Boca Benefits Consulting Group Inc.

The below info is excerpted from a Zane Benefits information piece published Sunday, Sep 15, 2013.  The entire technical discussion can be accessed at their RSS blog feed by clicking here.  The essence of the discussion is that unlike what some major group insurance carriers have been indicating, newly stuctured HRP’s ( i.e., a limited healthcare reimbursement plan) can be used as the vehicle to shift employees from a group plan to individual purchases on exchanges. Wallgreens is the most recent large company to announce such a shift (click here for info on annoncement today 9/18/2013). IBM and Time Warner have made similar announcements.

[Begin Excerpt] ____________________________

Now, the good news

Employers can still reimburse employees for individual health insurance premiums.

For the first time, the Department of Labor, the Department of Treasury, and Health and Human Services have coordinated to issue formal confirmation that employers are 100% allowed to reimburse individual health insurance premiums tax-free under the tax code. This is a MAJOR positive.

We repeat – employers are still allowed to reimburse employees tax-free for individual health insurance premiums.

What is the solution for plan years beginning on or after January 1st, 2014?

For plan years beginning on or after January 1st, 2014, the solution is to adopt a limited Healthcare Reimbursement Plan (HRP), such as ZaneHealth.

The HRP is structured to only reimburse:

1. Health insurance premiums up to a specified monthly healthcare allowance,
2. Preventative care as required by PHS Act Section 2713 at 100% without cost-sharing.

This structure ensures the HRP complies with the PHS Act 2711 annual limit requirements and the PHS Act 2713 preventative care requirements as outlined in the Technical Release.

Additionally, care must be taken in the design and administration of the HRP to ensure the plan does not meet the definition of an eligible employer-sponsored plan in IRC Section 5000A and consequently qualify as minimum essential coverage. This ensures employees participating in the HRP are able to receive a tax subsidy via the new health insurance marketplaces assuming they meet additional eligibility criteria.

Conclusion / Next Steps

With the Departments all in agreement, everyone should be excited there is finally a clean, final process for employers to reimburse employees for individual policies that are guaranteed-issue.

Sponsors of stand-alone HRAs should begin preparing to convert their plan to an HRP for plan years beginning after 2014.

Finally, our nation can rid itself of one-size-fits-all employer group health insurance policies that hamper businesses, employees and their families.

[End Excerpt] _____________________________________

In doing some research for a LinkedIn member relative to COBRA eligibility it seems an inconsistency has been detected between (1) long-standing COBRA regulations pertaining to early termination rules and (2) the regulations requiring early termination of the the present 65% federal subsidy. 

Although this inconsistency may be nothing more than an oversight on the part of DOL, it would appear to be more fundamental relative to its overall intent going forward. The newer intent seems to be much more business friendly (i.e., no expense associated with a non-productive former employee). It may not be so much altruistic as the real politic of what has been required to get health reform issues through a divided Congress.

In the specific case, the 65% federal subsidy will be terminated if a former employee is so much as eligible for a new employer plan. No enrollment in the new plan is required for the previous employer to require the full 102% premium to be paid (i.e., as opposed to 35%) to remain in COBRA.  It is purely a matter of eligibility. Unquestionablly, the net result will be less people on COBRA and more people enrolled in their new employer plans. Employers with a sizeable number of COBRA participants should see substantial savings if they monitor this provision closely (i.e., some form of periodic written statement from the COBRA participant that they have never been eligibile for another group plan from the inception of their COBRA participation, either personally or via spouse).

Note that this is not an allowable early termination event as previously defined by DOL where actual enrollment has been required before a former employer can terminate a former employee’s COBRA participation. In this case COBRA termination would be a voluntary former/new employee act based on the relative economics. 

The subsidy regulation above appears to be in line with the “To Age 26” provisions of PPACA 2010 as we understand them. In that case, the parent’s employer can also terminate an adult dependent’s eligibility for its healthplan based solely on eligibility for a new employer’s plan. Again, no enrollment is required for this action. The pure eligibility is the key.

