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Breaking: House Passes Obamacare Repeal & Replace

Breaking: House Passes Obamacare Repeal & Replace

by | May 4, 2017 | AHCA, Health Care Reform, HSA, Obamacare, Tax

Breaking: House Passes Obamacare Repeal & ReplaceBreaking: House Passes Obamacare Repeal & Replace

In a first step toward repealing and replacing Obamacare ie. Affordable Care Act (ACA), the  House of Representatives narrowly passed the American Health Care Act (AHCA) today by a vote 217-213. Every House Democrat and 20 House Republicans opposed the measure. The bill will now be sent to the U.S. Senate. Until this legislation is passed by the U.S. Senate and signed into law by President Trump, all existing ACA requirements remain in effect, including penalties for noncompliance.
Notable Provisions of the American Health Care Act
If signed into law, the American Health Care Act would, among other changes, make the following revisions to key features of the ACA over the next three years:

SIMILARITIES

  •  Pre-Exissting Conditions Covered: Under the Affordable Care Act, insurance companies are required to cover pre-existing conditions. This is still the case under the AHCA, but the creation of High Risk Pools, funded with $8 billion dollars was an added amendment to the AHCA.  Pools provide coverage if you have been locked out of the individual insurance market because of a pre-existing condition, and are subsidized by a state government. The premium is up to twice as much as individual coverage. Individuals who have a lapse in coverage of more than 63 days will be required to pay a 30 percent premium surcharge for 12 months when coverage is purchased.
  • Adult Coverage to Age 26 Covered: People who are under 26 years old can stay on their parents’ health insurance plan under both the ACA and the AHCA.
  • No Lifetime Cap: People who are under 26 years old can stay on their parents’ health insurance plan under both the ACA and the AHCA.

CHANGES

  • “Pay or Play”: Penalties for noncompliance with the “pay or play” coverage requirement (which mandates, in general, that employers with 50+  FT
    GOP Repeal & replace Provisions

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     employees [including full-time equivalent employees] must offer affordable, minimum value coverage to their full-time employees, or pay a penalty tax) are zeroed out. However, the Form 1094 & 1095 reporting requirements are unchanged by the bill.

  •  Individual Mandate: Penalties for noncompliance with the individual mandate are zeroed out, effectively repealing the mandate. In its place, the bill requires issuers in the individual or small group markets to impose a 30% penalty on the health insurance premiums of individuals who do not maintain continuous health insurance coverage.
  • Essential Health Benefits:   AHCA eliminates the requirement for Essential Health Benefits. The AHCA allows limited policies that are only in case of major illness or injury.
  •  HSA Contribution Limits: Limits on contributions to health savings accounts (HSAs) are increased to equal the inflation-adjusted annual out-of-pocket expenses limitation imposed on high deductible health plans (currently $6,550 (self-only coverage)/$13,100 (family coverage)).
  •   Health FSA Contribution Limits: Limits on contributions to health flexible spending arrangements (health FSAs) are eliminated.
  •  Tax Credits for Individual Coverage: Replaces the ACA’s premium tax credits for individual market coverage with advanceable, refundable tax credits adjusted for both age and income.
  •  Market Reforms: Permits states to seek waivers from the ACA’s essential health benefits and age and health status community rating requirements.
  • Medicaid: Allows states to elect to receive federal Medicaid funding via a block grant or per capita allotment, and alters the ACA’s Medicaid expansion.

The chart below summarizes some of the significant changes made by the AHCA.

