Wal-Mart makes some pretty big health insurance announcements over the last 2 days.

First, from yesterday:

Wal-Mart enters health insurance business – In this article, Wal-Mart discusses their plans to sell health insurance at 2,700 of their stores through DirectHealth.com (which is basically GoHealth quoting platform operated by TZ Insurance Solutions, LLC – which looks like an offshoot of Tranzact).  Though it doesn’t look like the agency has been around for very long, this will obviously put them on the map.

Then, today:

Wal-Mart cuts health benefits for some part-timers – I guess this is one of those good news/bad news deals.  Bad news – part-timers are not getting access to coverage anymore.  Good news – some agents will be pitching camp in the stores soon to sell them some new policies.  How is that for the glass is half-full?

It will be interesting to see how Wal-Mart approaches this business and what kind of success they will have. It seems odd that Wal-Mart will not participate in the commissions generated.  I guess they figure that someone who comes for Health Insurance may pick up a Snickers when they are checking out?

Makes sense to me.  I personally can’t wait for the price rollback!

The DOL’s Employee Benefits Security Administration (EBSA) has 873 full-time employees, and almost 80% of its $183 million budget is dedicated to enforcement.

• 3566 firms audited so far
• 2570 firms or 72% audited received penalties
• 32% were hit with a penalty of greater than $10k
• $1.2 billion in total penalties

The DOL typically starts an audit with a letter requesting documents related to an employer’s group benefit plan—two of which are the SPD and Plan Document. The fact is, most employers don’t have one or both of these documents, and that could be a major problem during an audit.

The following are some important tips for producing these requested documents:

• Don’t ignore or delay compliance with the DOL Document Request letter.
• Submit all requested documents to the DOL within the specified deadline.
• Don’t provide documents that are not requested.
• Create a binder with tab headings, indexed in the order the documents were requested and organized chronologically (the DOL typically requests documents from the last 3-5 years).
• Provide a written explanation of the reason for any missing documents as well as a proposed resolution to the problem.

Remember, the more organized and complete the requested documentation is, the less time the DOL will spend on any subsequent on-site interview, and may actually eliminate the DOL’s need to conduct such an interview altogether. Please email me, if you would like free access to our DOL Audit Document Checklist.

Last week, the IRS release draft forms that applicable large employers and health insurance issuers will use to report information regarding health coverage, as required under the Affordable Care Act starting in 2015.

At this time, draft instructions relating to the forms are not available; however, the IRS anticipates that draft instructions will be available in August.  Both the forms and the instructions will be finalized later this year.  The forms may be found by following these links:

• Form 1094-B: Transmittal of Health Coverage Information Returns
  • http://www.irs.gov/pub/irs-dft/f1094b–dft.pdf
• Form 1095-B: Health Coverage
  • http://www.irs.gov/pub/irs-dft/f1095b–dft.pdf
• Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return
  • http://www.irs.gov/pub/irs-dft/f1094c–dft.pdf
• Form 1095-C: Employer Provided Health Insurance Offer and Coverage
  • http://www.irs.gov/pub/irs-dft/f1095c–dft.pdf

 

Applicable large employers will satisfy their reporting requirements by filing Form 1094-C (a transmittal to the IRS) and Form 1095-C (a statement to employees).   Applicable large employers that sponsor self-insured plans will complete both sections of Form 1095-C to satisfy their obligation, whereas an employer sponsor of a fully insured plan will complete only the top half of Form 1095-C.

The IRS will use Form 1095-C to assess an employer’s compliance with the pay-or-play mandate as well as whether an employee is eligible for premium tax credits to purchase coverage through the Health Insurance Marketplace.  Employers must file Form 1094-C with the IRS by February 28 following the reporting year (March 31 if filing electronically) and must provide Form 1095-C to full-time employees by January 31 following the reporting year.

Health insurance issuers, including self-insured employer-sponsored plans, will satisfy their reporting obligations by filing Form 1094-B with the IRS and by providing Form 1095-B to covered employees, who will use the information to report compliance with the individual mandate on their federal income tax return.  The IRS will use Form 1095-B to verify whether individuals have the minimum essential coverage necessary to comply with the ACA’s individual mandate.

 

The IRS has released the 2015 inflation adjusted amounts for health savings accounts (HSAs). To be eligible to make HSA contributions, an individual must be covered under a high deductible health plan (HDHP) and meet certain other eligibility requirements.

High Deductible Health Plan Coverage
An HDHP has a higher annual deductible than typical health plans and a maximum limit on the sum of the annual deductible and other out-of-pocket expenses. For 2015, the minimum annual deductible is $1,300 for self-only coverage or $2,600 for family coverage. Annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) may not exceed $6,450 for self-only coverage or $12,900 for family coverage.

(An HDHP may provide certain preventive care benefits without a deductible, as required under Health Care Reform.)