Both the subsidy and the adult dependent regulations seem to reflect the true purpose of all these healthcare delivery mechanisms. The underlying intent has been to ensure that there is a mandatory safety net for those who would lose employer based coverage and have absolutely no other alternative. If there is an alternative, than there is no reason for that safety net (n.b., and the associated non-productive costs) to exist.  None of these devices have been put in place to allow for “plan shopping” on the part of an employee who might otherwise have mutliple eligibilities.

DOL needs to address the COBRA inconsistency and re-write the regulations going forward to allow for early termination of COBRA based solely on eligibility. Rarely, if ever, will there be a negative economic impact on an employee who will revert from 102% of premium to somewhere in the area of 75% of premium (i.e., assuming here a 25% employer contribution). This may require large employers to leverage local politicians if the various applicable federal statutes require amendment.


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Clearly, it has been exceptionally difficult to keep up and make the proper choices relative to the requirements of PPACA 2010.  The steady stream of clarifying  IFR’s (i.e., Interim Final Regulations) has almost become a torrent.

Is you broker keeping you up to date? If not as much as you might like, please click here to contact BBCG for assistance.

LinkedIn page with info:  http://www.linkedin.com/in/rwmurph

Resume from BBCG site: http://bocabenefits.com/resume.htm

“Core Competency” post: http://bocabenefits.com/blog/?p=992

Let BBCG help your organization this fall! 

President/CEO

BBCG Inc.

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Email Contact

With the summer ending and fall approaching many employers start to think about their January 1st group insurance renewals and what strategy they will ask their brokers to employ. Never in the last 30 years has the broker selection issue been so important. PPACA 2010 (i.e., healthcare reform) has defined brokers in two main categories: (1) those that have kept up and can properly advise; and (2) those that will continue business as usual. BBCG puts itself squarely in the former, not the latter, category.

As you may have noticed from our various types of posts, BBCG is involved in many different types of employee benefits and individual insurance concepts. However, our core competency is group insurance.

I have 30 years of experience in the group insurance business, first starting as a home office underwriter for the largest group insurer in the U.S. at the time (i.e., Prudential prior to selling off its health book of business). That start has given me a technical foundation across all group insurance products that most brokers do not possess. It also gave me an in-depth knowledge of healthcare plan alternative funding and self-insurance concepts (e.g., both ASO approaches with carriers and TPA approaches when using a non-carrier administrator and stand-alone network). Statistics show that the highest rate of broker-related Errors & Omissions events is related to self-funded plan stop-loss insurance due to its complexity and the lack of in-depth understanding by many brokers.

Since my initial career start with Prudential, I have held positions in sales management, product development and brokerage/consulting for three other national companies. Boca Benefits Consulting Group, Inc. was first located in Boca Raton, Florida  where its initial assignment was product development on behalf of an investor group in that area. It was incorporated in the state of Florida in 1996. It was relocated to Clearwater, Florida late in 1999.

BBCG agents are not appointed by every carrier in the market. However, we have access to virtually every one of them (i.e., the de facto standard in the industry is “quote/sell first and appoint after the fact”). For larger companies we will draw up specifications and go to market directly. For smaller/medium sized companies we have access to two general agencies as needed to go to market on our behalf. There is virtually no quality market not available to our clients.

If the economics of a relationship make sense for prospective clients outside Florida or Washington D.C., we will secure the appropriate non-resident licensing in your state. Note: that process has become relatively easy with the centralized on-line based licensing procedures adopted by most states.

Let us help you this fall! You can contact us by clicking here. We prefer not to get into bidding wars with other brokers in order for an orderly approach to the markets on behalf of our clients. However, we will show an alternative quote to those a current broker is showing if we do not feel the market has been fully tested. 

— Bob Murphy, REBC, ChFC, CLU, RHU, MBA

   President/CEO

   BBCG Inc.

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Quick Jump to Presentation

Has group insurance seen its best days? I had to ask myself that today. In 2016 medical underwriting of individual policies will no longer be allowed. There will no longer be uninsurables that get treated differently under group plans than they do under individual policies. Why would an employer continue to stay on the back of a bronco that has been trying to throw it off for 20 years?

