As Health Care Costs Continue to Rise, Retirees Hoping to Rely Solely on Social Security Better Think Again

June 2016

As Health Care Costs Continue to Rise, Retirees Hoping to Rely Solely on Social Security Better Think Again

Your clients may have an idea of how they want to spend their retirement years, and let's face it, it is a lot more fun to think about warm weather and golf clubs than prescription drugs and medical bills. No wonder only 12% of working Americans have taken any steps toward addressing medical expenses in retirement. I mean, that's what Social Security is for, right? Click here to read more.

Insurers Expected To Raise 2017 Premiums Significantly

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(6/12, Alonso-Zaldivar, Murphy) reports that healthcare insurance premiums are expected to increase next year “because major insurers have taken significant financial losses” under the Affordable Care Act due to lower than expected enrollment, new customers requiring more care than anticipated, “and a government system to stabilize the markets had problems.” The article says some 10 million consumers will receive subsidies through the ACA, but those who earn “more than $47,520 for an individual and $97,200 for a family of four” will not qualify. In addition, those who obtain private insurance “outside of HealthCare.gov or a state marketplace” are not eligible for subsidies, regardless of their income.

Insurers’ Actuaries Explain Need For Higher Premiums For ACA Plans.

 

The New York Times  (6/9, Pear, Subscription Publication) reports that actuaries typically garner little attention, yet “as they crunch the numbers for their Affordable Care Act business, their calculations are feeding a roaring national debate over insurance premiums, widely used to gauge the success of President Obama’s health care law.” Insurers in most states have submitted their rates for 2017, and many of them are seeking double-digit increases. State officials are still considering the requests, but the Obama Administration says those rates are often reduced significantly, and ACA subsidies will help to keep them low. The article mentions the Geisinger Health Plan, which requested a 40 percent rate increase, and whose chief actuary Kurt J. Wrobel says the rates are influenced by new Federal rules, recent losses, and an ever-changing marketplace.

From our HR Client Newletter

Question about Money Matters Do we have to require our employees who are being switched from exempt to non-exempt to take their lunch breaks if they prefer to eat while working?

Answer from Kara, one of our HR Pros Thank you for the question. The FLSA does not require private employers to provide rest periods for employees, so the answer is dependent on state law. Often state-mandated meal periods can be waived if the employee would prefer to work through them, but a few states do not allow this practice. If your state does allow the meal period to be waived, it may require that the employee agree to it in writing. Whether or not the state requires this documentation, we strongly recommend it. The written agreement shows that any employees who skipped a meal period did so freely. As long as you are within the bounds of state law, you are free to do whatever works best for your organization. For instance, if customers expect you to be open from 9:00 am to 5:30 pm, but employees are asking to work through (and thereby waive) their 30-minute lunch period so they can leave at 5:00 pm, there is nothing saying you must honor this request. But if it makes sense to let employees work through lunch so you can power down computers and turn off the lights 30 minutes earlier at the end of the day, you’re free to do that as well. Just make sure that you consistently apply your policies and that you document the legitimate business reasons when making any exceptions for a particular employee. If you have any additional questions, please let us know. We look forward to assisting you again soon!

Kara practiced employment and bankruptcy law for five years before joining us, and was a Human Resources Generalist at a mid-size Civil Engineering and Architecture firm for two years prior to that. As an attorney she worked on many wage and hour and discrimination claims in both state and federal court. She holds a Bachelor of Arts degree in Liberal Studies from Oregon State University and received her law degree from Lewis and Clark Law School.