Affordable Care Act (ACA)

American Health Care Act (AHCA)

Mandates
  • Individual mandate
  • Employer mandate on applicable large employers (ALEs)
  • No individual or employer mandate effective retroactive to Jan. 1, 2016
  • Insurers can impose a one year 30% surcharge on consumers with a lapse in continuous coverage (individual and small group market)

Assistance
  • Income-based subsidies for premiums that limit after-subsidy cost to a percent of income
  • Cost sharing reductions for out-of-pocket expenses
  • Age-based refundable tax credits for premiums, phased out for higher incomes
  • No cost sharing reductions for out-of-pocket expenses
  • ACA subsidies phased out after 2019; AHCA credits effective in 2020

Medicaid
  • Matching federal funds to states for anyone who qualifies
  • Expanded eligibility to 138% of poverty level income
  • Federal funds granted to states based on a capped, per-capita basis starting in 2020
  • States can choose to expand Medicaid eligibility, but would receive less federal support for those additional persons

Premium Age Differences
  • 3:1
  • 5:1 (and the MacArthur amendment would allow a higher ratio)

Health Savings Account Limits
  • $3,400/$6,750
  • Contribution limits increased to maximum out-of-pocket limit for HDHP coverage
  • $6,550/$13,100 (effective retroactively to Jan. 1, 2017)

“Cadillac” Tax
  • Cadillac tax on high-cost employer plans implemented in 2020
  •  Cadillac tax on high-cost employer plans delayed until 2026

Other Taxes
  • 3.8% tax on net investment income
  • Limit placed on contributions to flexible spending accounts
  • Annual health insurance provider tax
  • Over-the-counter medication excluded as qualified medical expense
  • 0.9% Medicare tax on individuals with an income higher than $200,000 or families with an income higher than $250,000
  • Repeal of these taxes retroactive to the beginning of 2017 (except for the repeal of the Medicare tax, which would begin in 2023)

Essential Health Benefits
  • Individual and small group plans are required to offer ten essential health benefits
  • Under the MacArthur amendment, individual and small group plans are required to offer the ten essential health benefits, but a waiver option is available
  • Some Medicaid plans are not required to offer mental health and substance abuse benefits

MacArthur Amendment

The following chart summarizes the changes made to the AHCA by the MacArthur amendment.

Insurance Market Provisions

The MacArthur amendment:

  • Reinstates Essential Health Benefits (EHB) as the federal standard (removes ability of states to define EHBs, but see waiver option)
  • Maintains the following provisions of the AHCA:
    • Prohibition on preexisting condition exclusions
    • Prohibition on discrimination based on gender
    • Guaranteed availability and renewability of coverage
    • Coverage of adult children to age 26
    • Community Rating rules (but see waiver option)
Limited Waiver Option States may obtain waivers from certain federal standards, in the interest of lowering premiums and expanding the number of enrollees. States could seek waivers from:

  • Essential Health Benefits (states could set their own definition of EHBs for the individual and small group markets starting in 2020, and increase the age rating ratio above 5:1 starting in 2018)
  • Community rating rules, except for the following categories, which are not waivable:
    • Gender
    • Health Status (unless the state has established a high-risk pool or is participating in a federal high risk pool)
Limited Waiver Requirements States must explain how the waiver will benefit the insurance market in their state, such as reducing average premiums, increasing enrollment, stabilizing premiums for individuals with pre-existing conditions, or increasing the choice of health plans.,Applications are automatically approved within 60 days unless denied by HHS.

 

As always, please contact us info@medicalsolutiosncorp.com for a compliance review of your benefits offering. Click here to read the American Health Care Act in its entirety.

Clinton vs Trump on Healthcare

Clinton vs Trump on Healthcare

by | Jul 21, 2016 | Health Care Reform, healthcare, HSA, Obamacare, PPACA

TRUMP VS. CLINTON ON HEALTH CARE

CLINTON VS TRUMP ON HEALTH CARE

CLINTON VS TRUMP ON HEALTHCARE

Clinton vs Trump Healthcare.  A helpful overview from SHRM on the differences between the Candidates.  They presumably agree on repealing the Cadillac Tax and well-needed price transparencies.

