How To Prepare for the ESR Provisions

BePreparedPaychex released a checklist for business owners to prepare for the IRS year-end reporting for the Employer Shared Responsibility (ESR) provision. Under the Affordable Care Act (ACA), ESR provisions are in place to determine if full-time employees are offered adequate and affordable health care coverage.

Businesses with 100 or more full-time employees (including full-time equivalents) may be subject to ESR penalty assessments beginning in January 2016 for the tax year 2015. Businesses with 50 to 99 full-time employees in 2014 (including full-time equivalents) may be eligible for relief from ESR penalties for the year 2015, but only if they meet specific qualifications. They still have to complete IRS year-end reporting requirements to certify their eligibility for they exemption.  While the tax filing is not required until early 2016, it is important to act now.

Below is a checklist to help guide business owners through IRS year-end reporting:

• Prepare now to avoid playing catch-up later: It is critical to have at least 12 months of payroll information tracked as businesses are expected to use historical hours and wages – by month – for every employee to determine the following: whether you are considered an applicable large employer (ALE), which employees are considered full-time based on 30 hours per week, not 40, and whether the coverage you offer to full-time employees is considered adequate and affordable. For more information and tips on tracking employees’ hours, click here.

• Determine if you are an applicable large employer (ALE): ALEs in 2015 have had 50 or more full-time employees (including full-time equivalents) in calendar year 2014. Full-time employees work an average of 30 hours per week, or 130 hours per month in the calendar year. To calculate the number of full-time equivalent employees, use the hours of service for all employees  who were not full-time employees (including seasonal workers) in any given month (capped at 120 hours per employee) divided by 120. Click here for more information.

• Determine your full-time employees: Hours can be measured on a monthly basis during the calendar year or throughout a pre-determined look-back period. You must give every employee who was full-time for at least one month during the calendar year this form: IRS Form 1095-C. For help determining your employees’ status, click here.

• Review your plan coverage: ACA Section 6056 requires ALEs to file information returns with the IRS and provide statements to their full-time employees about their health insurance coverage. This includes information about medical coverage offered to full-time employees on a monthly basis throughout the calendar year. ALEs must determine and report that the coverage they offer meets the minimum actuarial value standards, as well as affordability requirements, outlined in the ESR provisions. Click here.

• Complete and submit forms 1094-C and 1095-C: These IRS forms provide certification as to whether you have allowed full-time employees to enroll in insurance that provides Minimum Essential Coverage at a minium-actuarial-value of 60% for each month of the year. They employer files these forms with the IRS: Form 1094-C and Form 1095-C. Employers must also give this form to their full-time employees: Form 1095-C t. You can find draft instructions for forms at http://www.irs.gov/Forms-&-Pubs.

• Be on time: Year-end reporting timelines are similar to W-2 forms. You have to file forms 1094-C and 1095-C with the IRS no later than February 28 or, if filing electronically, by March 31. You have to give Form 1095-C to full-time employees by January 31.

Understanding and complying with these new health care reform requirements may be overwhelming for business owners to handle on their own. With this in mind, beginning in tax year 2015, Paychex will offer IRS year-end reporting assistance through its Employer Shared Responsibility Services to help ease the burden of these new requirements. For continuous updates on health care reform provisions impacting small business owners, visit www.paychex.com/health-reform.

New Drug Therapies Drive Affordability Strategies

Cigna is monitoring the health outcomes of customers with hepatitis C who have undergone treatment using a prescription combination with the drug Sovaldi. Cigna found that 91% of customers achieved a sustained virologic response. Customers who have an SVR when tested 12 weeks after the completion of treatment are considered cured.

Cigna is taking several steps to try to address the affordability issue, including:

• Requiring all prescriptions for hepatitis C therapy to undergo a prior authorization review to ensure appropriate coverage. The coverage policy conforms to applicable professional practice guidelines and incorporates factors related to a customer’s infection type, co-morbid conditions, and  treatment history.

• Continuously evaluating coverage criteria using the latest clinical evidence.

• Negotiating pharmaceutical manufacturer discounts for existing and upcoming treatment alternatives.

• Offering therapy support management through Cigna Specialty Pharmacy Services to every customer undergoing hepatitis C treatment.

For more information, visit www.cigna.com.