If the employer thinks it has a financial incentive to keep the group plan in place, that is likely not true. Changes in the Internal Revenue Code effective in 2009 makes purchase of individual policies with pre-tax HRA salary reduction amounts, as well as pre-tax employer HRA contribution amounts, permissible. The HRA contributions become “defined” in that the employer can fix the amount, if any, per class of employee, often at a level less that group plan levels.  How the employee uses it is entirely employee driven. The employer steps out of the equation for everything except the regulatory framework of a Section 125 HRA approach.  Employees make their own product purchase and just file the required paperwork with the administrator.

This is an exciting new concept about which only a few really knowledgable consultants are assisting employers. Let BBCG show you how this might work for your workforce.  Please click here to open a link to a preseentation from one of our strategic partners which is a nationally recognized leader in the implementation of this concept.

Please note that this concept is not carrier dependent. Employees can buy any healthplan they desire. However, for ease of transition BBCG can make available to the purchasing employees from one up to three individual plan carriers and assist with the purchase process.  For very large employers considering this transition, BBCG would actually put enrollers on site to assist. Note that with 3 carriers, three basic plans, and dozens of variable alternatives within the plans the decision points can exceed 100 for an employee. Using lowest cost as the driver can often be very dangerous for some employees.

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BBCG has been asked to comment on “grandfathering” under the 2010 healthcare reform statute and the recent interim final rules issued by HHS. Please see our prior post for the interim final rules discussion (http://bocabenefits.com/blog/?p=840).  Below are some thoughts.

If a healthplan loses its “grandfathered”  status under PPACA, then participants in these plans will gain two additional new and substantial  benefits (i.e., assuming they did not exist prior):

• Coverage of recommended prevention services with no cost sharing; and
• Patient protections such as guaranteed access to OB-GYNs and pediatricians

Clearly, adding no-cost access for preventative services has significant cost implications  (e.g., no co-pay for primary care visits, etc., changes both the cost structure and the frequency of service assumptions).  How that is passed along will be determined by the funding vehicle in place (i.e., fully insured, partially insured, self-funded, etc.). In the case of OB-GYN and PEDS, many plans already cover these as primary care (i.e., service dependent).  Cost implications may be somewhat less for that requirement. Plans must independently evaluate what the requirements will cost. Also should be judicious in accepting “quick and dirty” carrier underwriter/rep estimates which might be biased in the carrier’s favor (e.g., a high estimate to lock a client company into grandfathering, and therefore that carrier,  versus a lower estimate which would allow an employer to change carriers once grandfathering was relinquished). 

The question for employers is the trade-off between the extra costs noted above and the incremental flexibililty to modify the plan and/or carrier. Loss of grandfathering may still be the most efficacious course of action for many employers.

The Affordable Care Act requires all health plans– including grandfathered health plans – to provide certain new protections for plan years on or after September 23, 2010. The reforms that apply include:

• No lifetime limits on coverage for all plans
• No rescissions of coverage when people get sick and have previously made an unintentional mistake on their application
• Extension of parents’ coverage to young adults under 26 years old

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HHS Releases Final Interim Guidance on “Grandfathering”

Today, the Departments of Health & Human Services, Labor, and Treasury issued long-awaited interim final regulations that specify how “grandfathered” status will be defined and maintained. Regulators spelled out which actions or changes will (and will not) cause a plan to lose its “grandfathered” status.

These interim final regulations will still require analysis by carriers, consultants and employers relative to their implications and effect on employer-sponsored healthplan change decisions. We expect substantial industry opinions in the next day or so. HR and benefits professionals should keep a close eye on these developments.

Please contact us via email if you have questions about the interim final regulations. BBCG will be receiving guidance from carriers, and their attorneys, which may be valuable to you.


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Health Care Reform Impact on Employer-Sponsored Health Plans

Excerpted from Various Insurance and Benefits Industry Sources

(impact on self-insured plans is annotated in bold text below)