HILLARY CLINTON’S HEALTH CARE REFORM PLAN:

  • Defend the Affordable Care Act. Clinton will continue to defend the ACA against Republican efforts to repeal it.
  • Lower out-of-pocket costs like copays and deductibles. The average deductible for employer-sponsored health plans rose from $1,240 in 2002 to about $2,500 in 2013. Clinton believes that workers should share in slower growth of national health care spending through lower costs.
  • Reduce the cost of prescription drugs. Prescription drug spending accelerated from 2.5 percent in 2013 to 12.6 percent in 2014. It’s no wonder that almost three-quarters of Americans believe prescription drug costs are unreasonable. Clinton believes we need to demand lower drug costs for hardworking families and seniors.
  • Build on the Affordable Care Act and require plans to provide three sick visits without counting toward deductibles every year. The Affordable Care Act required nearly all plans to offer many preventive services, such as blood pressure screening and vaccines, with no cost-sharing at all. But because average deductibles have more than doubled over the past decade, many Americans would have to pay a significant cost out-of-pocket toward their deductible if they get sick and need to see a doctor. Clinton’s plan will build on the Affordable Care Act by requiring insurers and employers to provide up to three sick visits to a doctor per year without needing to meet the plan’s deductible first.
  • Provide a new, progressive refundable tax credit of up to $5,000 per family for excessive out-of-pocket costs. For families that still struggle with prescription drug costs even after out-of-pocket limits on drug spending and free primary care visits, Clinton’s plan will provide progressive, targeted new relief. Americans with health coverage will be eligible for a new refundable tax credit of up to $2,500 for an individual, or $5,000 for a family, available to those with substantial out-of-pocket health care costs. The credit will be available to insured Americans with qualifying out-of-pocket health expenses in excess of five percent of their income, and who are not eligible for Medicare or claiming existing deductions for medical costs. This refundable, progressive credit will help middle-class Americans who may not benefit as much from currently-available deductions for medical expenses. This tax cut will be fully paid for by demanding rebates from drug manufacturers and asking the most fortunate to pay their fair share.
  • Enforce and Broaden the ACA’s Transparency Provisions. Americans deserve real-time, updated, and reliable information to guide them in selecting a health plan, navigating changes to their out-of-pocket costs in their existing plan, choosing a doctor, and determining how much they will need to pay for a prescription drug. Clinton’s plan will vigorously enforce existing law under the Affordable Care Act and adopt further steps to make sure that employers, providers, and insurers provide this information through clear and accessible forms of communication so that Americans can make informed choices about their coverage and realize meaningful savings.
  • Repeal the ACA “Cadillac Tax”

Source: https://www.hillaryclinton.com/issues/health-care/

DONALD TRUMP’S HEALTH CARE REFORM PLAN:

  • Repeal ACA -Modify existing law that inhibits the sale of health insurance across state lines. As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state. By allowing full competition in this market, insurance costs will go down and consumer satisfaction will go up.
  • Tax deductible health insurance premium payments. Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system. -Allow individuals to use Health Savings Accounts (HSAs). Contributions into HSAs should be tax-free and should be allowed to accumulate. These accounts would become part of the estate of the individual and could be passed on to heirs without fear of any death penalty. These plans should be particularly attractive to young people who are healthy and can afford high-deductible insurance plans. These funds can be used by any member of a family without penalty. The flexibility and security provided by HSAs will be of great benefit to all who participate.
  • Price transparency. Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.
  • Reform mental health programs. Families, without the ability to get the information needed to help those who are ailing, are too often not given the tools to help their loved ones. There are promising reforms being developed in Congress that should receive bi-partisan support.
  • Block-grant Medicaid to the states. Nearly every state already offers benefits beyond what is required in the current Medicaid structure. The state governments know their people best and can manage the administration of Medicaid far better without federal overhead. States will have the incentives to seek out and eliminate fraud, waste and abuse to preserve our precious resources.
  • Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.

 Source: https://www.donaldjtrump.com/positions/healthcare-reform

Add our blog & sign up for newsletter on latest in Healthcare Reform News.  Please contact us for a free evaluation on your group’s benefits at 855-667-4621.