How Telehealth Could Save Big Money for in Medicare

Telehealth can help achieve savings in the Medicare program, according to an actuarial study by Alliance for Connected Care. The study found that 83% of telehealth visits require no additional follow-up care. Replacing in-person acute care services with a telehealth could save the Medicare program $45 per visit. “Reimbursing for telehealth will not increase Medicare expenditures; it will provide an easy alternative for beneficiaries to get quality health care. Telehealth can often replace an in-person visit to the emergency room or urgent care center and resolve the issue so no further care is needed,” said Dale Yamamoto of Red Quill Consulting.

Some Medicare Advantage plans have started offering telehealth services. Most seniors in fee-for-service Medicare lack access to telehealth services because of the restrictions in the Affordable Care Act. Generally, covered telehealth services must be provided in rural areas as determined by the Dept. of Health and Human Services (HHS). The Alliance says that telehealth can play a critical role in meeting the primary care needs of the incoming influx of Baby Boomers. For more information, visit Alliance for Connected Care.

Employers Remain Committed to Medical Benefits

Ninety-seven percent of employers say they are very likely to provide medical benefits to employees in 2016 compared to 77% in last year’s survey by the Private Exchange Evaluation Collaborative (PEEC). Sixty-seven percent are not considering moving part-time employees to public exchanges approach, and 84% not considering moving their full-time active employees to public exchanges.

Emma Hoo, director at the Pacific Business Group on Health said, “Employers…are seeking greater transparency in administrative and consulting or broker fees to [ensure] that employers and employees get better value. Many are not yet ready to relinquish control of key stewardship roles such as funding, carrier, plan design, provider network choice and even their benefits consultant.” The following are key findings of the survey:

• 98% say that the cost of private exchange plan options is important (up 5% from last year).

• The top two reasons that employers have implemented an exchange is to save money and provide more consumer choice.

• While only 6.4% of employers have implemented private exchanges for 2015, 20% are considering them as an option for 2016, and 41% are considering them as an option by 2018.

Hurdles to private exchanges include employee readiness (84%), stability of carrier relationships (84%), loss of flexibility in plan design (78%), and loss of control or stewardship (72%).

• Employers say that the following are key elements of a private exchange: delivery and reporting capabilities, such as implementation assistance (93%), spending account program administration (89%), member advocacy (85%), enrollment and eligibility maintenance (85%), and employer-specific reporting (91%). In an era of increasing administrative burden, 85% of employers put a lot of importance on the exchange’s ability to reduce administrative burdens.

• Employers place a lot of value on the following attributes of private exchanges for active employees: experience and track record (96%), plan design choices (87%), carrier/network options (89%), and transparency of fees and rate setting (92%).

Eighty-five percent say that plan selection tools are very important versus 70% in 2013. Thirty-five percent say that mobile device compatibility is very important compared to 26% in 2013.

Barbara Gniewek, principal, PwC said, “The emphasis on plan selection tools reflects the maturing of the employer’s understanding of the private exchange marketplace and the differences between the various exchange types /vendors. Because many exchanges assert that savings arise from employee decisions to buy-down on benefits, it’s critically important that consumers understand that they may be making trade-offs between a lower initial premium contribution and a higher deductible or out-of-pocket payments later,” said For more information, visit www.thepeec.com.

IN CALIFORNIA

Blue Shield Moves into Medicaid with Care 1st Deal

Blue Shield agrees to acquire Care First. San Francisco health insurer Blue Shield of California is expanding into Medi-Cal by acquiring Care 1st Health Plan of Monterey Park, reports the Los Angeles Times. With Care 1st, Blue Shield will gain 473,000 Medicaid managed-care members as well as 46,000 Medicare patients.

Agents Have Extra Time to Help Consumers Complete Enrollment

CAHU is informing agents that Covered California service partners will have until midnight on Sunday, December 21, 2014 to help consumers with enrollment. This applies to new and renewing consumers enrolling for coverage effective January 1, 2015. While the Agent Service Center will now be open this Sunday, Dec. 21st, the Covered California Service Center for consumers will be closed this Sunday. While agents and consumers are given the extra time, Covered California would appreciate help in communicating expectations: completing enrollment after December 15th may delay invoices and proof of enrollment from the health plan the consumer has chosen. Consumers are encouraged to make a binder payment when possible to facilitate faster enrollment in their chosen plan. To reach the Agent Service Center, call 877-453-9198.

Insurance Commissioner Responds to Insurer Denials of Mental Health Treatment

Insurance commissioner Dave Jones issued the following statement about a 60 Minutes story about insurer denials of coverage denials:

 60 Minutes featured a story last night about Anthem Blue Cross’ denial of coverage for patients needing mental health treatment. I am very pleased to see that 60 Minutes has brought national attention to our disputes with Anthem Blue Cross over their denial of coverage for mental health treatment. Medically necessary mental health treatment, including residential mental health treatment, is required to be covered under mental health parity laws. 

