Can corporations shift targeted workers who have known high medical costs from the company health plan to public exchange (aka Marketplace/SHOP) based coverage created by the Affordable Care Act? Some employers are beginning to inquire about it and some consultants are advocating for it.
Health spending is driven largely by those patients with chronic illness, such as diabetes, or those who undergo expensive procedures such as an organ transplant. Since a large majority of big corporations are self-insured and many more smaller employers are beginning to research this as an option to help control their medical premiums, shifting even one high-cost member out of the company health plan could potentially save the employer hundreds of thousands of dollars a year by shifting the cost for the high-cost member claims to the Marketplace/SHOP plan(s).
It is unclear if the health law prohibits this type of action, which opens a door to the potential deterioration of employer-based medical coverage.
An employer “dumping strategy” can help promote the interests of both employers and employees by shifting health care expenses on to the public through the Marketplace.
It’s unclear how many companies, if any, have moved any of their sicker workers to exchange coverage yet, which just became available January 1, 2014, but even a few high-risk patients could add millions of dollars in claim costs to those Marketplace plans. The costs could be passed on to customers in the next year or two in the form of higher premiums and to taxpayers in the form of higher subsidy expenses.
A Possible Scenario
Here’s an example of how an employer “dumping-situation” it might work:
At renewal, an employer reduces the hospital/doctor network on their medical plan to make the company health plan unattractive to those with chronic illness or high cost medical claims. Or, the employer could raise the co-payments for drugs or physician visits needed by the chronically ill, also making the health plan unattractive and perhaps nudging high-cost workers to examine other options available to them.
At the same time, the employer offers to buy the targeted worker a high-benefit “platinum” plan in the Marketplace. The Marketplace/SHOP plan could cost $6,000 or more a year for an individual in premiums, but that’s still far less than the $300,000 a year in claim costs that a hemophilia patient might cost the company.
The employer could also give the worker a raise so they could buy the Marketplace/SHOP policy directly.
In the end, the employer saves money and the employee gets better coverage. And the Affordable Care Act marketplace plan, which is required to accept all applicants at a fixed price during open enrollment periods, takes over the costs for their chronic illness/condition.
Some consultants feel the concept sounds too easy to be true, but the ACA has set up the ability for employers and employees to voluntarily choose a better plan in the Individual Marketplace which could help save a significant amount of money for both.
Legal but ‘Gray’
The consensus among insurance and HR professionals is that even though the employer “dumping-strategy” is technically legal to date (as long as employees agree to the change and are not forced off the company medical plan), the action is still very gray. This is why many employers have decided this is not something they want to promote at this time.
Shifting high-risk workers out of employer medical plans is prohibited for other kinds of taxpayer-supported insurance. For example, it’s illegal to persuade an employee who is working and over 65 to drop company coverage and rely entirely on the government Medicare program. Similarly, employers who dumped high-cost patients into temporary high-risk pools established originally by the ACA health law are required to repay those workers’ claims back to the pools.
One would think there would be a similar type of provision under the Affordable Care Act for plans sold through the Marketplace portals, but there currently is not.
The act of moving high-cost workers to a Marketplace plan would not trigger penalties under ACA as long as an employer offers an affordable medical plan to all eligible employees that meets the requirements of minimum essential coverage, experts said. If workers are offered a medical plan by their employer that is affordable coverage and meets the minimum essential coverage requirements, workers cannot use tax credits to help pay for the Marketplace-plan premiums.
Many benefits experts say they are unaware of specific instances where employers are shifting high-cost workers to exchange plans and the spokespeople for AIDS United and the Hemophilia Federation of America, both advocating for patients with expensive, chronic conditions, said they didn’t know of any, either.
But employers are becoming increasingly interested in this option.
This practice, however, could raise concerns about discrimination and could cause decreased employee morale and even resentment among employees who are not offered a similar deal, which could end up causing the employer more headaches and even potential discrimination lawsuits.
Many believe that even though this strategy is currently an option for employers, in the end, it may not be a good idea. This type of strategy has to operate as an under-the-radar deal between the employer and targeted employee and these type of deals never work out. Most legal experts who focus on employee benefits do not recommend this strategy either as it just opens the door of discrimination claims from employees.
