Category Archives: Plan Utilization
ACA Update: Summary of Benefits and Coverage and Uniform Glossary Details Remain Fuzzy, FAQ Released
The Affordable Care Act (ACA) created new disclosure tools—the summary of benefits and coverage (SBC) and uniform glossary—to help consumers compare coverage options available to them. Generally, group health plans and health insurance issuers are required to provide the SBC and uniform glossary free of charge. This disclosure requirement applies to both grandfathered and non-grandfathered plans.
On March 31, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued a Frequently Asked Question (FAQ) announcing their intention to issue final regulations on the SBC requirement in the near future. The final regulations are expected to apply for plan years beginning on or after Jan. 1, 2016 (including open enrollment periods in fall of 2015 for coverage beginning on or after Jan. 1, 2016).
However, according to this FAQ, the new template, instructions and uniform glossary will not be finalized until January 2016, and will apply for plan years beginning on or after Jan. 1, 2017 (including open enrollment periods in fall of 2016 for coverage beginning on or after Jan. 1, 2017).
Overview of the SBC Requirement
The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees, free of charge. The SBC is a concise document that provides simple and consistent information about health plan benefits and coverage.
The SBC requirement became effective for participants and beneficiaries who enroll or re-enroll through an open enrollment period beginning with the first open enrollment period starting on or after Sept. 23, 2012. For participants and beneficiaries who enroll other than through an open enrollment period (such as newly eligible or special enrollees), SBCs were required to be provided beginning with the first plan year starting on or after Sept. 23, 2012.
The DOL has provided a template for the SBC and Uniform Glossary documents along with instructions and sample language for completing the template, available on the DOL’s website. On April 23, 2013, the SBC template was updated for the second year of applicability to incorporate ACA changes that become effective in later years. Until further guidance is issued, these documents continue to be authorized.
On Dec. 22, 2014, the Departments released proposed regulations on the SBC requirement, which would revise the SBC template, instruction guides and uniform glossary. At that time, the Departments expected that the new requirements for the SBC and uniform glossary would apply to coverage that begins on or after Sept. 1, 2015. The draft-updated template, instructions and supplementary materials are available on the DOL’s website under the heading “Templates, Instructions, and Related Materials—Proposed (SBCs On or after 9/15/15).”
The SBC and Uniform Glossary must be provided in a culturally and linguistically appropriate manner. Translated versions of the template and glossary are available through the Centers for Consumer Information and Insurance Oversight (CCIIO) website.
To the extent a plan’s terms do not reasonably correspond to the template and instructions, the template should be completed in a manner that is as consistent with the instructions as reasonably as possible, while still accurately reflecting the plan’s terms. In addition, the DOL notes that ACA implementation will be marked by an emphasis on assisting (rather than imposing penalties on) plans and issuers that are working diligently and in good faith to understand and comply with the new law.
Thus, during the first and second years of applicability, penalties will not be imposed on plans and issuers that are working diligently and in good faith to comply with the new requirements. This enforcement relief will continue to apply until further guidance is issued.
Overview of the FAQ Guidance
In the FAQ issued on March 31, 2015, the Departments stated that they intend to issue final regulations in the near future. These regulations would finalize proposed changes in the proposed regulations from Dec. 22, 2014, which were proposed to apply beginning Sept. 1, 2015.
However, the FAQ notes that the final rules are expected to apply in connection with:
- Coverage that would renew or begin on the first day of the first plan year (or policy year, in the individual market) that begins on or after Jan. 1, 2016; or
- Open enrollment periods that occur in the fall of 2015 for coverage beginning on or after Jan. 1, 2016.
Despite this effective date, the new template, instructions and uniform glossary are not expected to be finalized until January 2016. According to the Departments, this delay is necessary to allow for consumer testing and offer an opportunity for the public to provide further input before finalizing revisions to the SBC template and associated documents.
The revised template and associated documents will apply to:
- Coverage that would renew or begin on the first day of the first plan year (or policy year, in the individual market) that begins on or after Jan. 1, 2017; or
- Open enrollment periods that occur in the fall of 2016 for coverage beginning on or after Jan. 1, 2017.