The California Department of Insurance has taken aggressive action to enforce state mental health parity law. The department has initiated enforcement actions against major health insurers in California, filed legal arguments on behalf of patients denied mental health treatment in state and federal court, issued new regulations and directly assisted policyholders who were denied coverage by their health insurer for mental health care. We have been fighting to protect consumers from this type of discrimination for years, said Jones. 60 Minutes highlights Anthem Blue Cross’ history of denying coverage for vital mental health treatment despite mental health parity laws, but they are not the only insurer that has denied coverage for lifesaving care to those who suffer from mental illness. If a patient is denied medically necessary care, such as residential care for an eating disorder or behavioral health treatment for autism, the Department of Insurance is here to help the policyholder get the coverage they are entitled to under the law. This 60 Minutes feature puts a national spotlight on the all too common practice of denying people with severe mental illness the medical care to which they are entitled, continued Jones.

Jones filed amicus briefs on behalf of the patients in two recent cases where coverage for mental health treatment is at issue. In Harlick vs. Blue Shield, the department submitted an amicus brief to the Ninth Circuit Court of Appeals on behalf of a policyholder who sued to get coverage for treatment for anorexia after her insurer denied her claims. The department then submitted an amicus brief to the California Court of Appeal on behalf of the plaintiff in the Rea vs. Blue Shield case. The plaintiff in Rea was also seeking coverage for medically necessary treatment for anorexia 

Additionally, the Department has required health insurers to make changes to their policies to comply with mental health parity law.

Another example of Commissioner Jones’ efforts to protect consumers with mental illness involved recent regulations he issued to make sure policyholders obtain coverage for medically necessary treatment for autism. 

The mental health parity regulations will help end improper insurer delays and denials of medically necessary treatments for people with autism, said Insurance Commissioner Dave Jones. This regulation provides clear guidance to the industry, stakeholders and consumers on the requirements of the Mental Health Parity Act.

Prior to these new regulations it was not uncommon for health insurers to delay or deny medically necessary treatment for individuals with autism. The regulations further define the circumstances in which insurers must cover behavioral health treatments for autism. 

State and federal mental health parity laws are in place to prevent health insurers from denying coverage for mental health care. State law (Insurance Code 10144.5) requires health insurance policies to cover diagnosis and medically necessary treatment of severe mental illnesses for patients of all ages and of serious emotional disturbances of a child under the same terms and conditions applied to other medical conditions. Bipolar disorder and bulimia, the conditions suffered by the two women featured in the 60 Minutes segment, are among the severe mental illnesses for which treatment must be covered.

Covered California Reports Record Enrollment

More than 290,000 new consumers submitted applications and were determined eligible for private health insurance or Medi-Cal in the early weeks of open enrollment, according o Covered California and the California Department of Health Care Services. The consumers, who applied for coverage through Covered California since open enrollment began on Nov. 15, include 48,952 Covered California plan selections and 81,287 eligibility determinations through Dec. 3, as well as 116,262 enrollments into Medi-Cal coverage, and 44,295 who are likely eligible for Medi-Cal. So far in 2014, Medi-Cal has enrolled more than 2.2 million consumers.

Covered California Executive Director Peter V. Lee said, “The pace of enrollment is strong, at rates far exceeding those we saw last year, but open enrollment is only three months long this time around, so we are working hard to continue to get the word out, As we approach the Dec. 15 deadline to enroll for coverage starting Jan. 1, we encourage everyone in California to explore their options and get covered for 2015.”

Toby Douglas, director of the Department of Health Care Services said, “It’s clear that Californians’ desire for health coverage remains strong, and the improvements in the enrollment system are making a big difference. About 75% of new applicants who qualify for Medi-Cal through the Web portal are enrolled immediately into coverage without delay. We’ll continue our work to make quality, comprehensive coverage more easily available to all Californians.”

Although private insurance sold through Covered California is only available during open enrollment for most consumers, Medi-Cal enrollment is year-round. Individuals may apply for Medi-Cal online, through the Covered California Web portal, via mail by filling out a streamlined application and in person by visiting a county social services office.

The new figures released Wednesday show that Covered California has enrolled consumers at a far faster pace in the early days of open enrollment in 2014 than it did during 2013. In 2014, it took just 19 days to reach the 2014 enrollment numbers shown in the table above. In comparison, it took 42 days to reach the same number of eligibility determinations in 2013 and 28 days to reach the same number of plan selections in 2013.
For more information, visit www.CoveredCA.com.