Majority of millennials not participating in 401(k) plans

Majority of millennials not participating in 401(k) plans

Women, in particular, are lagging in earnings and in the amount of income they’re saving for retirement, according to research from T. Rowe Price. READ MORE »

Employers advised to proceed with caustion on wellness

Employers advised to proceed with caution on wellness

A program’s structure can determine which laws apply and federal agencies and courts are not always in agreement as to what is required for compliance. READ MORE »

Encouraging an employee to leave a group plan for a Medicare Supplement can be costly to the employer

Beware of CMS data match letters

Remind clients now that encouraging an employee to take Medicare versus staying on the group health plan is a potential minefield, says adviser David C. Smith. READ MORE »

 

Final FLSA White Collar Exemption Rules Announced

Final FLSA White Collar Exemption Rules Announced Today the Department of Labor announced the new salary threshold for certain employees to qualify as exempt from minimum wage and overtime under the Fair Labor Standards Act’s White Collar Exemptions. Effective December 1, 2016, the new minimum salary level will be $47,476 per year ($913 per week). Up to 10% of this income may come in the form of non-discretionary bonuses, incentive pay, or commissions, as long as that portion of the compensation is paid at least quarterly. In the event that an employee does not earn enough in bonuses and commissions to meet the full minimum salary requirement, a catch-up payment can be made by the employer once a quarter. The minimum salary requirement applies to all white collar workers who are classified as exempt executive or administrative employees, and to many who are classified as exempt professional employees. As anticipated, the duties tests for the White Collar Exemptions have not changed. Under the new rules, this salary threshold will increase every three years. It will be set at the 40th percentile of weekly earnings among full-time salaried (not necessarily exempt) employees in the country’s lowest income region – currently the South. It is expected that the next change, which will be effective January 1, 2020, will increase the minimum salary to approximately $51,168. The new rule also increases the minimum salary threshold for the Highly Compensated Employee (HCE) exemption from $100,000 per year to $134,004 per year. This exemption can be used when an employee carries out a limited number of executive, administrative, or professional duties, but is very well-compensated. The new rule sets the HCE threshold at the 90th percentile of all full-time salaried workers nationally. This number will also increase every three years, and is expected to rise to approximately $147,524 on January 1, 2020. Some state laws create different minimum salary levels. When state laws differ from the FLSA, an employer must comply with the standard most beneficial to employees. Presently, the federal minimum salary level is higher than any state-mandated minimum, and therefore must be followed. In preparation for the new rule, we have created the following materials, all of which can be found in the HR Support Center: FLSA Changes: Decision Making Guide FLSA Changes: Implementation Guide 2 Minute HR trainings on the new rule, the executive, administrative, and professional exemptions, and the salaried non-exempt classification A memo requesting that employees track their hours for planning purposes  A letter to employees regarding their classification change A guide to calculating overtime for non-exempt employees who receive non-discretionary bonuses or commissions

Americans underestimate cost of home care and nursing home.

Americans underestimate cost of home care by nearly 50%, while nursing home room now tops $92,000 per year

Huge disparity exists between what consumers think costs are and what they actually are, while Genworth’s just-released annual “Cost of Care” benchmark study finds cost of a private nursing home room now at $92,378 annually. VIEW ARTICLE

Employees report difficulty navigating healthcare options

Benefits issues can lead to diminished productivity, finds new research, as workers spend an average of three and a half hours a month dealing with healthcare issues at work. READ MORE »

California Passes Minimum Wage Hike

California Law Alert April 4, 2016

California Passes Minimum Wage Hike Today Governor Jerry Brown signed a bill that will incrementally raise the California minimum wage to $15 per hour over the next seven years. Below is the schedule of increases by size of employer. Employers with 26 or more employees: 1. $10.50 – January 1, 2017 2. $11.00 – January 1, 2018 3. $12.00 – January 1, 2019 4. $13.00 – January 1, 2020 5. $14.00 – January 1, 2021 6. $15.00 – January 1, 2022 Employers with 25 or fewer employees: 1. $10.50 – January 1, 2018 2. $11.00 – January 1, 2019 3. $12.00 – January 1, 2020 4. $13.00 – January 1, 2021 5. $14.00 – January 1, 2022 6. $15.00 – January 1, 2023 The bill allows the governor to delay a particular increase for one year in the event of a budget crisis or an economic downturn. With these increases, California joins New York in becoming the first states to pass legislation that will result in a statewide minimum wage of $15 per hour.

The ACA: What’s been repealed, delayed or retained

 By Zack Pace
January 20, 2016

SourceMedia's Partner Insights program enables marketers to deliver relevant content and insights directly to the Employee Benefit News audience via SourceMedia's digital media platforms. Partner Insights content is produced by the marketer. To find out more, contact Jim Callan at James.Callan@sourcemedia.com

 

Commentary: As you’ve no doubt noticed, the federal government made sweeping legislative and regulatory changes to the Affordable Care Act during the fourth quarter of 2015. During the last two weeks of December, I felt like I was drinking from a six-inch fire hose. How about you?
For 2016 planning purposes, I began making a list of the key items that have been repealed or delayed and those that we should continue to keep a keen eye on. With this list now complete, I thought I’d share.
Repealed provisions
1. Free-choice vouchers. Remember those? They were repealed back in 2011.
2. Form 1099 reporting. Remember how much added administrative work this provision would have created?
3. The $2,000-deductible ceiling. This provision coupled with Repealed Provision No. 5 (below) was scheduled to create a perfect storm this year for employers with 51 to 100 employees.
4. The automatic enrollment mandate. Reportedly, our elected representatives pressed for this provision’s repeal not because of its administrative infeasibility but because of the projected loss in tax revenue from increased salary reductions via Section 125 plans. Seriously.
5. The mandatory expansion of small group to 100 employees. I wish I had a quarter from everyone that joked, “Hey, Zack – they named an ACA after you!” How thrilling.
Delayed provisions
1. ACA nondiscrimination requirements. While these TBD rules were delayed indefinitely some time ago, some insiders expect finalization relatively soon. Sections 125 and 105(h) nondiscrimination rules remain alive and well.
2. The Cadillac tax. This excise tax is delayed until 2020. Per industry insiders, it seems awfully likely that this tax will be repealed before then. We’ll see. For those employers that began a multiple-year incremental mitigation strategy (aka glide path), they’ll need to decide if that strategy ought to be put in moth balls for a couple of years. Keep in mind that many employers can likely keep this excise tax at bay until 2022 by simply ending the flexible spending account, making health savings account contributions post-tax and eliminating their richest medical plan. 2022 is six years from now. Who knows where we’ll be by then. When it comes to increased taxation on employer- sponsored health plans, the more immediate concern, apparently, is that Section 125 becomes a bargaining chip during the budget negotiations next year between Congress and the new administration.
Lingering provisions of keen importance
1. Annually determining large-employer status. To determine status for 2016, ask your accountant to run Treasury’s formula to determine how many full-time employees plus full-time equivalents your firm averaged in the previous calendar year. Employers with 50 or more are generally subject to shared responsibility. Employers in most states with 51 or more are generally not subject to the fair health insurance premium rules (only fully insured plans are subject to these latter rules). Can anyone explain to me why they didn’t simply select 50 or 51 for both definitions?
2. Employer shared responsibility. Didn’t we make this topic a little more complicated than it needed to be? It turns out that it’s relatively easy to eliminate this penalty risk by offering to all employees that work 30 hours or more a week a low-cost plan (relatively speaking) that meets minimum value and that has an employee contribution rate for single coverage that meets the federal poverty-level safe harbor (i.e., less than around $93 per month). We can offer this “ACA easy button” plan, continue offering the normative health plans employees prefer and call it a day. Of course, for those employers with seasonal and/or variable-hour employees, tracking complications remain.
3. Eliminating opt-out credits. Under pending regulations, employers that offer cash to those employees that waive the health plan will find it harder to satisfy the affordability requirements of employer shared responsibility. See No. 5 in the below further reading list for more detail.
4. ACA reporting. Also known as Form 1095-C/1094-C reporting. The topic du jour.
5. The market reform rules. For example: elimination of pre-existing condition limitations, age 26 expansion, out-of-pocket limit ceiling, 100% coverage for preventive services (grandfathered plans are exempt from these latter three). If your health plan is fully insured, the insurer should have made these changes. If your plan is self-funded, the TPA should have. Either way, double-check.

Employers advised to prepare for questions on ACA reporting form

 

By Andrea Davis
January 21, 2016

 

As employers prepare to distribute Forms 1095 to employees by the newly extended IRS deadline of March 31, they should brace for increased questions from employees about the new forms.
In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended the deadlines for both providing individuals with the reporting forms required as part of the Affordable Care Act and for filing them with the IRS, although it also said “employers and other coverage providers are encouraged to furnish statements and file the information returns as soon as they are ready.”
In the year-end notice, “the IRS indicated to employers that there’s going to be no more extensions,” says Laura Kerekes, chief knowledge officer with ThinkHR Corporation. “This is already more generous than what the initial filing extension was. The feeling is that you better get these done and into the government.”
The IRS notice also provides guidance to those who might not receive a 1095-C by the time they file their 2015 tax returns, saying people can rely on information they’ve already received from their employer outlining whether they’re enrolled in employer-sponsored coverage or not.
“That’s pretty important for employers to just make note of and maybe get ahead of with communication to their employees to say the filing deadlines have been extended so the company will not have your 1095-C done,” says Kerekes, adding employers can let employees know “this is the information we've already provided you, you can rely on it when you're working on your taxes and filing by your April 15 deadline.”
And while employers with more than 50 full-time employees need to compile data for the new forms to demonstrate employee healthcare coverage offerings under the ACA, two-in-five employers say they are unfamiliar with these forms altogether, finds a recent study from ADP.
“The good news is that 60% were highly or very familiar with the 1094-C and were working on it,” says Vic Saliterman, senior vice president and general manager of ADP’s healthcare reform business. “The fact that, given the nature of the way the law is written and the penalty, 40% were not familiar [with the forms] was certainly concerning.”
More than half (52%) of midsized businesses and 45% of large employers are unsure if they’re at risk of violating ACA compliance requirements this year and nearly one-in-five employers think they are at risk of not complying with Form 1095-C requirements, according to the ADP report.

Understanding the retiree benefit of HSAs

In this age of high-deductible healthcare plans, industry experts say employers and employees should increasingly consider the benefits of health savings accounts as a retiree benefit. HSAs, they say, offer cost-shifting benefits for employers and employees that advisers should be educating clients about.“Retiree benefits are going through a dramatic change,” says Seth Ravine, chief revenue officer of the Tampa, Fla.-based Acclaris. “Employers are looking for ways to cut costs, and retirees are feeling the brunt of that.”

According to Mercer’s latest data from the Inside Employees' Minds Survey, there is a growing concern about healthcare expenses in retirement. The survey also found most employees between the ages of 35 and 64 place a high value on an employer’s retirement benefits and low healthcare costs, ranking them as the second and third most valued elements of the employment deal, behind base pay.
A high-deductible healthcare plan coupled with an HSA is a way for employers to cut healthcare costs for the company, yet still satisfy employee retirement and healthcare needs, experts say.
Also see: “7 things employers and employees don’t know about HSAs.”
“The individual or employee is going to have to take on more control and financial burden than any other previous generation,” Ravine says.
“A high-deductible healthcare plan has short term and long-term gains,” he says, adding that advisers should work with employers to understand the short term and long-term goals.
“Most employers will see the short-term drops of healthcare costs immediately, but you haven’t actually changed the trend of your healthcare liability,” he says. “What HSAs can do long term is, if employees start them early, invest in them early, and learn how to utilize them — including when to draw from HSAs and when it is best to pay out of pocket — now you’re giving real dollars to individuals. At the same time you’re giving yourself as the employer the ability to push more costs onto employees.”
Education
Educating employees about what an HSA is and how it can be used as a tool for meeting healthcare costs in retirement is key, experts say.
“Most Americans are unprepared for healthcare costs in retirement, and an HSA is the best way to save for that,” said Eric Roberts, a consultant at Nyhart Actuary & Employee Benefits, during a recent webcast hosted by the Healthcare Trends Institute.
“If you have already made it into the retiree population and haven’t had the ability to open an HSA, you’re in a tight spot,” says Ravine. “Once you’re on Medicare, you can’t contribute to an HSA anymore, but the next generations have a real chance to utilize HSAs in their retirement.”
Still, employers and employees hold several misconceptions about how an HSA works, indicating a need for adviser help to understand them, including how an HSA differs from an FSA and an HRA.
Employees have a lack of awareness surrounding several HSA features and benefits, says HSA custodian company HealthEquity. For example, for some employees and employers the fact that HSA funds roll over and are not “use it or lose it,” is not common knowledge, the company says.
Many consumers also don’t know that after age 65, you can withdraw money from an HSA for any type of purchase (not just medical expenses) without penalty.
If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 20% penalty on the non-qualified withdrawal.

By Melissa A. Winn
      
 

Could state waivers undo the ACA's employer mandate?

The ACA allows states, beginning in January 2017, to ask the federal government to waive almost every major coverage requirement of the health care reform law, including the employer mandate. Employers and other benefit industry stakeholders hoping to be relieved from ACA requirements may consider state waivers the elixir they’ve been waiting for, but are they? READ MORE »

Reminder: Affordable Care Act 2016 Changes

Under the Affordable Care Act, there are several changes for large employers (100+ full time equivalent employees) and mid-sized employers (50-99 full time equivalent employees) coming in 2016. Here are the major ones to be aware of: Employer Mandate Reporting Begins (Section 6056 Reporting) – Beginning in the 2015 tax year, all mid-sized and large employers are required to perform Section 6056 reporting. Just like W-2s, copies of the forms must be provided to employees by January 31st and filed with the IRS by February 28th (paper) or by March 31st (electronic). The first reporting will take place early in 2016. Mid-Sized Employer Transitional Relief Expires – In 2015, there was some transitional relief that exempted most mid-sized employers from being subjected to employer mandate penalties. This transitional relief expires in 2016, so both mid-sized and large employers will be subject to employer mandate penalties attributable to 2016. Most mid-sized employers will enjoy reprieve until their plan renews in 2016. Counting Employee Transitional Relief Expires – In 2015, employers were permitted to determine their total number of full-time equivalent employees by averaging any consecutive 6-month period in 2014. However, in 2016, the employer will be required to average their FTEs for all 12 months in 2015 to determine if they are required to comply with the mandate. (Note: It is possible that this transitional relief may be extended.) Employer Mandate Margin of Error Shrinks – In 2015, large employers could fail to offer coverage to up to 30% of their full-time employees and still not face employer mandate penalties. In 2016, the margin of error shrinks to 5%. So in 2016 and beyond, both large and mid-sized employers will be required to offer coverage to 95% of their full-time employees or face a penalty. Employer Mandate Penalty Calculation Changes – In 2015, when calculating the "A" or "no coverage" penalty, large employers could subtract out their first 80 full-time employees. In 2016 and beyond, both mid-sized and large employers may subtract out only their first 30 full-time employees when calculating the "A" penalty.

More Companies Increased Contributions to Help Employees Pay Premiums

Companies are more likely to have added or increased contributions to their employees’ premiums this year compared to the last two years, according to a study by the Transamerica Center for Health Studies (TCHS). The study of 1,500 employers was conducted by the Harris Poll from August 14 to September 3. Forty-four percent of companies expect their healthcare costs to increase in the next 24 to 36 months.

Most employers are trying to keep constant their contribution to employees’ premiums (57%), deductibles (60%), and co-pays/coinsurance (58%). Thirty percent want to maximize their contributions to employees’ premiums to help manage health insurance costs. TCHS Executive Director Hector De La Torre said, “The anticipated increase in healthcare costs correlates to improved quality for many employers.” Forty percent expect the quality of health insurance they offer employees to improve in the next 12 to 36 months while only 10% expect the quality to decline. Companies are most concerned about managing healthcare costs related to cancer (71%), drug expenses (69%), and diabetes and obesity (68%).

Sixty-one percent of employers offer wellness programs. Forty-nine percent of employers that have had a wellness program in the past 12 months say that saving money was the motivation. Eighty-two percent of companies say their wellness program improved workers’ health; 80% say it improved productivity and performance, and 71% say it reduced healthcare costs. De La Torre said, “Providing the best healthcare benefit package possible remains the top healthcare-related priority for employers. Interestingly, employers that offer healthcare benefits are more likely to anticipate profitability, hiring and wage increases in the next two years.”

Navigating the employer mandate for 2016

 

Employer Mandate

IN THIS GUIDE:

How Do I Know if the Employer Mandate Applies to Our Organization?