Impact on Employers
This FAQ guidance leaves a lot of uncertainty for employers with regard to their SBC documents. The changes included in the final regulations may require health plans to update their SBC documents before the new template is released.
The forthcoming final regulations may address this issue. In some cases, the Departments have provided temporary enforcement safe harbors when guidance is not issued sufficiently in advance of an effective date. However, at this time, no safe harbors or other relief has been provided on this issue.
For clarification of this information, or to be kept up to date with any and all parts of the Affordable Care Act, contact CIBC today.
CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign
FOR IMMEDIATE RELEASE
Kankakee, IL– (February 9, 2015)- William Johnson, Chairman and CEO of CIBC of Illinois, Inc. is pleased to announce the successful merger of CIBC of Illinois and Strategic Employee Benefit Services of Champaign (SEBS). The new organization will operate as CIBC of Illinois, Inc. and include offices in both Kankakee and Champaign.
“This is an extremely exciting development for both of our organizations,” said Johnson. “The expertise that CIBC possesses in the ever-changing world of employee benefits and group health insurance is exactly what businesses are demanding, and the SEBS connection to the Central and Southern Illinois markets is a great opportunity for us to deliver these solutions on a consistent basis. The synergies we gain via this new powerhouse organization will position CIBC as an industry-leader in both size and capabilities that we deliver to businesses.”
As a result of the merger, former SEBS Benefit Consultant Tony Johnston was named as President and Chief Operating Officer for both the Kankakee and Champaign offices, and Erin Beck remains as Chief Financial Officer for CIBC.
“This is a great opportunity for the SEBS team to further commit to the exciting business opportunity of employee benefits, “said Tony Johnston. “Our extensive client base will now have access to the cutting edge benefits knowledge, wellness resources, technology, and regulatory compliance that is requisite in the healthcare reform era.”
About CIBC of Illinois, Inc.
CIBC is a leader in the development and implementation of innovative employee benefits plans. Headquartered an hour south of Chicago in Kankakee and with a branch office in Champaign, CIBC serves private sector clients, non-profit organizations, governmental bodies and agencies and Taft-Hartley health and welfare funds across the Midwest. Over the past two decades, they have creatively addressed the employee benefits needs of hundreds of organizations — some with as few as two employees and others with as many as 25,000 employees around the globe.
CIBC of Illinois specializes in Group Benefit plans, and in order to best serve our clients, we also employ consultants that specialize in individual and family health insurance plans. In both of these areas, we continually get asked about high deductible plans because, in most cases, there is a significant cost advantage found in these types of plans. Hopefully this article will provide some basic information, and as always, please contact us for a detailed analysis.
Moving From a Standard Plan to an HDHP
There is no such thing as a one-size-fits-all health plan. Everyone has different health insurance needs depending on their health care requirements along with those of their dependents. While some prefer standard deductible health insurance (often called a PPO health insurance plan), people are increasingly switching to a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) as a better way to maximize their health care dollars.
Standard Plans vs. HDHPs
Standard plans and HDHPs are set up much in the same way. Under both plans, the member pays a premium for coverage. Both must cover preventive services free of charge. If a member receives nonpreventive medical care, he or she pays a deductible—a specified amount of money that the insured must pay before an insurance company will pay a claim. The chief difference between the plans is that under an HDHP, premium payments are considerably lower and the deductible is considerably higher.
The minimum deductibles for HDHPs are established by the IRS. For 2015, the minimum deductible is $1,300 for individuals and $2,600 for families. Comparatively, standard plans come with a deductible that is generally quite a bit lower.
The cost of the higher premiums for HDHP plans is offset by two factors. First, as previously mentioned, the premium price for an HDHP is much lower than standard plans. This means that members who use little or no medical care during the year can save hundreds of dollars that would otherwise go to unnecessary health coverage, while still remaining compliant with the individual mandate provision of the Affordable Care Act (ACA).
|While some people prefer standard deductible health insurance, people are increasingly switching to an HDHP with an HSA as a better way to maximize their health care dollars.|
The second major factor setting HDHPs apart from standard plans is the addition of an HSA.
