April 14, 2015 by Medcon Benefit Systems Group, Inc.

What Should You Look for When Searching for an Employee Benefits Advisor?

When evaluating, expanding and maintaining your benefits, including self-funding, fully insured or voluntary benefits, look for these qualities in a broker:

1. Comfort and trust level: Do you feel comfortable working with your broker? Do you feel they have your best interests in mind? Do you trust their intentions – are they assisting you with meaningful benefits or merely “selling” benefits?

2. Resources: Does your broker have resources to evaluate how your plans are working? Can they compare them to other plans in the marketplace; do they have benchmarking tools? Are they providing any level of HR services or tools?

3. Experience: Has your broker implemented both self-funded and fully insured plans? Have they worked with large groups, small groups? Do they have experience in traditional and voluntary plans? Short- and long-term disability? Long-term care? Do they have a working relationship with various carriers? Enough to know who requires what and who provides exceptional service?

4. Strategy: Is your broker experienced enough to actually think out of the box and provide innovative solutions? Do they have a long-term strategy for your future over a three- to five-year plan, or do they just bring you a spreadsheet with a “pick a rate” strategy for the year?

5. Compliance and Regulation: Is your broker well-versed in all things ACA (Affordable Care Act) as well as the DOL, ERISA, HIPAA and Plan Document requirements, just to name a few?

6. Compensation Disclosure: Do you know each and every year exactly how much your advisor is compensated on each product?

All of these questions should be answered with confidence in your relationship with your benefits partner. You know up front exactly what to expect from your CPA and your lawyer. They are strategic business partners and have responsibilities in the success of your firm. We submit that your benefits is every bit as important, should not your partner be chosen just as carefully?

April 8, 2015April 14, 2015 by Medcon Benefit Systems Group, Inc.

The Affordable Care Act – How the Individual Mandate Impacts Your Employees

As the Patient Protection and Affordable Care Act (PPACA) continues to be implemented, employers and their employees have questions about how the health care law affects them.

In an effort to keep our clients up to date about PPACA, we commit to answering the many questions that arise. Here is a basic sampling of the top questions:

Q: What is the individual mandate?

A: The individual mandate is the provision in the PPACA that says most US citizens and legal residents must have health insurance. For a listing of exemptions refer to www.Healthcare.gov. Some examples include: those who are incarcerated, members of a federally recognized tribe, those with religious exemptions, etc.

Your employees who do NOT comply with the individual mandate will be responsible for penalties when preparing individual tax returns. For 2014, the penalty equates to the greater of $95 or 1% of your annual income. If you earn under $10,150, there is no penalty. For 2015, the penalty equates to $325 or 2% of annual income. For 2016, the penalty equates to $695 or 2.5% of annual income.

As you can see, the Affordable Care Act has a direct impact on your employees regardless of whether or not you offer coverage. Dollars spent paying penalty fees could be used to contribute to group health insurance premiums, which in turn can lead to numerous benefits for your business – including employee retention, higher morale and peace of mind for our employees.

Q: What is the exchange or marketplace?

A: The public marketplace, or exchange, is the website where individuals can comparison shop for health plans and sign up for coverage. You have probably heard this referred to as: www.Healthcare.gov.

Federal tax subsidies to help pay for medical coverage may be available to eligible individuals if they enroll for coverage through the public marketplace.

The types of plans offered through the marketplace must be qualified health plans and must meet certain “metallic” levels of coverage – bronze, silver, gold or platinum. These metallic designations refer to the actuarial value of the plan, or how much, on average, the plan pays for the cost of covered benefits.

Q: What are essential health benefits?

A: Effective for plan years beginning on or after January 1st, 2014, all plans offered through the exchange are also required to cover certain, essential benefits. The PPACA requires plans to cover at least 10 general categories of items and services:

Ambulatory patient services (outpatient care)
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder benefits, including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric services, including oral and vision care

Q: Who is eligible for a subsidy through the individual marketplace?

A: Some individuals are eligible for tax credits to assist with premium payments and cost-sharing. Individuals with incomes between 100% and 400% of the federal poverty level are eligible, a family of four with income between $23,850 and $95,400.

Q: As an employer, should I offer health insurance to my employees?

A: Should you decide not to provide health insurance to your employees, you may be subject to penalties of up to $3,000 per employee. If you do provide coverage, it must be affordable and meet minimum value requirements. To maintain affordability, premiums may not exceed 9.55% of an employee’s annual income.

Most employees will find coverage offered through an employer to be more affordable than coverage offered on the marketplace based on your contributions. You have to weigh the cost of providing the benefit against the penalties as well as the intangible impact of not offering any coverage to your employees.

For help in making this important decision, we can work with you through our many resources and tools to estimate potential penalties against the cost of providing health care coverage to your employees.

This content is provided without any warranty of any kind. MedCon has taken reasonable steps to ensure this information is accurate and timely. If you have specific questions that pertain to your unique business environment or industry, we recommend that you consult legal council.

April 1, 2013March 27, 2013 by Medcon Benefit Systems Group, Inc.

Health Care Consumerism: Comparison Shopping

Every day consumers make important decisions that affect their family’s health and health-related financial security. Making these choices can be stressful and overwhelming, especially if a family member is ill or considerable medical expenses are involved. Often, it may seem like you don’t have a choice when faced with the cost of medical procedures, but that is not always the case. Many consumers today are taking more responsibility for their health care, which includes seeking more information about the cost of health services and making informed decisions regarding their care. This movement is called consumer-driven health care.

Comparison Shopping

Consumer-driven health care, or consumerism, revolves around the idea that consumers should be able to make informed choices about their medical care based on price and quality information. The eventual goal is for well-informed health care consumers to compare prices—choosing more wisely and ultimately lowering overall health care costs for everyone. However, the apples-to-apples comparison used for most products or services is mostly useless in the health care marketplace.

To date, lawmakers and health insurance companies have placed a great deal of emphasis on developing consumer-driven insurance products, but price transparency, an important aspect, has been mostly overlooked. Generally, the prices of health care services are not made public, making comparison shopping seem impossible. For realistic comparison shopping between hospitals, for example, you need to know in advance what the bottom line price would be for an all-inclusive bill, including hospital and physician fees. However, it’s hard to hunt for bargains when the prices of various tests, treatments and procedures differ significantly depending on a variety of factors, such as the type of health insurance you have, whether you have surgery at a hospital or freestanding surgery center, and whether your surgeon or anesthesiologist participates in your health plan’s network.

The goal of price transparency in health care is to help buyers have an easier time determining which providers have the lowest prices. Good information on provider quality is also important, so consumers aren’t compelled to simply choose the “cheapest” alternative, but rather make choices that provide the best quality health care for the best value.

Unfortunately, true price transparency—where consumers have realistic information about provider cost and quality at their fingertips—is scarce. However, the growth of consumerism in health care and the growing prevalence of HSAs as an integral part of employer-sponsored health benefits are likely to put pressure on hospitals, physicians and other health care providers to make their prices more readily available.

MedCon has successfully introduced a patient advocacy program to many of our clients of all sizes. With just a phone call, your employees are connected to an account representative assigned to your company who knows all the details of your health plan. Your account representative will search for board certified, in-network physicians in your employee’s area and send them a list of options to choose from. They will even set the appointment for your employee and review EOBs or assist with claim disputes.

This is a true health care concierge service and MedCon is excited to offer this tool to our clients. Please contact us today for more details about this program.

March 27, 2013 by Medcon Benefit Systems Group, Inc.

In Focus: Health Care Consumerism

Health care costs in the United States continue to more than double the rate of inflation. Hoping to encourage a turnaround, many employers have turned to consumer-driven health plans for providing employee health care benefits. Consumer-driven health plans are employer-sponsored health benefit programs that aim to educate employees about the true costs of medical services and how to be more responsible for their medical care purchase decisions.

These plans require a more educated patient, who in theory will become financially responsible for more of the real costs of health care services. Employers who offer these types of plans hope that better, more efficient use of health care services on the part of their employees will create a downward shift in both demand and cost for health care over time.

Ultimately, consumer-driven health plans are more than just a few specific types of health plan “models.” Rather, the entire consumer-driven movement relies upon the introduction of a wide spectrum of “consumerism” elements that, coupled with a formal employer-sponsored health plan, will encourage employees to assume a greater role in managing their own health and the associated costs. Consumerism, as it relates to health care, can range from simply offering employees the ability to choose among a few different health plans to providing vouchers for employees to purchase their own individual health plans on the open market. Whatever the case, consumer-driven health plans only work when a variety of peripheral financial incentives and informational programs are introduced, such as preventive care services, wellness and disease management programs and provider cost and quality information. These programs provide employees with the tools they need to make the most value-driven choices.

The most common consumer-driven health plan pairs a health savings account (HSA) with a high-deductible insurance plan. Employers and employees make pre-tax contributions to the HSA, which can be used to pay for routine and preventive medical care. The insurance portion provides coverage for catastrophic or high-cost events. Typically, any unused amounts in the savings account can be rolled over and used in subsequent plan years.

The key component of any type of consumer-driven health plan remains: Employees must be provided with a set of tools to help them understand the complex health care system. MedCon has introduced a successful patient advocacy program to our clients of all sizes. With just a phone call, employees are connected to an entire resource which allows them to shop for health care and know exactly what they will pay before going in for a treatment. How often do we research high-ticket items before we buy them, yet we never think twice when our doctor refers us to a specific specialist or facility? As the health care landscape changes on a daily basis, MedCon recognizes that employers are looking to manage the costs of their valuable employee benefits program. Often this is through plan design changes, and as employees become repsonsible for more first dollar expenses, it becomes even more important to educate them and provide them with the tools to be a smart health care consumer. Please contact us to learn more about this exclusive program we offer to our clients.

Check back frequently for more insights on health care consumerism.

August 1, 2012August 1, 2012 by Medcon Benefit Systems Group, Inc.

How Employers Should Handle MLR Rebates

The Affordable Care Act (ACA) requires health insurance issuers to spend a minimum percentage of their premium dollars on medical care and health care quality improvement. This percentage, or medical loss ratio (MLR), is 85 percent for issuers in the large group market and 80 percent for issuers in the small and individual group markets. Issuers that do not meet the applicable MLR standard must provide rebates to consumers.

The MLR requirements, which are enforced by the Department of Health and Human Services (HHS), became effective for issuers in 2011. Rebates must be paid by August 1 following the end of the MLR reporting year. Thus, issuers are required to pay rebates by Aug. 1, 2012, based on their 2011 MLRs.

In a report on 2011 MLR data, HHS noted that the vast majority of individuals are insured by issuers that met or exceeded the applicable MLR standard. However, for 2011, issuers in the large and small group markets are still expected to return $386 million and $321 million, respectively, in rebates.

Employers with insured group health plans may receive rebates this summer based on their issuer’s 2011 MLR data. Issuers were required to submit their 2011 MLR reports to HHS by June 1, 2012, so they may already know whether they will be issuing rebates by Aug. 1, 2012. Employers that expect to receive rebates should become familiar with the MLR rebate rules and should decide how they will administer the rebates. For assistance with rebates, please contact your MedCon Benefit Systems, Inc. representative.

MLR rebates

An issuer that does not meet its MLR standard must provide a rebate to the policyholder, which is typically the employer that sponsors the plan in the group health plan context. For current enrollees, issuers may provide rebates in the form of a lump-sum payment or a premium credit (that is, a reduction in the amount of premium owed).

Also, to avoid having to pay a rebate, an issuer may institute a “premium holiday” during an MLR reporting year if it finds that its MLR is lower than the required percentage. According to HHS, an issuer may use a premium holiday only if it is permissible under state law. Also, any issuers using premium holidays must meet certain other requirements, such as providing the holiday in a nondiscriminatory manner and refunding premium overpayments.

How an employer should handle any MLR rebate it receives from an issuer depends on the type of group health plan (an ERISA plan, a non-federal governmental group health plan or a non-ERISA, non-governmental plan) and whether the rebate is considered a plan asset.

ERISA Plans

Most, but not all, group health plans are governed by ERISA. Employers with ERISA plans should not assume that they can simply retain an MLR rebate. The Department of Labor (DOL) issued Technical Release 2011-4 to explain how ERISA’s fiduciary duty and plan asset rules apply to MLR rebates. Any rebate amount that qualifies as a plan asset under ERISA must be used for the exclusive benefit of the plan’s participants and beneficiaries.

Is the Rebate a Plan Asset?

According to Technical Release 2011-4, in the absence of specific plan or policy language addressing these types of distributions, whether the rebate will constitute a plan asset depends, in part, on the identity of the policyholder and on the source of premium payments.

If the plan or its trust is the policyholder, the policy is an asset of the plan and the entire rebate must be treated as a plan asset.
If the employer is the policyholder, as is most often the case, the portion of the rebate that must be treated as a plan asset depends on who paid the insurance premiums. For example:
- If the premiums were paid entirely out of trust assets, the entire rebate amount is a plan asset;
  - If the employer paid 100 percent of the premiums, the rebate is not a plan asset and the employer can retain the entire rebate amount;
If participants paid 100 percent of the premiums, the entire rebate amount is a plan asset; and
- If the premiums were paid partly by the employer and partly by the participants, the percentage of the rebate equal to the percentage of the cost paid by participants is a plan asset.

How Should the Rebate be Used?

Once an employer determines that all or a portion of an MLR rebate is a plan asset, it must decide how to use the rebate for the exclusive benefit of the plan’s participants and beneficiaries. DOL Technical Release 2011-04 identifies the following methods for applying the rebates:

The rebate can be distributed to participants under a reasonable, fair and objective allocation method. If the employer finds that the cost of distributing shares of a rebate to former participants approximates the amount of the proceeds, the fiduciary may decide to limit rebates to current participants.
If distributing payments to participants is not cost-effective because the amounts are small or would give rise to tax consequences to the participants, the employer may utilize the rebate for other permissible plan purposes, such as applying the rebate toward future participant premium payments or toward benefit enhancements.

If a plan provides benefits under multiple policies, the employer must be careful to allocate the rebate for a particular policy only to the participants who were covered by that policy. According to the DOL, using a rebate generated by one plan to benefit another plan’s participants would be a breach of fiduciary duty.

Is There a Time Limit for Using Rebates?

To the extent a rebate qualifies as a plan asset, ERISA would generally require the amount to be held in trust. However, most group health plans receiving rebates do not maintain trusts because their premiums are paid from the employer’s general assets (including employee payroll deductions). In Technical Release 2011-4, the DOL provides relief from the trust requirement for premium rebates that are used within three months of their receipt.

In addition, directing an issuer to apply the rebate toward future participant premium payments or toward benefit enhancements adopted by the plan sponsor would avoid the need for a trust and, in some circumstances, may be consistent with the employer’s fiduciary duties. Employers that decide to take this approach should coordinate with their insurance issuers to establish the process for handling rebates.

Non-federal Governmental Plans

Group health plans maintained by non-federal government employers (for example, state and local governments) are not governed by ERISA’s fiduciary standards. HHS’ interim final regulations on the MLR rules address how rebates for these plans should be handled.

Under these regulations, employers must use the portion of the rebate attributable to the amount of premium paid by employees for the benefit of its employees covered under the policy. This portion of the rebate must be applied to reduce employees’ premiums or must be provided to these employees as a cash refund. Under either option, the rebate may be applied to employees enrolled during the year in which the rebate is paid, rather than during the MLR reporting year.

Non-ERISA, Non-governmental Plans

HHS has also addressed rebates for non-governmental group health plans that are not subject to ERISA, such as church plans. Under HHS final regulations, an issuer may make a rebate payment to the policyholder (typically, the employer sponsoring the plan) if it receives the policyholder’s written assurance that the rebate will be used for the benefit of current subscribers using one of the options described above for non-federal governmental plans. Without this written assurance, issuers must pay the rebate directly to employees covered under the policy during the MLR reporting year.

Tax Treatment of Rebates

On April 19, 2012, the Internal Revenue Service (IRS) issued a set of frequently asked questions (FAQs) addressing the tax treatment of MLR rebates. In general, the rebates’ tax consequences depend on whether employees paid their premiums on an after-tax or a pre-tax basis.

After-tax Premium Payments

If premiums were paid by employees on an after-tax basis, the rebate will generally not be taxable income to employees and will not be subject to employment taxes. This tax treatment applies if the rebate is paid in cash or if it is applied to reduce current year premiums. However, if an employee deducted the premium payments on his or her prior year taxes, the rebate is taxable to the extent the employee received a tax benefit from the deduction.

Pre-tax Premium Payments

If premiums were paid by employees on a pre-tax basis under a cafeteria plan, the rebate will generally be taxable income to employees in the current year and will be subject to employment taxes. This is the case whether the rebate is paid in cash or is applied to reduce current year premiums. A premium reduction in the current year will reduce the amount that an employee can contribute on a pre-tax basis. Thus, there is a corresponding increase in the employee’s taxable salary that is also wages subject to employment taxes.

Additional Guidance

A copy of DOL Technical Release 2011-4 is available at: www.dol.gov/ebsa/newsroom/tr11-04.html.

A copy of the IRS’ FAQS is available at: www.irs.gov/newsroom/article/0,,id=256167,00.html.

More MLR guidance is available from HHS at: http://cciio.cms.gov/programs/marketreforms/mlr/index.html.