When Did the Employer Mandate Begin?

How Do I Immunize My Organization from Employer Mandate Penalties?

Do I Have to Offer Coverage to Part-time, Seasonal and Variable Hour Employees?

How Are Employer Mandate Penalties Calculated?

What Employer Mandate Reporting is Required?

 

Navigating the Employer Mandate  (send for a free copy to;

 

info@amsisure.com

subject line: guideline to health care reform 2016 

 

2-Minute HR

Our 2-Minute HR trainings serve up important HR topics in segments that you can watch in less time than it takes to drink a cup of coffee. So take a couple of minutes to learn some great HR basics, tips, and best practices.  Browse our most recent trainings below, or filter them according to the HR topic you're most interested in.

 

FREE HR SUPPORT; HR Demo Video

 

 

 

 

 

 

 

 

 

 

 

  

• Health Plans Expect Group Premium Increase of 7.2% in 2016, 10.8% for Individual Plans

• Health Plans Expect Group Premium Increase of 7.2% in 2016, 10.8% for Individual Plans

You can check for the plans and relates of all companies in privacy, then contact us to assist you.

January 2016 rates now available.

 

Group Health Plans

 

Small Business (2-50 Employees)

Individual / Family Health Plans

• Standard Health Insurance

info@amsinsure.com

Employers plagued by ACA administrative burdens

By Nick Otto
November 3, 2015

As employers face growing challenges trying to balance employees’ well-being with containing benefits-related company costs, many are seeking guidance on how to manage the administrative and compliance requirements of the Affordable Care Act.

And as the health care law continues to evolve, be it through Congressional bills or Supreme Court rulings, employers are battling a number of reforms and regulations, and 60% of employers say they need help managing the ACA landscape, according to the Guardian Workplace Benefits Study.

Also see: “The long regulatory road trip for benefits professionals.”

“As employers adapt to the ACA, we’re seeing greater adoption of private exchanges and self-funded medical plans paired with stop-loss insurance, so employers can deliver the workplace benefits their employees rely on while addressing the challenges they are facing,” says Ray Marra, Guardian’s senior vice president, group products.

As companies reassess their approach to benefits, the report notes, three trends are gaining momentum: increased outsourcing, interest in private exchanges, and consideration of self-insurance.

“The ACA has intensified challenges for a majority of employers,” Marra says. “They must deal with administrative and compliance requirements, trying to offer employees wider benefits choices and an effective enrollment experience and controlling costs.”

The study notes one in three employers expects to outsource more aspects of their benefits program as a direct result of the ACA. Nearly 70% of employers expect greater compliance and administrative burdens because of the law.

Also see: “Boosting benefits enrollment with technology.”

And the market for benefits outsourcing appears to have considerable room for expansion, according to the report. Only 16% of all employers are engaged in a “high level” of outsourcing (where all administration tasks are outsourced to a vendor), while at the other end of the spectrum, just 15% report doing no outsourcing.

Companies with fewer than 1,000 employees are more likely than larger companies to outsource their benefits administration to a single third-party administrator (36% versus 22%), according to the report. Nearly half (47%) of employers that outsource all of their administration and enrollment tend to use a single vendor compared to 25% of those doing just a little to no outsourcing.

Also see: “Budget reconciliation sought for ACA repeal.”

“It’s important for brokers to provide guidance on emerging options for funding and delivering employee benefits which can help employers respond,” says Marra.

In addition, some other key findings from the report include:

• About 20% of employers expect to offer benefits on a private exchange in the next year. Top reasons are to increase employee choice and to improve the employee experience. Seven in ten employers say it is highly important to offer benefits that meet their employees’ personal needs and help them make better benefits choices.
• Of those thinking of self-insuring, 58% say the ACA is the impetus and half of those planning to self-insure expect to carry stop-loss insurance. Self-insuring medical plans is a less common funding option for smaller firms but is receiving increased attention due to the ACA. Seventy-eight percent of employers expect benefit cost increases due to the ACA, impacting an employer’s health benefits offering.
• A tailored benefits and communication approach is becoming increasingly critical to address employees’ financial needs at different points in their work stages.