Please contact our office for assistance in reviewing all of the benefit options available to your company and employees under ACA.
Imagine you are home cooking dinner on a Saturday night and you suffer a minor burn. You can not decide if the burn is serious enough to go to the Emergency Room or how exactly to care for the burn. Did you know that most major insurance carriers offer their members 24/7/365 access to a free Nurse Hotline for situations just like this?
These Nurse Hotlines help provide a free nurse to members who can help the member evaluate the best type of care for their situation (i.e. if they should go to the ER to have their burn looked at or if a home remedy will suffice). They can also offer members additional information on chronic conditions they suffer from, support when coordinating follow up care, or help direct them to other programs their insurance carrier may offer (i.e. weight loss discounts or free breast pumps to expectant mothers).
For more information on your insurance carrier and if they offer this program, please contact our office.
The Immigration Customs and Enforcement division (ICE) of the Department of Homeland Security, continues to issue Form I-9 Notices of Inspection to businesses of all sizes across the nation. In fiscal year 2012, ICE served over 3,000 Notices to businesses, resulting in over $12 million in fines. Additionally, ICE made 520 criminal arrests tied to worksite enforcement investigations. These criminal arrests involved 240 individuals who were owners, managers, supervisors, or human resources employees.
The Notices of Inspection allow ICE to inspect employers I-9 forms to determine compliance with employment eligibility-verification laws. Once the Notice of Inspection has been issued, the targeted employer has three days to provide ICE with the company’s I-9 forms to be reviewed. In addition to I-9 forms for current and recently terminated employees, employers will be asked to turn over payroll records, list of current employees, and information about the company’s ownership.
Civil penalties for errors on the I-9 form can range from $110 to $1,100 per violation. Civil penalties for knowingly hiring and continuing to employ unauthorized workers range from $375 to $3,200 per violation for first time violations. In determining penalty amounts, ICE considers five factors:
1) The size of the business;
2) Good-faith efforts to comply;
3) The seriousness of the violation;
4) Whether the violation involved unauthorized workers
5) Any history of previous violations.
Here are 12 tips to help protect your company and limit exposure for I-9 violations:
1. Make sure you are using the correct I-9 form. U.S. Citizenship and Immigration Services recently released a new version of the I-9 form. Beginning May 7, 2013 only the 03/08/13 version of the I-9 form will be accepted.
2. Have employees complete the form in a timely manner. For a new hire, the employee must complete Section 1 before starting work on the first day. You must complete Section 2 and the Certification by the end of the third business day.
3. Ensure that the Preparer/Translator Section is completed if the employee received assistance completing Section 1 of the I-9 form.
4. Don’t accept any expired documents.
5. Avoid discrimination or document abuse. When completing the I-9 process, do not require the employee to provide specific documents or more documents than minimally required.
6. Don’t play detective. If a document presented by the employee is on the List of Acceptable Documents, reasonably appears to be genuine, and relates to the person presenting it, you may accept that document to complete Section 2 of the I-9 form.
7. Re-verify expiring work-authorization documents before they expire and do not allow any employee to continue to work after a work-authorization document expires.
8.Don’t re-verify U.S. passports or passport cards, Permanent Resident Cards, or List B Identity documents.
9. Keep I-9 forms in a separate binder for current employees and another for terminated employees. Do not keep I-9 forms in employee personnel files.
10. Train the individuals in your company who complete the I-9 process.
11. Conduct self-audits. Correctable errors on the I-9 form should be fixed, the change should be initialed and dated, and the words “Per Self Audit” should be placed beside the correction.
12. Know your rights. If ICE appears to review your I-9 forms and conduct an audit, insist on a written Notice of Inspection and your right to have three business days before you turn over your original I-9 forms.
It’s clear from recent events that ICE will continue auditing employers’ I-9 forms to ensure that all employers are complying with immigration laws. Creating a culture of compliance and auditing your company’s forms is the best way to prepare your company for an ICE I-9 audit.
Please contact our office regarding any questions that you may have on performing an I-9s or how to perform an I-9 audit.
Keeping up with changes under the Affordable Care Act (ACA) is a challenge for all employers. Here are the top five issues you should specifically pay attention to as healthcare reform rolls out.