HSA 2017 Limits

HSA 2017 Limits

by | May 3, 2016 | healthcare, HSA

HSA 2017 Limits

The IRS has released the 2017  Health Savings Account (HSA) inflation adjustments. 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.

New HSA 2016  limits are as follows:                     HSA 2016 Limits Chart

HSA Annual Contribution Limit:

 Single –  $3,400 ($3,350 in 2016)

Family – $6,750 ($6,750 in 2016)

Catch-up – $1,000 ($1,000 in 2016) for age 55+.

HDHP Minimum Annual Deductible: 

Single – $1,300  

Family – $2,600 

HDHP Out-of-Pocket Maximum: 

Single – $6,550 ($6,550 in 2016)

Family – $13,100 ($13,000 in 2016)

Age 55 Catch Up Contribution-As in 401k and IRA contributions, you are allowed to contribute extra if you are above a certain age. If you are age 55 or older by the end of year, you can contribute additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute additional $1,000.

HSA/HDHP Market Growth

HSA holders own the assets in the accounts and can build up substantial sums over time.  Enrollment in HSA-compatible insurance plans has increased to 10 million earlier this year, from 1 million in March 2005, according to, America’s Health Insurance Plans (AHIP), a trade group.

HSAs were authorized starting in January 2004. Since then, AHIP has conducted a periodic census of health plans participating in the HSA/HDHP market.

  • The number of people with HSA/HDHP coverage rose to more than 11.4 in January 2011, up from 10.0 million in January 2010, 8.0 million in January 2009, and 6.1 million in January 2008.
  •  30 percent of individuals covered by an HSA plan were in the small group market, 50 percent were in the large-group market, and the    remaining 20 percent were in the individual market.
  •  14% of all workers in the private sector that have access to a Health Savings Account acc. to Bureau of Labor Statistics.
  •  States with the highest levels of HSA/HDHP enrollment were California, Ohio, Florida, Texas, Illinois and Minnesota.

HSA Advantages:

  • Opportunity to build savings – Unused money stays in your account from year to year and earns tax-free interest. The HSA also gives you an investment opportunity.
  • Tax-free contributions and earnings – You don’t pay taxes on contributions or earnings.
  • Tax Free Money allowed for non traditional Medical coverage– As per IRS Publication 502, unused moneys can be used  for dental,vision, lasik eye surgery, acupuncture, yoga, infertility etc.  Popular Examples
  • Portability – The funds belong to you, so you keep the funds if you change jobs or retire.

Our overall experience with HSAs have been positive  when employer funding is at minimum 50% using either the HSA or an HRA (Health Reimbursement Account-employer keeps unspent money).  Traditional plans trend of higher copays and new in network deductibles has also led to the popularity of an HSA.

Is your HSA compliant?  Which pre-tax qualified HSA, FSA, HRA spending card is right  for you? Please contact our team at Millennium Medical Solutions Corp (855)667-4621 for immediate answers.  Stay tuned for updates as more information gets released.  Sign up for latest news updates.

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HSA-FSA-HRA: Whats the Difference?

HSA-FSA-HRA: Whats the Difference?

by | Apr 28, 2015 | HSA, Tax

HSA-FSA-HRA: Whats the Difference?

HSA-FSA-HRA: Whats the Difference?

HSA-FSA-HRA: Whats the Difference? Health reimbursement arrangements (HRAs), health savings accounts (HSAs) and health care flexible spending accounts (HFSAs) are generally referred to as account-based plans. That is because each participant has their own account, at least for bookkeeping purposes. Under the tax rules, amounts may be contributed to these accounts (with certain restrictions) and used for health care on a tax-favored basis.

The Patient Protection and Affordable Care Act (PPACA) has added new requirements that affect HRAs and HFSAs. Most HFSAs and HRAs will need to be amended to meet the new PPACA requirements. HSAs generally are not affected by PPACA.

The chart below describes the main characteristics of these types of accounts, and should help you decide which is the best option for your particular situation.