• Prohibition of lifetime limits – Prohibits all plans from establishing lifetime limits. Only applicable to self-insured plans established after 6 months from date of enactment.
• Prohibition of annual limits – Prohibits all plans from establishing annual limits on the dollar value of benefits starting in 2014. Prohibits plans from setting limits that would “impair essential health benefits” in subsequent years. Only applicable to self-insured plans established after 6 months from date of enactment.
• Prohibition on rescissions – Prohibits all plans from rescinding coverage except in instances of fraud or misrepresentation. Only applicable to self-insured plans established after 6 months from date of enactment.
• Coverage of preventive health services – Requires all plans to cover preventive services and immunizations, recommended by various Federal agencies, also specifically includes certain child preventive services and women’s preventive care. Plans are prohibited from imposing any cost-sharing requirements. Only applicable to self-insured plans established after 6 months from date of enactment.
• Dependent coverage – Requires all plans offering dependent coverage to make coverage available to dependents that are under the age of 26 and unmarried. Plans are not required to cover dependents of dependents. Only applicable to self-insured plans established after 6 months from date of enactment.
• Prohibition of preexisting conditions – No group health plan or insurer offering group or individual coverage may impose any pre-existing condition exclusion or discriminate against those who have been sick in the past. Only applicable to self-insured plans established after 6 months from date of enactment.
• Prohibiting discrimination based on health status – No group health plan may set eligibility rules based on health status, medical condition, claims-experience, receipt of healthcare, medical history, genetic information or evidence of insurability – including acts of domestic violence or disability. Permits employers to vary insurance premiums by as much as 30 % for employee participation in certain health promotion and disease prevention programs. Only applicable to self-insured plans established after 6 months from date of enactment.
• Prohibition on waiting periods – Prohibits any waiting periods for group or individual coverage that exceed 60 days. Employers are penalized $600 per full-time employee for each employee required to wait beyond 60 days. Only applicable to self-insured plans established after 6 months from date of enactment. 
• Required Plan Information Disclosure
  • Requires plans to issue a summary of benefits and explanation of coverage to beneficiaries with the following criteria:
    • In uniform format
    • In “easily understood” language
    • Inclusion of uniform definitions of standard insurance and medical terms
    • Explanation of cost-sharing exceptions, reductions and limitations on coverage
    • Provide common benefits scenarios 
• Expanded Beneficiary Appeals Availability
  • Requires plans to implement a process for external appeals of coverage determinations and claims
  • Requires self-insured plans to comply with minimum standards to be established by the Secretary of DOL
  • Only applicable to self-insured plans established after 6 months from date of enactment.
• Health Information Technology Standards and Plan Requirements
  • Adoption of uniform standards and operating rules for the electronic transactions that occur between providers and health plans that are governed under HIPAA (such as benefit eligibility verification, prior authorization and electronic funds transfer payments)
  • Establishes a process to regularly update the standards and operating rules for electronic transactions and requires health plans to certify compliance or face financial penalties collected by the Treasury Secretary
• “Young Invincibles” Plan
  • Allows health insurers to offer a catastrophic, high-deductible plan as an exchange option
  • To be eligible for plan, individuals must be either
    • Under the age of 30
    • Exempt from the individual responsibility requirement because coverage is unaffordable to them
    • Individuals with access to employer-sponsored plans who meet criteria may join
  • Plan must
    • Cover essential health benefits
    • Cover at least 3 primary care visits
    • Require cost-sharing up to the HSA out-of-pocket limits
• Allowable Prevention and Wellness Incentives
  • Allows employers to discount up to 30% of the premium or cost-sharing requirements for participants in a workplace wellness program
  • Provides discretion to HHS to permit discounts up to 50%
• Low-Income Tax Subsidies Effects on Employer-Sponsored Health Plans
  • Employees with access to employer-sponsored coverage are eligible for credit (for use in an Exchange only), if:
    • Plan covers less than 60% of total coverage cost
    • The premium exceeds 9.8 of total income
• Employer Responsibility
  • Requires an employer with more than 50 full-time employees that offers coverage, but has employees receiving the “premium assistance” tax credit, to pay the lesser of $3,000 for each employee receiving the credit, or $750 for each full-time employee – adjusted annually and non-deductible
  • An employer with more than 50 full-time employees that maintains an enrollment waiting period would be required to pay