Health Savings Accounts
HSAs are one of several types of tax-advantaged health accounts, and are exclusively available to people enrolled in an HSA-compliant HDHP.
With an HSA, the account holder or his or her employer (usually both) make contributions into a savings account. No taxes are deducted from money placed into the account, as the HSA contribution is withdrawn from a paycheck before taxes are assessed. While in the savings account, the money can earn interest. The employee is free to spend that money on qualified medical expenses.
The total amount that can be placed in an HSA per year is capped by the IRS. For 2015, the maximum contribution limit is $3,350 for individuals and $6,650 for families, though account holders over 55 years old may contribute an extra $1,000 to those totals.
These limits are significantly higher than other types of tax-advantaged health accounts, and unlike the other options, HSAs have additional unique features that allow you to save more money and keep it over a longer period of time. Whereas funds in health Flexible Spending Accounts (FSAs) and Health Reimbursements Arrangements (HRAs) come with an expiration date or a maximum carry-over dollar amount, HSAs allow you to build your balance as high as you wish in perpetuity. Except for the cap on total contributions per year, there are no limits on how much money can be in your account and how long it remains open.
Additionally, HSAs are individually owned accounts, meaning employees take the account—including any employer contributions—with them if they leave their employer.
Using Health Care with an HDHP
Because of the high deductibles associated with HDHPs, having an HDHP means you need to become a smart health care shopper.
The most important thing to keep in mind is that some types of health care products and services cost much more than similar items, and the more expensive option may not be necessary for the treatment you require.
Additionally, like most other health plans, HDHPs cover preventive services at no cost. Preventive care is defined as medical checkups and tests, immunizations and counseling services used to prevent chronic illnesses from occurring. Preventive care not only keeps you healthy, but it can also monitor and even reduce the risk of developing future, costly health problems.
Most types of specific preventive services are listed here. While it can sometimes be difficult to determine if a specific medical service qualifies as preventive, you can call your health plan to learn if a service is considered preventive before receiving it.
Other medial savings strategies people with HDHPs should consider are:
- Using a generic in place of a name brand prescription can result in significant savings. While there is not a generic version for every type of drug, the only difference between a branded drug and a generic counterpart is the name; they both have the same active ingredients. If you need medication, find out what class of drugs your prescription is classified under. If you receive a name brand prescription from a doctor, ask if a generic is available.
- Emergency Room vs. Urgent Care.Like prescriptions, there is a sizable cost adjustment between emergency rooms and urgent care. It is very expensive for hospitals to support all of the equipment and staff that an emergency room requires, so visits to the emergency room generally cost much more than those to a doctor’s office or an urgent care center. If you develop a problem that needs to be treated quickly, but it is not life threatening or risking disability, go to an urgent care clinic.
- Qualified Medical Expenses. Use your HSA to pay for qualified medical expenses without paying taxes. Qualified medical expenses include the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for medical services rendered by physicians, surgeons, dentists and other medical practitioners. They also include the costs of equipment, supplies and diagnostic devices needed for these purposes. Like preventive care, there can sometimes be uncertainty surrounding what is an allowable qualified medical expense. Specific qualified medical expenses are approved by the IRS, and a list of them can be found here.
HDHPs and HSAs are not the ideal health coverage plan for everyone. However, for many people, HDHPs are a great way to avoid paying for superfluous coverage and HSAs are an excellent vehicle for stockpiling tax-free money to use on future health care needs.
Starting in 2015, the Affordable Care Act (ACA) requires applicable large employers to offer affordable, minimum value health coverage to their full-time employees (and dependents) or pay a penalty. The employer penalty rules are also known as the employer mandate or the “pay or play” rules.
Also, effective for 2014, affordability of health coverage is used to determine whether an individual is:
- Eligible for a premium tax credit for a health plan purchased through an Exchange; and
- Exempt from the penalty for not having minimum essential coverage.