 

 

 FSA Flexible Savings Accounts HRA Health Reimbursement Accounts  HSA Health Savings Accounts
Who may legally participate? Any employee who is also eligible to participate in a group medical plan sponsored by the employer; retired employees are eligible if most participants are active employees. Any employee who is covered by a group medical plan sponsored by the employer (or if the employer chooses, by the spouse’s employer); retired employees are eligible (a retiree-only plan does not have to meet the medical coverage requirement). Any employee who is covered by a high deductible health plan (HDHP), not covered by a plan that is not an HDHP, and not covered by any part of Medicare or eligible to be claimed as a tax dependent; individuals who are receiving Medicare may not contribute to an HSA.
May the employer impose additional eligibility requirements? Yes, the employer may design the plan to cover whom it wishes as long as it meets the non-discrimination requirements. Yes, the employer may design the plan to cover whom it wishes as long as it meets the non-discrimination requirements. An employer may not limit the ability of an eligible employee to contribute to an HSA, but the employer may limit its contributions to employees participating in the HSA designated by the employer.
May an employee contribute to the account? Yes, up to the lesser of $2,500 (indexed to $2,550 for 2015) or the maximum set by the plan (any carryover does not apply toward the $2,500 cap). No. Yes, up to the total contribution limit ($3,350 in 2015 for self-only coverage and $6,650 in 2015 for family coverage); individuals aged 55 or greater may contribute an additional $1,000.
May an employer contribute to the account? Yes, up to two times the employee’s contribution plus $500. Yes. Yes, up to the total contribution limit described above.
May another person or entity contribute to the account? No. No. Yes – anyone may contribute to an HSA, up to the total contribution limit.
Does the spouse’s coverage matter? No. An employer may – but is not required to — integrate the HRA with coverage through the spouse’s employer. Yes. If the employee is covered by a non-HDHP through the spouse (which may include an HFSA or an HRA), the employee will not be eligible to contribute to an HSA.
Is a formal account required? No, a notational/ bookkeeping account is allowed. No, a notational/ bookkeeping account is allowed. Yes, a trust or custodial account is required. Generally this is done at a bank or credit union.
Should a Section 125 cafeteria plan be used? Yes – the HFSA must be part of a Section 125 plan. No – an HRA may not be part of a Section 125 plan. An HSA may, but need not be, part of a Section 125 plan. Including in a Section 125 plan will allow the employee to contribute with pre-tax dollars and allow the employer to meet the Section 125 non-discrimination rules instead of the comparable contribution rules.
What health expenses may be reimbursed? All medical expenses allowed by Code Section 213 (which includes dental and vision expenses), except long term care services, may be reimbursed. Premiums may not be reimbursed. All medical expenses allowed by Code Section 213 (which includes dental and vision expenses), may be reimbursed. Health premiums may be reimbursed for group coverage if not reimbursing (directly or indirectly) employee’s pre-tax premium. The cost of premiums for individual policies may not be reimbursed. All medical expenses allowed by Code Section 213, except premiums (unless for COBRA, long-term care insurance or Medicare supplemental, which may be reimbursed).
May non-health expenses be reimbursed? No. No. Yes, but income taxes and a 20% excise tax will apply.
Are limits on reimbursable expenses allowed? Yes. An employer may exclude specific expenses if it wishes. It also may design the plan to be a “limited purpose” FSA to interface with an HSA option. Limited purpose FSAs typically only reimburse dental, vision and/or preventive care expenses, retiree expenses, or expenses in excess of the IRS high deductible. Yes. An employer may exclude specific expenses if it wishes. It also may design the plan to be a “limited purpose” HRA to interface with an HSA option. Limited purpose HRAs typically only reimburse dental, vision and/or preventive care expenses, retiree expenses, or expenses in excess of the IRS high deductible. No.
Whose expenses may be reimbursed? The employee, spouse, children under age 27 and tax dependents, if the expense was incurred during the coverage period. The employee, spouse, children under age 27 and tax dependents, if the expense was incurred while coverage is in effect. The employee, spouse, children under age 27 and tax dependents – even if the person is not eligible to set up their own HSA – if the expense was incurred after the HSA is established.