The Employer Mandate
Under the ACA, large employers will be required to provide affordable healthcare insurance that meets minimum value to all full-time employees beginning in 2015. Final regulations issued in February clarify most aspects of how the mandate will be implemented.
The Individual Mandate
Beginning January 1, 2014, all individuals are required to carry qualified health insurance known as “minimum essential coverage” or face penalties when they file taxes in the spring of 2015. In 2014, the penalty for noncompliance will be the greater of $95 per uninsured person or 1% of household income over the filing threshold. This penalty will rise in 2015 and again in 2016.
Wellness Programs
As health insurance costs rise, wellness programs are gaining popularity, however be cautious when designing and maintaining a wellness program because they must conform to new ACA requirements and existing HIPAA nondiscrimination requirements.
Reporting Requirements
Beginning in the spring of 2016, large employers will face a new reporting requirement for the 2015 calendar year. The Form 6056 will ask for information including:
Automatic Enrollment And Nondiscrimination Regulations
Though enforcement of the automatic enrollment and nondiscrimination provisions of the ACA has not started, keep an eye out for regulations that will trigger compliance obligations. Employers with over 100 employees should anticipate that in the next few years, they will be required to automatically enroll all full-time employees for health insurance coverage.
In addition, employers who offer varying levels of coverage or employer-provided subsidies based on classes of employees need to watch for nondiscrimination regulations.
Please contact our office if you have any questions on how Healthcare Reform will affect you or your business.
Does your company currently use forms created more than three years ago that asks for information about an applicant or an employee’s family medical history?
Do your supervisors and managers know that if they are “friended” by an employee on a social media site and they see medical information relating to the individual or the individual’s family member, they have violated a federal law and subjected the company to liability?
Has your company failed to update Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), workers’ compensation, no-harassment, and other policies and procedures to comply with the Genetic Information Nondiscrimination Act (GINA)?
If you answered yes to any of these questions, you should review the impact of GINA so your company does not become the next GINA “headline.”
What Is GINA?
The Genetic Information Nondiscrimination Act (GINA) has been an active federal law for five years now. However, many employers still know little about the law. Enacted in 2008, GINA generally prohibits employers from engaging in three types of conduct:
Most attribute GINA’s enactment and requirements as a response to a trend in which employers sought to rely on genetic information in an attempt to screen out potentially unhealthy employees to help control their surging health care costs.
Inadvertent Collection Of Genetic Information
Many employers today pay little attention to GINA on the mistaken assumption that they do not collect genetic information. But there are three very common situations in which an employer can unknowingly collect genetic information.
First, employers regularly request medical documentation to support a potentially disabled employee’s request for a reasonable accommodation.
Second, employers regularly request medical documentation to support an employee’s request for leave under FMLA.
Third, many employers require a medical examination upon hire and, as a result, receive medical information in that context.
In each of these situations, the employer might acquire genetic information (without intentionally requesting it) and would violate GINA as a result of doing so. Fortunately, GINA provides a “safe harbor” that can protect an employer in such situations.
How To Avoid Noncompliance
When an employer requests medical information, it must warn the provider not to provide genetic information. When the employer makes such a warning, the “safe harbor” provision provides that any receipt of genetic information in response to their request will be deemed unintentional and not in violation of GINA.
As a result, it is imperative that employers include this specific warning any time that they request health-related information from a health care provider or an employee.
Of course, an employer could also obtain genetic information in a less formal situation. For example, a supervisor could obtain genetic information about an employee during a casual conversation, through email, or through social media. As long as the supervisor does not ask follow-up questions and does not take any employment-related action based on the accidentally acquired info, this information would be deemed unintentional. However, the use or disclosure of the accidentally acquired information would still violate GINA.
Does Your Wellness Program Violate GINA?
The federal regulations also make clear that an employer does not violate GINA if the employer requests genetic information as part of a “voluntary wellness program.”
For such a program to be deemed voluntary, the employer must show that:
Another reason that employers may be less knowledgeable about GINA (as compared to other federal laws) is that relatively few lawsuits have be filed since the law was enacted. According to EEOC statistics, there were just 280 charges of GINA-related discrimination filed in 2012, or around 0.3% of the overall charge filings for that year. However, the number of filed, GINA-related charges has increased by nearly 40% since the first year an individual could file under the statute.