On July 24, 2014, the IRS released Revenue Procedure 2014-37 to index the ACA’s affordability percentages for 2015.
For plan years beginning in 2015, an applicable large employer’s health coverage will be considered affordable under the pay or play rules if the employee’s required contribution to the plan does not exceed 9.56 percent of the employee’s household income for the year.
Applicable large employers can use one of the IRS’ affordability safe harbors to determine whether their health plans will satisfy the 9.56 percent requirement for 2015 plan years, if requirements for the applicable safe harbor are met.
This adjusted affordability percentage will also be used to determine whether an individual is eligible for a premium tax credit for 2015. Individuals who are eligible for employer-sponsored coverage that is affordable and provides minimum value are not eligible for a premium tax credit.
Also, Revenue Procedure 2014-37 adjusts the affordability percentage for the exemption from the individual mandate for individuals who lack access to affordable minimum essential coverage. For plan years beginning in 2015, coverage is unaffordable for purposes of the individual mandate if it exceeds 8.05 percent of household income.
The pay or play rules apply only to applicable large employers. An “applicable large employer” is an employer with, on average, at least 50 full-time employees (including full-time equivalents) during the preceding calendar year.
Many applicable large employers will be subject to the pay or play rules starting in 2015. However, applicable large employers with fewer than 100 full-time employees may qualify for an additional year, until 2016, to comply with the employer mandate.
The affordability of health coverage is a key point in determining whether an applicable large employer will be subject to a penalty.
For 2014, the ACA provides that an employer’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year. The ACA provides that, for plan years beginning after 2014, the IRS must adjust the affordability percentage to reflect the excess of the rate of premium growth over the rate of income growth for the preceding calendar year.
As noted above, the IRS has adjusted the affordability percentage for plan years beginning in 2015 to 9.56 percent. This adjusted affordability percentage will also be used to determine whether an individual is eligible for a premium tax credit for 2015.
The affordability test applies only to the portion of the annual premiums for self-only coverage and does not include any additional cost for family coverage. Also, if an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option that also satisfies the minimum value requirement.
Affordability Safe Harbors
Because an employer generally will not know an employee’s household income, the IRS created three affordability safe harbors that employers may use to determine affordability based on information that is available to them.
The affordability safe harbors are all optional. An employer may choose to use one or more of the affordability safe harbors for all its employees or for any reasonable category of employees, provided it does so on a uniform and consistent basis for all employees in a category.
The affordability safe harbors are:
- The Form W-2 safe harbor (affordability determined based on Form W-2 wages from that employer)
- The rate of pay safe harbor (affordability determined based on an employee’s rate of pay)
- The federal poverty line (FPL) safe harbor (affordability determined based on FPL for a single individual)
Beginning in 2014, the ACA requires most individuals to obtain acceptable health insurance coverage for themselves and their family members or pay a penalty. This rule is often referred to as the “individual mandate.” Individuals may be eligible for an exemption from the penalty in certain circumstances.
Under the ACA, individuals who lack access to affordable minimum essential coverage are exempt from the individual mandate. For purposes of this exemption, coverage is affordable for an employee if the required contribution for the lowest-cost, self-only coverage does not exceed 8 percent of household income. For family members, coverage is affordable if the required contribution for the lowest-cost family coverage does not exceed 8 percent of household income. This percentage is to be adjusted annually after 2014.
For plan years beginning in 2015, Revenue Procedure 2014-37 increases this percentage from 8 percent to 8.05 percent.
As always, contact your CIBC Consultant for help with this, or any other part of Group Benefits Management and The Affordable Care Act. We provide Solutions…that Work!
How Does Your Business Measure up?
An attractive benefits program is vital for your recruiting and retention efforts, but it is also a significant expense. To ensure you are providing a package that is both competitive and economical, you need to know how your offerings compare to those of other employers in your industry. Benchmark data can provide valuable insight for evaluating your benefits package, helping you conform to or even set industry standards. Quality benchmarking allows you to search for best practices, innovative ideas and highly effective operating procedures that lead to superior performance.
