans don t have enough support to override a Presidential veto. President Obama has said he will veto any wholesale effort to repeal the ACA. However, he will consider potential changes to the ACA to address some of the ACA s challenges. The Republicans have indicated that the new Congress will focus on the ACA. Republicans may try to change any of the following aspects of the ACA: Individual Mandate - The individual mandate will affect taxpayers in early Taxpayers will likely struggle with the tax penalty. Despite all the media coverage, many Americans are not aware they must obtain health insurance or pay a tax penalty. Plus it will be a challenge for the IRS to administer the mandate with all the exemptions. Employer Mandate - Congress may revise many aspects of the employer mandate. The House has already passed a bill to increase the full-time hour threshold. Employers are opposed to the mandate for primarily two reasons. First, the employer mandate greatly affects employers that did not offer health coverage to a large segment of their employees. Most affected are employers with tight margins and primarily low income employees. The second reason involves the employer reporting requirements. Employers with 50 or more fulltime and full-time equivalent employees are required to report detailed information on employees every month. Many current benefit administration systems are not designed to track the required information or provide the necessary historical snapshots. Employers are concerned because they don t have the resources they will need to devote to this reporting. The new Congress may work to revoke this ACA requirement or even delay the mandate. However, with only 54 Republicans in the Senate, they may not be successful in this effort. Taxes and Fees - The ACA includes a number of taxes and fees to support various aspects of health reform. The tax on medical devices has been debated since it launched. Repeal of the excise tax on medical devices has significant support. The tax revenue is less than expected. Congress is debating how to replace the revenue this tax is expected to raise. Many members of Congress are arguing the repeal would need no offset. Washington insiders think there is enough universal support to repeal the medical device tax. Congress is not the only branch of the government that can affect the ACA this year. The judicial branch of the government will weigh in again. The DID YOU KNOW? 1 in 68 children have an autism spectrum disorder Currently 37 states have laws requiring insurers to cover autism treatment 82% of large self-funded employers offer autism coverage; these employers cover the following services: 74% cover diagnostic services 68% cover speech, occupational and physical therapies 63% cover medication management 56% cover inpatient and outpatient treatment services 36% cover intensive behavioral therapies Source: 2013 National Survey of Employer-Sponsored Health Plans, Mercer Supreme Court has announced it will hear arguments on King v. Burwell in early March. At issue in this case is whether the ACA allows subsidies in federally-run Marketplaces. The statute says that the subsidies are available in state-run Marketplaces. However, the Department of Treasury subsequently ruled that the subsidies are meant for federally-run Marketplaces as well. If the Supreme Court finds the Department overstepped its authority with this ruling, the impact would be substantial. From an employer perspective, penalties associated with the employer mandates are triggered when an employee receives subsidized coverage in a Marketplace. Subsidies limited to just state-run Marketplaces will substantially reduce some employers liability since, according to Kaiser Family Foundation, only 14 state-based marketplaces exist. The Supreme Court s decision is expected in June. Continued on Page 3

3 Volume Eighteen, Issue One February 2015, Page 3 Assuming the Supreme Court finds that subsidies are not available in the federally-run Marketplaces, expect the government to be ready. They will try to set a minimum level of state involvement to call a Marketplace state-run. Republicans will be ready as well. The Republicans are working on a way to replace the ACA. They want to be ready with an alternative if the Supreme Court strikes down the subsidies in federally-run Marketplaces. This New Year brings more questions about how the ACA will evolve. It is certain that while President Obama remains in office, the ACA will never successfully be repealed. Public opinion remains divided on the ACA. This year, both taxpayers and employers will feel the effects of the ACA. It will be interesting to see whether the Supreme Court and the new Congress may change the ACA in MMA FOCUS ON CANCER Almost everyone has been touched by cancer. Many have either battled cancer themselves or watched as a friend or relative fought the disease. Cancer affects employers both directly and indirectly. Health plan costs are certainly affected. Work environments are also affected, especially when a beloved