Moreover, recent activity by the EEOC suggests that it would be best if employers begin reviewing their procedures now and taking the necessary steps to ensure they are GINA compliant.
Unknowing or unintentional violations of GINA are perhaps the most worrisome type of violations since they are the most likely to occur. This is particularly true for employers that rely on dated, pre-GINA human resources documents (including employment applications) or employment policies.
Employers should update existing nondiscrimination and anti-harassment policies and handbooks so that discrimination/harassment on the basis of genetic information is clearly prohibited. Similarly, employers should also update their Family Medical Leave Act (FMLA) and Americans with Disabilities Act (ADA) forms to include the requisite “safe harbor” language that warns employees and health care providers not to provide genetic information.
Employers also should ensure that an employee’s medical information is maintained separately from the employee’s personnel file, as required by the law.
For further information on GINA and its impact on your business or for assistance on insuring your company is GINA compliant, please do not hesitate to contact our office.
The topic this month highlights record retention and cover what employers should be keeping and for how long.
Did you know that there are over 14,000 federal, state, and industry specific laws/standards/regulations that dictate how long employers are required to keep certain records? Non-compliance can result in fines against company employees personally as well as judgments against the company itself.
Some of the Federal Labor and Employment laws that require record retention include:
Please contact our office directly if you would like more information on this topic or if you would like more information regarding how to conduct an audit of your company record retention policies.
President Obama has proposed expanding the availability of overtime pay, which would cause the Department of Labor to do its first overhaul of Fair Labor Standards Act (FLSA) regulations in 10 years.
The President signed a memorandum on March 13, 2014, instructing the Department of Labor to update regulations about who qualifies for overtime pay. In particular, he wants to raise the threshold level for the salary-basis test from the current $455 per week in order to account for inflation. The threshold has been raised just twice in the past 40 years. The President did not specify the exact amount the threshold should be raised though.
“Unfortunately, today, millions of Americans aren’t getting the extra pay they deserve. That’s because an exception that was originally meant for high-paid, white-collar employees now covers workers earning as little as $23,660 a year,” Obama said in his remarks on overtime pay.
The memorandum also suggests that both the primary duties and pay of some exempted employees do not truly fit in the executive, administrative and professional employees exemptions, referred to as the white-collar exemptions under FLSA.
In a fact sheet on the President’s memorandum, the White House said: “Millions of salaried workers have been left without the protections of overtime or sometimes even the minimum wage. For example, a convenience store manager or a fast food shift supervisor or an office worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receive a dime of overtime pay.” The FLSA’s minimum wage would not protect a salaried worker because salaried workers’ pay must satisfy the weekly salary-basis test rather than the Federal hourly minimum wage, which is $7.25 per hour. The hourly minimum wage in Florida is currently $7.93 per hour.
The memo also pointed out that “only 12% of salaried workers fall below the threshold that would guarantee them overtime and minimum wage protections.“ The fact sheet also called the current FLSA regulations outdated, noting that states such as New York and California have set higher salary thresholds.
Small businesses will be hit particularly hard by a change in the FLSA regulations.
If the regulations shrink the current white-collar exemptions, employers would have two main options to hold down costs. They would have to either increase workers’ salary above the new salary-basis threshold (to avoid paying overtime) or leave employees in the nonexempt category and pay them overtime. Companies could also hire more employees, but the other two options are more likely.
Implications for HR
Once tightened white-collar exemptions are implemented, which is not likely to happen for months now, it could result in far-reaching implications for HR, including wage and hour audits and layoffs. The money to pay for increased overtime wages has got to come from somewhere which might mean layoffs, reducing overtime and taking a fresh look at the fluctuating workweek.
When asked at a press briefing about the burden on businesses if the Obama administration succeeds in efforts to both increase the federal minimum wage and revise FLSA regulations, Betsey Stevenson, a member of the White House’s Council of Economic Advisers, said, “We think these two items are very different, but, obviously, they do feed into the same thing, which is people should be rewarded for fair work.” She suggested that some workers in the white-collar exemptions aren’t even earning minimum wage for all the work they do at low salaries.