FINANCIAL PLANNING

The Hopes, Fears, and Reality of Retirement

Nearly one in two Americans retire earlier than expected, yet retirees overwhelmingly report that they are enjoying themselves and discovering that pre-retirement fears of boredom, financial insecurity, and a lack of purpose were largely unfounded, according to a study by MassMutual Retirement Services. The biggest lesson for retirement success: plan as soon as possible for your emotional and financial well being, as you are likely to retire sooner than planned. “MassMutual’s research on retirees and pre-retirees tells us that retirement can be and should be an extraordinarily happy time in our lives as long as we start to strengthen our emotional bonds and exercise financial planning discipline well before we plan to retire. The happiest retirees provide us with a roadmap for success, which is especially instructive for those who are close to embarking on the journey,” said Elaine Sarsynski, executive vice president, MassMutual Retirement Services.

Seventy-two percent of retirees report being extremely or quite happy, 67% say they’re extremely or quite relaxed, and 66% say they are financially secure. Few characterize themselves as stressed, frustrated, lonely or distressed.

Retirees express positive sentiments about their lives despite that nearly half (45%) retire earlier than planned. The most frequently cited reasons for earlier-than-planned retirement are changes at work (44%) and being able to afford to retire sooner rather than later (39%). On a positive note, the majority (79%) of those who retired early have no regrets about their decision.

The study finds a strong relationship between happiness and planning as retirees who express the highest levels of satisfaction are also those who took concrete steps to put their emotional and financial lives in order at least five years or more before retirement:

• Those who began focusing on their relationships – building stronger connections to their spouse or significant other, reaching out to old friends or making new friends, and pursing new interests – were more likely to enjoy retirement.

• Additionally, those who took concrete financial steps such as calculating the best time to collect Social Security, targeting how much money they would need to afford retirement, and increasing savings report feeling more financially secure in retirement. Six in 10 (58%) of retirees who were most satisfied with their situation worked with a financial advisor before retirement.

Despite planning, many retirees report positive or negative surprises once they retired. The biggest positive surprises were having no time constraints and more freedom (23%), keeping busy and active (18%), having time with family and friends (11%) and being in a good financial position (10%). Negative surprises included having financial problems (17%), being too busy (13%), or suffering an illness or disability (10%). The fact that one in six has unexpected financial problems indicates that more efforts at financial planning are needed.

Retirees demonstrate an ability to adapt to changing circumstances, indicating increased satisfaction, improved ability to manage spending, and greater feelings of financial security as their tenure in retirement grows, the study found. Although unexpected life events can occur, focus groups found that retirees adapt financially by finding creative ways to cut expenses without giving up activities they enjoy.

Overall, retirees report lives that are quite positive, including enjoying themselves (82%), having more free time (80%), and having new experiences (69%). In some instances, the expectations of pre-retirees about retirement fall short of the actual experience, such as 79% of pre-retirees anticipating new experiences. Few (6%) made plans to start a new career.

Although pre-retirees express fears they will be anxious about financial uncertainty in retirement (44%), they will not know what to do without their jobs (31%) and they will be bored (26%), few retirees find this to be the case (31%, 14% and 19% respectively), according to the study.

Concerns about retirement decrease as pre-retirees approach retirement. For example, 31% of pre-retirees who are 11-15 years away from retirement say they are looking forward to the experience with very few or no concerns compared to 43% less than five years away. Forty-six% of those within one year of retirement had very few or no concerns.

Feelings of financial security build as pre-retirees get closer to retirement and continue to rise through retirement. Only 63% of pre-retirees 11-15 years out feel they are financially on track, compared to 82% of those retiring in less than five years. Positive emotions increase and negative emotions decrease for retirees. The study finds that retirees are happier, more relaxed and less stressed than pre-retirees: extremely happy (72% compared to 61%, respectively), extremely relaxed (67%, compared to 34%, respectively) and moderately stressed (17%, compared to 43%, respectively). Still, pre-retirees overestimated the extent to which retirement would have a positive emotional impact, with 86% of pre-retirees expecting a least moderate excitement in retirement compared to 71% of retirees who say they feel this way. For more information, visit —– 

IRA Ownership Is Down, but Assets Are Up

While the share of families with an individual account retirement plan is ticking down, the assets in those plans are going up, according to a new analysis by the Employee Benefit Research Institute (EBRI). The percentage of families with an individual account retirement plan (such as a 401(k) plan or an individual retirement account (IRA) decreased from 53% in 2001 to 48% in 2013, based on the most recent data from the 2013 Survey of Consumer Finances, the Federal Reserve Board’s triennial survey of wealth.