employee may be battling the disease. In 2009, the National Institutes of Health estimated the financial impact of cancer on the American workforce at approximately $216 billion. That breaks down to roughly $87 billion in direct medical cost and $129 billion in indirect costs. Employers hit with significant cancer cases among their employees are already wondering what can be done to make sure employees get proper treatment without spiking health plan costs. The projected cancer rate in 2015 is frightening. The American Cancer Society has projected that YOUR QUESTIONS roughly 1.6 million new cancer cases will be diagnosed this year. That will add to the roughly 14.5 million Americans with a history of the disease. To tackle cancer in the workplace, employers may want to review the resources made available by the National Business Group on Health (NBGH). Various tools are available on the NBGH s website at cancer/resources.cfm. Cancer affects businesses in so many ways. Medical expenses are just one consideration. Employers also need to understand the FMLA, their disability plans and their return to work policies. Employers also need to think about the emotional impact on an employee. The NBGH looks at cancer along a continuum of care. It provides tools to help organizations deal with many cancer-related issues that arise in Continued on Page 4 Q: Our health plan has always covered domestic partners. We will soon begin covering same-sex spouses as well. However, we find the difference in coverage between the two confusing. We understand that same-sex spouses married in a jurisdiction that recognizes same-sex marriage are now considered spouses under federal law. Does this change how we view domestic partners? A: It may not change how you view domestic partners, but it will change how you administer same-sex spouse benefits. You need to make the difference clear to your employees because some may have covered their same-sex spouse as a domestic partner in the past. Domestic partners are treated differently from same-sex spouses married in a jurisdiction that recognizes the union. It will be important to identify who are same-sex spouses and who are domestic partners. Next it may be useful to create a chart comparing legal implications for domestic partner coverage with same-sex spouse coverage. For example, COBRA and FMLA apply to same-sex spouses. These laws do not, however, cover domestic partners. Employers can always be more generous than the law requires, but they should confirm their approach with insurance carriers or stop loss carriers. Section 125 will allow employee contributions for same-sex spouses to be taken pre-tax. On the other hand, domestic partner coverage should not be tax-favored unless the partner qualifies as a Section 152 dependent. Employers need to continue imputing income on the value of the coverage provided to domestic partners. Same-sex spouse expenses are eligible under medical flexible spending accounts (FSAs) and health savings accounts (HSAs). Again, domestic partners would not be eligible for tax-favored treatment of expenses unless they qualify as a Section 152 dependent. You should also compare the impact of state law in both situations. For example, you need to know whether same-sex spouse and domestic partner health benefits are tax-favored under state law.

4 Volume Eighteen, Issue One February 2015, Page 4 the workplace. The tools start with wellness activities that may help prevent cancer. They then move into cancer screenings. Most employer health plans cover recommended screenings with no employee costshare. However, just because the screenings are free does not mean that employees are getting them as recommended. Employers can offer some screenings, such as biometric screenings, as part of wellness programs. They can launch campaigns to remind employees of what is recommended at various ages. Employers can also look to their health plan vendors to see whether the vendor can send specialized information. The next phase to consider affects only those diagnosed. This phase deals with treatment. From an employer perspective, this means looking at your health plan. It does not always mean just looking at what is covered and what is not. Health plan vendors focus on quality and appropriate care. Many cancer treatment options exist. It is critical that employers partner with vendors that can help assess evidence-based treatment protocols to steer employees to the best treatment. Some health plan vendors are developing centers of excellence for various cancer treatment options. The challenge is identifying the best treatment for each patient. That depends on many factors. The best course of treatment for one employee may not be effective for another. In addition, treatments are evolving. Many of the new specialty medications in development are chemotherapy drugs that target very specific patient profiles. Pairing with a center of excellence means cancer patients will get quality treatment for their form of cancer. Cancer treatment affects the medical