    • $600 for any full-time employee subjected to longer than a 60 day waiting period – adjusted annually and non-deductible
• Employee “Free Choice” Voucher
  • Allows employees with access to an employer-sponsored plan, under certain income eligibility, to receive a voucher from their employer, equal to their employer’s contribution (“free choice” voucher), to purchase coverage through an Exchange participating plan.
  • To be eligible for a voucher, an employee would have to meet both of the following criteria:
    • The cost of the employee’s coverage needs to be between 8% and 9.8 percent of the employee’s household income
    • Employee has a household income below 400% FPL
  • The contribution amount to the voucher must be equal to the amount the employer contributes to their own health plan
  • If the employee chooses coverage that costs less than the voucher, the employee keeps the remainder amount
  • Vouchers cannot be taxed as income
• Automatic Employee Enrollment
  • Requires employers with more than 200 employees to automatically enroll new full-time employees in coverage
  • Requires employers to provide adequate notice and the opportunity for an employee to opt out of any coverage the individual or employee was automatically enrolled in 
• Reporting Requirements for Employer-Plan Sponsors
  • Requires large employers (over 200 employees) to report the following
    • Whether it offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan
    • The length of any applicable waiting period
    • The lowest cost option in each of the enrollment categories under the plan
    • The employer’s share of the total allowed costs of benefits provided under the plan
    • The number and names of full-time employees receiving coverage
    • Disclose the value of the benefit provided by the employer for each employee’s health insurance coverage on the employee’s annual Form W-2 
• Requirement to Disclose Coverage Options
  • Requires that an employer provide notice to their employees informing them of the existence of an exchange
• Excise Tax on Generous Plans
  • Levies an excise tax of 40% on insurance companies and plan administrators for any health coverage plan that is above the threshold of:
    • $8,500 for single coverage
    • $23,000 for family coverage 
• Fees on Self-Insured Plans
  • In 2013, the plan sponsor of a self-insured plan is required to pay $2 multiplied by the average number of covered lives
  • From 2013-2019 the previous year’s fee is multiplied by projected per-capita amount of National Health Expenditures
  • Plans are not required to pay fees beyond 2019 
• Termination of Deductibility of Medicare Prescription Drug Subsidies
  • Elimination of the deductibility of Federal subsidies for Medicare Rx programs 
• Limitation on Health Flexible Spending Arrangements
  • Limits the amount of contributions to health FSAs to $2,500 per year indexed by CPI 
• Annual Report on Self-Insured Plans
  • Requires the Secretary of DOL to prepare an annual report, using information obtained from submitted Form 5500, on various aspects of self-insured, group health plans. Report will include:
    • Plan type
    • Number of participants
    • Benefits offered
    • Funding arrangements
    • Benefit arrangements
    • Data from the financial filings including:
      • Information on assets
      • Liabilities
      • Contributions
      • Investments
      • Expenses 
• Indirect Health Industry Fees Likely to Increase Plan Costs 
  • Fees on Pharmaceuticals
    • Imposes an annual flat fee of $2.3 billion on the pharmaceutical manufacturing sector beginning in 2010
  • Fee on Medical Devices
    • Imposes an annual flat fee of $2 billion on the medical device manufacturing sector in years 2011 – 2017
    • Imposes an annual flat fee of $3 billion on the medical device manufacturing sector in years after 2017

Injured or Ill Members of the Armed Forces

The Labor Department will release regulations November 14, 2008 which will let family members of seriously injured or ill members of the armed services take up to 26 weeks off from work each year to care for them.

The military caregiver provision gives family members up to 26 weeks off, longer than the normal maximum of 12 weeks under the Family and Medical Leave Act. The provision also allows additional family members, including siblings and cousins – not just spouses, parents or children – to take time off.

Relatives of National Guard or Reservists Called to Duty

The regulations also will allow family members of those called to active duty in the National Guard or the Reserves to take up to 12 weeks off so they can manage needed and often rushed matters regarding a service member’s departure or return.

Labor Department officials said the law creating the leave for such situations did not cover regular active-duty military members.  DOL indicates that the provision is to assist families of deploying Guard or Reservists where significant family adjustments must be made as a result.

Other Changes

• Allowing employers to require “fitness-for-duty” evaluations for workers who took leave time and are returning to jobs that could endanger themselves or others.
• Forcing workers to tell employers in advance when they want leave time. Current regulations allow employees to tell employers up to two days after not showing up for work that they are using leave time. Employees will now have to follow their employer’s regular rules for informing them about missing work “absent unusual circumstances.”