Annual HSA Contribution Limitation
An eligible employee, his or her employer, or both may contribute to the employee’s HSA. For calendar year 2015, the annual limitation on HSA deductions for an individual with self-only HDHP coverage is $3,350. For an individual with family coverage under an HDHP, the annual limitation on HSA deductions is $6,650. The limit is increased by $1,000 for eligible individuals age 55 or older at the end of the tax year.

I guess delays have come to be expected with Health Reform. Well, on February 10, 2014, the Internal Revenue Service released the final employer responsibility rule, together with a fact sheet and a series of questions and answers about the rule.  The rule finalizes rules proposed late in December 2012.

Although the rule contains a number of transition provisions, three provisions seem to be getting the most attention – for good reason.

1. The rule postpones until 2016 the application of the mandate for employers with between 50 and 99 employees, as long as employers do not intentionally reduce their workforce to avoid the rule.
2. The rule extends for a year transition relief originally available for 2014, allowing employers who have not heretofore offered affordable and adequate dependent coverage an additional year until 2016 in which to add it.
3. The rule will not penalize large employers that cover at least 70 percent of their full-time employees for 2015, giving them until 2016 to cover 95 percent of their full-time workers.

Other transition rules affect new employers and employers with non-calendar year benefit plans.

Yesterday, the Department of Treasury announced a major policy change that will impact Flexible Spending Account (FSA) plans.  In response to years of requests from administrators, employers, and FSA participants, the Treasury has modified the “use it or lose it” provision to allow for a limited rollover of FSA funds.

Details are as follows:

• Effective for the 2014 plan year, employers will have the option to allow FSA plan participants to roll over up to $500 of unused funds at the end of the plan year.
• Effective immediately, employers with an FSA plan that does not include a grace period will have the option to allow current FSA plan participants to roll over up to $500 of unused funds at the end of the 2013 plan year.

The new guidance, as issued by the IRS, can be found here.

This is a big change and should impact 2014 enrollment into FSAs.  It should also encourage employers and employees who have been discouraged by this provision to become more comfortable with their participation and pre-tax estimates.

Now that some more information has come out, I am getting a clearer picture of the financial impact of the changes coming from Health Reform.

Before I jump into my summary, I must commend ehealthinsurance.com for having the most complete summary information available today.  I was able to quickly and easily access a number of carrier summary options in only a few minutes.  I was also able to run a quote for both a 12-1-2013 effective date and a 01-01-2014 effective date.  I encourage everyone to go through this process as well.  I am curious to hear some better news scenarios than mine.  Here is a breakdown of how my personal options came in:

In 2013, I have 67 plans to choose from with the least expensive plan being $65.60 per month (the most expensive option is $480.26).  Deductibles range from $500 to $10,000 and plans include options to eliminate certain types of coverage – like maternity or office visits.

In 2014, I have 34 plans to choose from with the least expensive plan being $218.67 per month (the most expensive is $443.28.  Deductibles range from $0 to $6,300 and there has been considerable standardization of essential benefits included in these plans – like wellness paid without cost, unlimited lifetime maximums, etc.

I have been on a High Deductible Plan with a Health Savings Account for years, so I narrowed my search to HSA eligible plans.  That is where I pulled the comparisons of 2013 and 2014 plans.  As you can see from the summaries, the premiums are about 60% higher and the out of pocket maximums are about $800 (or 13%) higher on average.

This is not the best news for me.  However, I would qualify for financial assistance (subsidies) if I earned less than $37,000 per year AND I do not have to answer medical questions or stress about getting approved for coverage in 2014 like I do now.

As I pour through the newly released rate grids from Blue Cross and try to assess the impact of coming changes to the health insurance market to me and my family, it has hit me that things are changing VERY soon.  Here is where I am now and what I can see coming.

My family and I (me, my wife and 3 kids under 11) are currently insured with Humana.  Since I am unable to run 2014 rates for Humana at this point, I cannot make the comparison.  But, I will.

We have been on an HSA eligible plan for a long time now (8 years, I think).  We currently have a $7,000 family deductible and the plan pays everything after that.  We pay about $750/month and I think that includes a small amount of life insurance.

For a comparable (actually much higher OOP – $12,600) plan with BC in 2014, I would pay $902.62 per month – about 20% or $2,500 per year more!  So, I will get to pay more AND pick up another $5,000 in out-of-pocket exposure.  That is NOT cool.

I was curious to see how this compares to similar Blue Cross plans available still this year.  So, I ran a quote for my family with a December 1st effective date and was blown away.  A slightly richer plan ($11,000 OOP instead of $12,600 and 80% coinsurance instead of 70%) was $634 per month.

Now, I know this is not exactly a fair comparison.  Because, my family and I would need to submit an application answering medical questions and be approved for a 2013 policy.  Blue Cross and others will not be able to ask those questions or decline coverage starting in January.  BUT, that is more than a 30% increase in the family premium for the a plan that is not as rich.  That is  not good news.

Sorry to be the bearer of bad news (at least for me).  I know that there are plenty of folks who will be helped significantly by the changes coming from the Affordable Care Act.  And, I know that the proponents have had the best intentions.  But, for me and my family, it seems Affordable Care will come at quite a price.