plan and the pharmacy plan. There are many different types of chemotherapy. Some are administered on an outpatient basis. Others can be administered at home. Your employees need to check with your plan about covered therapies and possible restrictions. For example, many health plans limit specialty medications to a first fill of 15 days through the pharmacy. This is done for cost purposes, because often patients cannot tolerate the side effects of these aggressive treatments. The 15- day first fill limits waste, but can be a potential hassle for employees. The focus next moves to recovery and ongoing monitoring. Recovery can mean a number of things, such as a partial return to work, physical therapy or another medication. This stage occurs after the patient completes a course of chemotherapy or radiation. At this point the employee is getting the strength back to resume normal activities. Returning employees will likely be more focused on new screening recommendations. A cancer diagnosis is devastating and overwhelming. Patients do not always get answers to their questions during office visits. Employers could consider offering a Patient Advocacy program to help. Claims specialists and trained nurses staff most advocate programs. They can help answer medical questions and provide claim assistance. This support is invaluable to anyone fighting cancer. Dealing with claim issues or medical questions when you are ill is difficult. Patient Advocates are trained to help. Despite the number of cancer claims, most employers do not formally support cancer patients. The NBGH resources offer great suggestions and assistance. Look at the free tools this site offers. Also read the Cancer Benefits and Resource Guide. It is designed for a number of audiences: Employees diagnosed with cancer or recovering from treatment Employees serving as caregivers Employees looking to reduce their cancer risk TREND TIDBITS $ Annual health benefit cost increased 3.9% in 2014 $ Survey participants project the 2015 increase will be 4.6% $ HMO plans nationally are the most expensive $ Consumer driven health plans (CDHPs) paired with Health Savings Accounts (HSAs) are the least expensive nationally The nation s cancer rate is increasing and although many organizations are feeling its impact, they are not always sure of the best way to help. The NBGH has developed a toolkit for employers. It will help them think through their options to support employees diagnosed with cancer. MMA $ 2014 National average cost per employee by type of plan: HMO - $11,052 PPO - $10,644 CDHP with HSA - $8,789 (includes employer contributions to HSA) Source: 2014 National Survey of Employer-Sponsored Health Plans, Mercer Continued on Page 5

5 Volume Eighteen, Issue One February 2015, Page 5 TECHNICAL CORNER - ANNUAL ENROLLMENT Many employers have just finished their annual open enrollment, a very busy time. It begins with calculating anticipated cost in order to budget for the next plan year. Employers make decisions regarding benefits and contributions in order to align projected costs with budget targets. Once they make the decisions, they must inform their employees. Employees need the chance to either re-enroll or change their elections. Employers inform and re-enroll employees in various ways. Some employers still use paper. Others use in-person meetings and perhaps offer a customized enrollment form. Many employers use completely automated systems. Everything is handled electronically, typically through the Internet. Most employers just try to get through their annual enrollment. However, they should also schedule a session after employee elections to evaluate the process of communicating changes and entering payroll deductions. The debrief session should analyze what went wrong and which activities were cumbersome and timeconsuming. The best time to discuss changes and plans for next year s open enrollment is now. Ideas to consider for next year: Perhaps you have a complicated voluntary life plan with low participation. Can you simplify the offering to four separate options and provide premium cost to employees? Perhaps you can streamline your medical or dental plan options. If you offer multiple plans, reconsider the value of offering so many options. Can you cut back? Perhaps you still do open enrollment using paper. You may want to consider moving to an online enrollment process. To make that move, you should be interviewing potential vendors in the spring. It will take time to evaluate options and to implement a new system. You want to have decisions made and implementation started well before next year s open enrollment. Don t miss your opportunity to evaluate procedures after open enrollment. Improving your process now will help streamline open enrollment next year. MMA Copyright Marsh & McLennan Agency LLC company. This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change. Marsh & McLennan Agency LLC 3331 West Big Beaver Road, Suite 200 Troy, MI Telephone: Fax: Monroe Ave. NW, Suite 400 Grand Rapids, MI Telephone: Fax: