Obamacare

BiggsKofford is extremely selective when reviewing possible partnerships with other businesses. Because of this, when we find a fit, we know the quality of service and care for clients will closely match our firm values.

ADP seeks and negotiates partnerships with best-of-breed organizations to bring added value to our joint clients and to increase operating efficiencies. ADP’s Channel Alliance program partners with various types of companies to best address the needs of specific industries. Each partnership is created for synergy, value and new levels of success.

Although ADP offers much more than Affordable Care Act reporting help, if you are seeking assistance navigating ACA reporting, view their ACA Reporting Requirements Infographic to learn more about how they can help your business thrive. Click here to view your responsibilities as an employer before and after with ADP.

For questions about the BiggsKofford/ADP partnership, call us at 719-579-9090.

(AccountingWeb, By Terry Sheridan; Published June 2014)

Employers who figure they’ll pay workers upfront for health insurance on the state or federal exchanges rather than provide coverage themselves are going to run smack into the Internal Revenue Service juggernaut.

The agency made clear in its Notice 2013-54 that such maneuvers, considered employer payment plans, are tantamount to an end run around the intent of the Affordable Care Act (ACA).

In a recently updated Q&A advisory, the IRS said that these employer payment plans generally don’t include arrangements where employees either can have an after-tax amount applied to health coverage or can take that amount in cash. These plans are considered group health plans subject to the market reforms under the ACA. Those reforms ban annual limits on essential health benefits and require that certain preventative measures, such as mammograms, are free.

And employers’ group plans can’t merge with individual coverage to satisfy the ACA provisos.

The upshot is a fine of $100 per day excise tax per employee, or $36,500 a year per employee under Section 4980D of the Internal Revenue Code.

The Department of Labor (DOL) issued Technical Release 2013-03 that is almost identical to the IRS notice, and the Department of Health and Human Services (HHS) is expected to release a similar proviso.

Andrew R. Biebl, a partner at accounting firm CliftonLarsonAllen in Minneapolis, Minn., told the New York Times late last month that the IRS ruling could upend tactics used in many businesses.

“For decades, employers have been assisting employees by reimbursing them for health insurance premiums and out-of-pocket costs,” Biebl said. “The new federal ruling eliminates many of those arrangements by imposing an unusually punitive penalty.”

Here are highlights from the IRS notice about employer payment plans and reimbursement accounts. (The ruling also covers flexible spending accounts.)

• According to Ruling 61-146, an employer who pays an employee’s premiums for non-employer sponsored insurance must exclude the payments from the employee’s gross income. Same goes if the payments are made to the insurer.
• Employers can forward post-tax employee wages to an insurer at the employee’s direction without establishing a group health plan, if certain DOL regulations are met.
• The IRS, DOL and HHS will amend three regulations to allow that benefits under an employee assistance program will be considered excepted benefits—only if the program doesn’t provide benefits like medical care and treatment. Excepted benefits aren’t subject to the ACA’s market reforms and aren’t considered minimum essential coverage. Until final rules are in place and likely through the remainder of this year, the agencies will consider employee assistance plans to mean excepted benefits only if they don’t provide medical care or treatment. It’s up to employers to use a “reasonable, good faith interpretation” of whether their plans provide that care or treatment.
• An employer’s health reimbursement account (HRA) can’t be merged with individual coverage or with the employer’s individual policies. So, an HRA used to buy individual coverage violates the ACA’s ban on annual dollar limits.

In case you missed last week’s breakfast on ‘Implementing Obamacare’, here are the handouts.

It was presented by Jeff Ahrendsen and George Martin, both Senior Vice Presidents with HUB International.  If you have any questions, please e-mail them by clicking their name above or call (719) 884-0700.

(Fox News, Dr. Sreedhar Potarazu; Published February 19, 2013)

Over the past couple of weeks, many insurance companies have provided guidance in their investor calls that premiums for insurance plans being sold in the individual market could go up as much as 50 percent on average.

One has to wonder how this is even possible when ObamaCare was passed under the promise of affordability and access.  While some may argue that “rate shock” has become a mechanism for insurance companies to scare the market, the reality is that economics really leave the insurance market with no other choice.

ObamaCare requires insurers to offer benefit plans on the new exchanges that are relatively generous and would include coverage for maternity, prescription drugs and treatment of mental illness.  These are clearly important areas to cover.

In order to get this level of coverage, however, many people in their 20s, who are used to buying basic coverage, will now be required to pay more for these required benefits in the exchanges.  In fact, it is expected that more than 75-85 percent of individuals in this age group could end up spending more for insurance in these exchanges than they do currently.

Some argue that the annual price tag of $1,600 to $2,000 for an insurance plan is still an attractive deal, but if the penalty for not having coverage can be as low as $95 per year, the question remains whether many people will decide to opt out until they absolutely need insurance.

A key reason why insurance premiums are going up is because insurance companies will no longer be able to turn away or charge people more with pre-existing conditions. Even more significant is that these companies would only be able to charge its oldest customers three times as much as their youngest.

If younger individuals decide to wait until they get sick enough to require health insurance, this will obviously skew the insurance market where the sickest individuals will be the ones who are in the system, thus raising rates for everyone else. Many insurance companies are pushing the government to regulations that would charge higher rates for individuals who don’t sign up for insurance within a certain time frame.

What many people also fail to recognize is the income they earn this year will impact the amount of subsidy and/or penalty that will be calculated for 2014.  A recent survey indicated more than 70 to 80 percent of Americans had no idea how this year’s income reporting will impact the calculation of their benefits for next year, and as much as 40 percent of people between the ages of 18 to 34 were unaware that there was even a penalty for not having coverage.

Supporters of the law have downplayed the notion of rate increases with the idea that the new competitive markets will force insurers to provide competitive rates.  History will tell us, however, that in the days of managed care it is very difficult to ultimately contain costs in the long-term, especially when you factor in community rating and guaranteed issue.

The other complicating factor in the equation is that, as of Friday, February 15, 2013, only about half of the states have agreed to proceed with setting up the insurance exchanges, while the other half is deferring to the federal government.  What remains to be seen is how effective this dichotomy of market places will be in driving competitive advantage, and how insurance premiums will vary between these two systems.

The Congressional Budget Office indicated in its estimates that insurance premiums for those buying coverage in the marketplaces would probably be 10 to 13 percent in 2016 because the health plans would be more comprehensive.  The likely outcome from the current effects of ObamaCare is that while rates come down for older people, they may increase for consumers in their 20s, which could leave an older, sicker population now, and an even sicker population down the road.

The idea that federal subsidies will help shelter the cost of those individuals who need to find affordable coverage is worrisome in light of recent findings.  Several high-risk pools were established to provide assistance for those individuals with pre-existing conditions who needed help in finding coverage.  As recent as last week, it was reported these high-risk pools were running out of money and are underfunded.

The harsh reality is with an aging population that has a growing need for care of their chronic conditions, the cost for providing adequate coverage will not be cheap, and the biggest fear among employers, states, insurance companies, providers and the consumer is how we will afford the price tag to provide for what has been proposed.

As premiums continue to rise out of control, the jury is still out as to whether the promises of ObamaCare will actually be able to reel these trends in, or whether it is a balloon that continues to drift away.

Dr. Sreedhar Potarazu is an acclaimed ophthalmologist and  entrepreneur who has been recognized as an international visionary in the business of medicine and health information technology. He is the founder of VitalSpring Technologies Inc., a privately held enterprise software company focused   on   providing employers with applications to empower them to become more sophisticated purchasers of health care.