Even though the president did not assign a number for the minimum salary-basis threshold, Stevenson said the overtime “protections have been eroded over time. This threshold in 1975 was nearly $1,000 in today’s dollars; today it’s $455.” Stevenson believes that the rule should be modernized as a matter of the “basic principle of fairness.”
We will continue to keep you abreast of any changes to FLSA as well as other regulations that can impact your business. If you have any questions about the current or proposed FLSA regulations, please contact our office.
It was announced on Wednesday, March 5th, by the Obama Administration that it would allow some health plans that do not currently meet all Affordable Care Act (ACA) requirements to continue offering non-compliant insurance for another two years. The Centers for Medicare and Medicaid Services (CMS) released the announcement, clarifying the new policy.
In November 2013, the Obama administration decided that some non-grandfathered health plans in the small group and individual markets would not be considered out of compliance if they failed to meet certain coverage provisions of the ACA. The transition relief was originally scheduled to last for one year, and was viewed as a response to the numerous health insurance policy cancellations that would result from the new requirements.
This recent announcement extends this relief for two additional years. CMS released the following:
“At the option of the States, health insurance issuers that have issued or will issue a policy under the transitional policy anytime in 2014 may renew such policies at any time through October 1, 2016, and affected individuals and small businesses may choose to re-enroll in such coverage through October 1, 2016.”
Who Will This Impact?
This decision, which will likely prevent another wave of cancellations that were scheduled to begin November 1, 2014 and will impact some insurance offerings, but is unlikely to have a significant impact, since only about half of the states have opted to grant extensions to health plans within their jurisdictions. Further, the number of people currently on these non-compliant plans has been dropping, and is expected to continue to decline. Under the new policy, these plans (which typically offer fewer benefits at lower costs since they do not have to abide by the ACA’s minimum essential coverage) will still be available until plans expire in 2017.
Please note that it will be up to each individual state, as well as each individual insurance carrier, as to if they will decide to adopt this additional two year extension. Under the original one year transitional relief, even though it was allowed in the State of Florida, there are currently some health insurance carriers who have decided to not allow groups to renew their existing non-compliant medical plans.
We will continue to keep you up to date of new developments in ACA implementation as they arise. Please contact our office for additional information regarding your group’s medical policy and the impact of this recent change on it.
If you are interested in signing up for medical coverage through the Marketplace, please note that you only have until the end of the open enrollment period (March 31, 2014) to sign up for coverage effective either April 1, 2014 or May 1, 2014. The effective date of your coverage in the Marketplace depends on when your application is submitted and processed.
The only way you will be able to enroll in a Marketplace medical plan outside of the open enrollment period is if you qualify for a “special enrollment” due to a qualifying event. A qualifying event is a change in your life that would make you eligible to sign up for coverage outside of open enrollment such as a marriage, divorce, birth or adoption, moving to a new state, loss of employment or loss of coverage due to changes in employment, etc. With employer based medical coverage, you typically have 30 days from the date of the qualifying event to enroll or make changes to your coverage due to a qualifying event, but the Marketplace allows you 60 days from the qualifying event to make changes.
You can enroll on either Medicaid or the Children’s Health Insurance Program (CHIP) at any time during the year as there is no limited open enrollment periods for these programs. You only need to qualify for these programs to be eligible. You can either complete a Marketplace application to find out if you are eligible for either program or contact your state agencies for further information.
The tentative next open enrollment dates for the Marketplace are November 15, 2014 through January 15, 2015, however please note that these dates are subject to change.
Did you know that some of the major insurance carriers have revised their requirements on small group medical insurance regarding employee participation and employer contribution?
One major carrier offers 5 group medical plans in Florida for employers (with 2-100 employees) that lowers the required employer contribution to the lesser of 25% of the employee medical premium or $50 per employee. Additionally, they also only require 50% employee participation on any of these 5 plans.
Currently most major medical carriers require the employer to contribute 50% towards the cost of the employee premium and the group must maintain 75% employee participation (this does not include any eligible employees who can provide proof of valid coverage elsewhere).
Another national medical insurance carrier just lowered their employee participation requirements for all small group medical plans in Florida. This is valid only for new business with 2-50 eligible employees, but it does apply to all of their small business medical plans offered. Any existing small group clients with this carrier are still subject to the 75% participation requirement currently.
If you would like more information on any of the plans offered, please contact our office for more information.