How are expenses reimbursed? Employee submits substantiated expense to claims administrator. May be paper or debit card. Employee submits substantiated expense to claims administrator. May be paper or debit card. Employee pays expense from HSA. May be paper or debit card. Employee is responsible for maintaining record to substantiate expense.
May expenses be reimbursed after employment terminates? COBRA may be elected, generally until the end of the plan year in which termination occurred. COBRA may be elected. Employer may design plan to allow reimbursement after termination, but employee must be given option to decline that extended coverage. Yes.
May unused contributions be carried over from year to year? Generally no; however, plan may be designed to allow carryover of up to $500 into next year or a grace period to incur claims attributable to prior year for up to 2-1/2 months. Yes, if plan allows. Yes (the account is the individual’s).
May an employee access funds before they have been contributed? Yes – under the HFSA rules the employee must have access to the full planned contribution for the year on the first day of the coverage period. Not required, but plan may be written to allow full access at start of year. Generally no, although in certain situations the employer may advance contributions.
May planned contributions be changed mid-year? Generally no. An employee may make a mid-year change only if allowed under the Section 125 change in status rules. Yes (may require plan amendment and participant communications). Yes – even if employee is contributing to the HSA through a Section 125 plan.
Do non-discrimination rules apply? Yes, the Section 125 and the Section 105(h) rules apply. Yes, the Section 105(h) rules apply. Yes, either the Section 125 or the comparability rules apply.
May an employee participate in multiple accounts? May participate in an HSA if HFSA is limited purpose; pays after HRA unless plan provides differently. May participate in an HSA if HFSA is limited purpose; pays before HFSA unless plan provides differently. Could also participate in a limited purpose HFSA or HRA.
Are a plan document and SPD required? Yes (unless a government or church plan). Yes (unless a government or church plan). Not for HSA; will need for related HDHP.
Is a 5500 required? If 100+ participants in the HFSA unless a government or church plan. If 100+ participants in the HFSA unless a government or church plan. No.
Is W-2 reporting required? No, provided the HFSA is an “excepted benefit.” No (reporting is currently optional). Employer contributions are reported in Box 12 with code W; do not include in “cost of coverage” reporting under code DD.
Does the PCORI fee apply? Not if an excepted benefit (if owed, fee is only due on employees, not dependents). Yes, if HRA is the only self-funded plan using that plan year (fee is only due on employees, not dependents). No.
Does the health insurance provider fee apply? No. No. No.
Does the TRF apply? No. No. No.
Do contributions apply to Cadillac tax? Yes (both employer and employee). Yes. Yes (employer; probably employee if made through a Section 125 plan).
Do contributions apply toward minimum value determinations? No. Yes, if may only be used for cost-sharing (deductible, coinsurance, copays). Yes.
Do employer contributions apply to affordability determinations? No. Yes, if may be used for premiums and/or cost-sharing. No.
Qualifies as “minimum essential coverage”? No. Yes (if provides any medical benefits). No.
Do HIPAA privacy requirements apply? Yes. Yes. Not to HSA; may apply to related HDHP.
Is a Medicare Part D notice required? No. Yes, unless integrated with the Rx coverage. Not for HSA; will need for related HDHP.
  • To qualify as an excepted benefit, an HFSA must be offered in conjunction with a group medical plan and the employer’s contribution cannot exceed two times the employee’s pre-tax contribution to the HFSA plus $500.
  • Beginning in 2014, HRAs must be available only to individuals actually covered by the group medical plan (or the spouse’s group medical plan if the plan provides). Participants must be given the option to decline further HRA reimbursement annually and when their employment terminates.

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4/15/15

This information is general and is provided for educational purposes only and is subject to change. It is not intended to provide legal advice.
You should not act on this information without consulting legal counsel or other knowledgeable advisors.