While ownership of individual account retirement plans was declining, the median (mid-point) account balance of those families owning an individual account retirement plan increased: The value was $35,456 in 2001 and had reached $59,000 by 2013. “For many families, individual account retirement plan savings constitute most of whatever financial assets they have, said Looking at these accounts is key to understanding how well—or poorly—people are preparing for retirement,” Craig Copeland senior research associate at EBRI and author of the report.

Individual account retirement plan assets were a clear majority of their total financial assets: 70% in 2013 at the median, the same share as in 2010. Across all demographic groups, these assets accounted for at least 49% of median total financial assets (when these accounts were owned). For more information, visit www.ebri.org

ANNUITIES

Fixed Indexed Annuities Are Poised for Growth

Following on the heels of a record-setting 2013, this year will be another strong sales period for indexed annuities. Despite a third quarter that saw an almost 9% decline from the previous quarter, overall sales for 2014 will easily pass $45 billion, according to a report by AnnuityAdvantage. “Fixed indexed annuities are among the safest choices for funding retirement they are not subject to stock market based losses and the issuing insurance company provides contractual guarantees, all else being equal.

Ken Nuss, founder and CEO of AnnuityAdvantage said, “Fixed indexed annuities can provide…one of the most reliable and efficient sources of retirement income. Fixed indexed…offer a guaranteed minimum surrender value for the duration of the contract term. Interest earnings during the accumulation phase are tax deferred until the owner begins making withdrawals. On the other hand, annuities are not as liquid as many other investments…Early withdrawal incurs penalties and tax obligations, so conscientious planning is necessary at the outset, he said.

“While some financial planners might advise against indexed annuities before the age of 40, it’s never too early to consider an alternative to the conventional wisdom of retirement planning. Provided that one can avoid depositing funds that might be needed for living expenses or emergencies, there’s no reason not to purchase a fixed indexed annuity at the start of one’s career as opposed to the middle or the end. A distinct advantage of buying early is that compounding over a longer term results in larger payments during retirement,” he added. For more information, visit http://www.annuityadvantage.com or call 1-800-239-0356.

NEW PRODUCTS

Fixed Index Annuity with a Lifetime Income Rider

Genworth has introduced a fixed index annuity with a lifetime income rider for consumers as young as 45 who want to start building retirement income that is protected from market losses while having the potential to grow before and after withdrawals begin. SecureLiving Growth with IncomeChoice rider can help consumers save for retirement and get protection from market losses, growth potential that’s greater than existing interest rates, and guaranteed lifetime income that can keep growing. SecureLiving Growth+ with IncomeChoice also offers the potential for contract owners to double their income for up to five consecutive years when they are confined to a medical care facility. For more information, visit https://www.genworth.com/contact-us.html or call 888-436-9678.

Chronic Illness Rider

Voya Financial launched a chronic illness rider with its indexed universal life insurance products. The rider offers access to funds for various chronic illnesses. It differs from many long-term care coverage products in that the benefit does not require professional health care services. There are no restrictions on the use of the funds received. For more information, visit www.voya.com.

Health Plan Purchasing Tool

The National Health Council created the www.puttingpatientsfirst.net calculator to help people gain a better understanding of their options in the health insurance marketplace and find the best coverage.

Free HR Grader

TriNet launched its HR Grader, a free online human resources assessment tool for small to medium-sized businesses. It helps business owners evaluate key HR functions, such as workforce management, employee retention, and risk and compliance. The assessment can be completed in about six minutes, with instant results. For more information, visit http://www.trinet.com/hrgrader.

New Spanish-Language Cartoon and Calculator

The Kaiser Family Foundation released two Spanish-language tools to help consumers understand health insurance as they shop for plans during open enrollment for the Affordable Care Act’s marketplaces and in other venues. El seguro de salud, explicado – los YouToons lo tienen cubierto is a Spanish version of the five-minute cartoon video Health Insurance Explained – The YouToons Have It Covered. It breaks down important health insurance concepts, such as premiums and provider networks, and explains how individuals pay for coverage and obtain medical care and prescription drugs when enrolled in various types of health insurance, including HMOs and PPOs.

Calculadora del mercado de seguros de salud — the Spanish version of the Foundation’s Health Insurance Marketplace Calculator, now includes zip code-specific data on 2015 marketplace plans.

 

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