Employer interest in benefits benchmark data has grown over the past decade, as the cost of providing health care benefits continues to skyrocket and companies look for new ways to manage expenses. Analyzing how other companies are structuring their plans and the strategies they are using to cut costs may make your own benefit plan decisions easier.
Benchmarking can show you:
- Where your weaknesses are
- Where your strengths are and how to maintain them
- Which areas you can improve
- Strategies for improvement
- New or different ways to do things
Everything Can Be Benchmarked
The first step to successful benchmarking is to identify different aspects of your benefits and choose which are most costly and which are most important to your business’s success. There is information available for almost any aspect of a benefits program, including:
- Total costs
- Cost-sharing measures
- Plan design
- Voluntary offerings
- Workers’ compensation
- Paid leave
Using claims analysis, employers can analyze their own health claims for the previous year to see where employees are spending more money or utilizing care above national norms. Once cost drivers are identified, employers can make changes to plan designs to influence employee wellness and spending habits.
Benchmarking can also be a powerful tool to measure your business against the competition. By benchmarking your plans against competitors’, employers can remain competitive in the market while implementing strategic changes—for instance, you may see that your deductible is much lower than other employers’ deductibles in your region or industry, so you may feel comfortable raising it.
Whether you are curious to know how your voluntary disability benefits stack up or are wondering if your paid leave program is comparable to competitors, there is likely benchmark data available.
Precisely Adjust for Impact of Health Care Reform
Interest in benefits benchmark data has grown since the introduction and implementation of health care reform.
The regulations and provisions of health care reform require significant changes to benefit plans and, in many cases, tough decisions for employers. How are you handling the expansion of dependent coverage for children or the impact of removing annual limits? How is your company planning to manage the increased costs associated with the auto-enrollment provision that will take effect? Will your company pay or play regarding the employer mandate?
Employers are responsible for implementing many new rules and absorbing the costs, which will likely mean cutting or shifting costs elsewhere. These decisions can make the difference between maintaining a competitive benefits package and seeing a decline in recruiting and retention of quality employees.
Knowing how other employers plan to address these benefits decisions can be incredibly advantageous for your company, allowing you to anticipate the shifting benefits landscape and evolve before your competition responds.
CIBC of Illinois, Inc. provides access to all this valuable benchmarking information and more. Contact us to find out more.
CIBC of Illinois, Inc.
187 S. Schuyler Avenue
Kankakee, IL 60901
P | 877-936-3580
F | 815-936-3583
Updating policies and remaining compliant on a vast number of issues in the workplace, as well as keeping up on wellness, employee communications and other HR topics, are big concerns and can be a burden for HR departments.
Gathering information from a variety of sources can be time-consuming and tedious. You also need to ensure that you’re gathering accurate, up-to-date information, which is a challenge when using the Internet. Misinformation and confusion will not be an acceptable excuse if you are fined for noncompliance with government regulations, so finding a good source of information for HR support is crucial.
What You Need
We understand that HR departments are spread thinner than ever, yet are responsible for vitally important parts of the business: workplace compliance, policies and procedures, employee communications, benefits enrollment and much more. Researching, writing and maintaining all the information needed to stay on top of these tasks, in addition to handling day-to-day responsibilities, can be time-consuming for an overwhelmed HR staff.
For example, accurate, timely enrollment information is vital to smooth enrollment periods and happy employees, but explaining benefits to employees can take a lot of time. Good articles and explanatory materials can cut down on the time HR needs to spend face-to-face presenting and explaining basic benefit terms and information.
The difficulties of keeping up with changing government regulations are numerous, especially in the current environment of massive health care changes that affect businesses and individuals alike. Search engines such as Google can be used to look for information on a variety of HR-related issues, but the endless list of results can be unwieldy and difficult to sift through:
- Relying on search engines will not alert you to new compliance issues, and you can’t search for a topic if you aren’t aware of what the new regulations are.
- Random Internet searches can turn up an unmanageable number of results, wasting your precious time sorting through site after site.
- Not everything on the Internet is trustworthy, so you need to spend extra time and effort making sure your source is up to date and accurate.
- Government sites are reliable, but in many cases the lengthy legalese is confusing and time-consuming to read.
- Sometimes, you just can’t find the materials you need, such as wellness program materials or appropriate employee communication newsletters.
A Single, Reliable Source
A hub of resources for all pertinent compliance information; sample policies and guidelines for procedures; employee communication and wellness program templates; and enrollment information and forms is the solution.
Dispense with unreliable and inconsistent Internet searches by accessing a client portal that features the following:
- Up-to-date and easy-to-read compliance information
- Answers to various business needs, including wellness programs and social media guides
- Sample policies and forms for hiring, performance management, enrollment, employee handbooks and more
- Ready-to-go employee communication pieces with options for customization
We are your “client portal,” offering answers that are provided by trustworthy professionals in a format devoid of complicated legalese.
If you’re interested in a single, reliable source to support your business needs, contact CIBC of Illinois, Inc. to assist you with gaining access to an “information portal.”
You can reach CIBC of Illinois, Inc. at 877-936-3580 or visit us at http://www.cibcinc.com.
Importance of claims analysis
In today’s business climate, managers need benefits solutions as resourceful and cutting-edge as the organizations they run. For many employers, pre-packaged full insurance health plans do not provide the greatest value to meet their organizations’ needs. Employers of all sizes are looking to mold their plans around the requirements of their businesses.
There are many reasons employers might eschew a traditional plan system. Small and mid-sized employers might want to avoid risk charges and state premium taxes. Large employers may want administer their benefits plans themselves and grow their cash flow by holding their reserves in an interest-bearing account. Multi-state employers might want to free themselves from the burden of complying with the insurance regulations of multiple states. Employers of young, healthy workforces may be looking to capitalize on their advantages by saving on health insurance.
Because each business is unique and requires its own set of insurance solutions, diversity in provided benefits plans is needed. For many employers it may be far more beneficial to pursue self-funding as a benefits solution.
A self-funded group health plan is one in which the employer eliminates obligations to a health plan provider by assuming the financial risk for providing health care benefits directly to its employees. While experienced, successful business managers are experts at mitigating risks, many will gladly take on risk exposure if the probability is good for a high payout. There are numerous well-documented advantages to self-funding for employers that manage risk well; including:
- Reduced insurance overhead costs. Carriers assess a risk charge for insured policies (approximately 2 percent annually), but self-insurance removes this charge.
- Reduced state premium taxes. Self-insured programs, unlike insured policies, are not subject to state premium taxes. The premium tax savings is about 2 to 3 percent of the premium dollar value.
- Avoidance of state-mandated benefits. Self-insured plans are exempt from state insurance laws, subject only to ERISA compliance.
- Choosing benefits services à la carte
- Flexibility in plan designs, administration and offered services
- Customizable stop-loss insurance to reduce the risk associated with high claims
- Improved cash flow. Self-insured employers do not have to pre-pay for coverage, and claims are paid as they become due.
- Additional cash flow if reserves are held in an interest-bearing account
One of the greatest assets offered by self-funding is the complete freedom to structure benefits according to needs of your company. Employers can choose what benefits they want to offer, while opting to insure individual benefits through traditional means or forgo offering them altogether.
The following benefits may be self-insured:
- Health care (indemnity, PPO, POS and HMO)
- Short-term disability
- Prescription drugs
- Vision care
Employers can also make the final call on important variables, such as:
- Policy limits
- Retiree benefits
Employers are also free to administer benefits themselves if they have the resources, or to retain a third-party administrator at a fraction of the cost of a traditional benefits provider.
Most advantageous to employers worried about the potential for large claims is the ability to acquire stopgap insurance, allowing managers to determine their total amount of yearly costs with 100 percent certainty.
CIBC of Illinois, Inc. welcomes the opportunity to help your organization examine its plan designs and make recommendations for improvement.