Pediatric Dental Benefits: Duplication of Coverage?

As of January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) requires pediatric dental benefits to be one of the 10 essential health benefits (EHBs) that must be included in individual and small group medical coverage, as well as cover…

Medical Loss Ratio (MLR) Rebate Deadline Approaching | Chicago Benefits Advisor

As was the case last year, insurers with medical loss ratios (MLRs) that were below the prescribed levels on their blocks of business must issue rebates to policyholders. The MLR threshold for large groups is 85%, and the threshold for small group and individual policies is 80%. The MLR ratio is based on the insurer’s block of business in the state, and not on the specific policy’s claims experience and administrative costs. Insurers must pay rebates owed on calendar year 2013 results by August 1, 2014. The rules for calculating and distributing these rebates are essentially the same this year as they were last year.

The guidance provided by the regulatory agencies on how employers should distribute rebates has been fairly general, so employers have some discretion on how to calculate and distribute the employees’ share. These general principles apply:

  1. Assuming both the employer and employees contribute to the cost of coverage, the rebate should be divided between the employer and the employees, based on the employer’s and employees’ relative share. Employers may divide the employees’ share of the rebate in any reasonable manner – for example, the rebate could be divided evenly among the employees who receive it, or it may be divided based on the employee’s contribution for the level of coverage elected (such as employee only or family). Employers are not required to precisely determine each employee’s share of the rebate, and so do not need to perform special calculations for employees who only participated for part of the year, moved between tiers, etc.
  2. The employer may pay the rebate in cash, use it for a premium holiday or other premium reduction, or use it for benefit enhancements. ERISA plans must apply or distribute the rebate within 90 days after it is received or the rebate will need to be deposited into a trust.
  3. The employer should consider the practical aspects of providing a rebate in a particular form. A cash rebate is taxable income if the premium was paid with pre-tax dollars, so issuing a check for a small rebate may not be the best option. However, an employer cannot simply keep the rebate if it determines that cash refunds are not practical–it will need to use the employee share of the rebate to provide a benefit enhancement or premium reduction. 
  4. Some plans now state how a rebate should be used. If the plan describes a method, that method must be followed. 

The Department of Health and Human Services has posted a listing of Issuers Owing Refunds for 2013.

For further information regarding MLR Rebate consideration for private and government/church plans, go to:

Frequently Asked Questions about Grandfathered Health Plans | Chicago Employee Benefits

99896707As employers determine their plan designs for the coming year, those with grandfathered status need to decide if maintaining grandfathered status is their best option. Following are some frequently asked questions, and answers, about grandfathering a group health plan. 

Q1: May plans maintain grandfathered status after 2014?

A1:  Yes, they may. There is no specific end date for grandfathered status.


Q2:  What are the advantages of grandfathered status?

A2:  Grandfathered plans are not required to meet these PPACA requirements: 

  • Coverage of preventive care without employee cost-sharing, including contraception for women
  • Limitations on out-of-pocket maximums (starting with the 2014 plan year)
  • Essential health benefits and metal levels (starting with the 2014 plan year; these only apply to insured small group plans)
  • Modified community rating (starting with the 2014 plan year; this only applies to insured small group plans)
  • Guaranteed issue and renewal (starting with the 2014 plan year; this only applies to insured plans)
  • Nondiscrimination rules for fully insured plans (this requirement has been delayed indefinitely)
  • Expanded claims and appeal requirements
  • Additional patient protections (right to choose a primary care provider designation, OB/GYN access without a referral, and coverage for out-of-network emergency department services)
  • Coverage of routine costs associated with clinical trials (starting with the 2014 plan year)
  • Reporting to HHS on quality of care (requirement has been delayed indefinitely)

Q3:  What PPACA requirements apply to grandfathered plans?

A3:  Most PPACA requirements apply to grandfathered plans. This includes:

  • Limits on eligibility waiting periods (starting with the 2014 plan year)
  • PCORI Fee
  • Transitional Reinsurance Fee
  • Summary of Benefits and Coverage
  • Notice regarding the exchanges
  • No rescissions of coverage except for fraud, misrepresentation, or non-payment
  • Lifetime dollar limit prohibitions on essential health benefits
  • Phase-out of annual dollar limits on essential health benefits, with all limits removed by the 2014 plan year
  • Dependent child coverage to age 26 (an exception for grandfathered plans when other coverage is available expires at the start of the 2014 plan year)
  • Elimination of pre-existing condition limitations (for children currently and all covered persons starting with the 2014 plan year)
  • W-2 reporting of health care coverage costs (this only applies if the employer provided more than 250 W-2s for the prior calendar year)
  • Wellness program rules
  • Minimum medical loss ratios (this only applies to fully insured plans)
  • Employer shared responsibility (“play or pay”) requirements (generally starting with the 2015 plan year)
  • Employer reporting to IRS on coverage (starting in January 2016, based on the 2015 calendar year)
  • Excise (“Cadillac”) tax on high cost plans (starting in 2018)
  • Automatic enrollment (this only will apply to employers with more than 200 full-time employees; this requirement has been delayed indefinitely)

For more FAQs on Grandfathered Health Plans, download a complimentary guide in UBA’s PPACA Resource Center:



It’s Called A "Day Off" For A Reason

How many times have you asked an employee about his or her stress level only to get the response that they are too busy to be stressed? Whether overworked, overstressed, or a combination of the two, employees keep putting off taking a day off to relax …

Courts Issue Opposite Rulings in PPACA Subsidies Cases | Chicago Benefits Advisor

174561029On July 22, 2014 two Courts of Appeals issued decisions that address whether only people who live in states that have state-run Marketplaces (which are also called exchanges) are eligible to receive premium tax credits or subsidies under the Patient Protection and Affordable Care Act (PPACA). One court held that the subsidy should only be available to people covered by state-run Marketplaces, and the other ruled that people should be eligible for subsidies regardless what type of Marketplace their state has.

The IRS is responsible for implementing and interpreting the premium subsidies part of the law. It has ruled that all eligible individuals are entitled to a subsidy regardless whether they live in a state that has a state-run Marketplace or a federally-run Marketplace. The basic issue in these cases is whether the IRS is bound by one sentence in PPACA, which says that a taxpayer “enrolled through an exchange established by a State” is subsidy-eligible, so that only a person enrolled in a state-run Marketplace is eligible for a premium subsidy, or whether the IRS had the authority to look at PPACA as a whole and conclude that it would not make sense to limit subsidies to people in state-run Marketplaces, and therefore interpret the law to mean a person enrolled in any Marketplace is subsidy-eligible. 

The Obama Administration has already said that it will appeal the decision of the Court of Appeals for the District of Columbia in Halbig v. Burwell (which ruled that the IRS overstepped its authority, and the subsidy should only be available to people living in states that have state-run Marketplaces). It is likely that the decision of the Court of Appeals for the Fourth Circuit (which ruled in King v. Burwell that the IRS has the authority to provide subsidies to individuals in all states) also will be appealed.  In both of these cases a three-judge panel decided the case, so the initial appeal could be to the full Court of Appeals for that circuit.  In all likelihood these cases will ultimately be appealed to the U.S. Supreme Court, which means there may not be a clear answer on this question before June 2015 or 2016.

While these cases work their way through the courts, these decisions will not be enforced. Employees who are currently receiving premium subsidies will continue to receive them.  Employers in states with federally-run Marketplaces should not assume that they will not have to comply with the employer-shared responsibility (play or pay) requirements.

Certainly, a final decision that the premium subsidies are only legally available in states that have state-run Marketplaces would have a huge impact.  (Currently, about one-third of the states have state-run Marketplaces and the other two-thirds have federally-run Marketplaces.)  It would mean that all the people enrolled in federally-run Marketplaces who are currently receiving subsidies would no longer be eligible to receive them (it seems unlikely that subsidies that have already been received would have to be repaid).  It would also mean that fewer people would be subject to the individual mandate since there is an exception to that requirement if coverage is not affordable.  For employers in states with federally-run Marketplaces, penalties would not apply, because penalties are only triggered if an employee receives a subsidy.  There would be broader implications as well – would so many people in the Marketplaces drop coverage because of the loss of subsidies that the Marketplaces would fail?  Would states be faced with lobbying from individuals and insurers to set up a state Marketplace so that subsidies would be available, and from employers advocating for federally-run Marketplaces so that penalties would not apply?  


For further information about the health care reform requirements for your business, download UBA’s complimentary guide, “PPACA Compliance and Decision Guide for Small and Large Employers” from the PPACA Resource Center at

Getting Employees To Save More For Retirement

Getting Employees To Save More For Retirement

There’s no denying it. The vast majority of workers won’t be ready financially for retirement. Seventy percent are behind schedule in saving for retirement and half of all Americans have less than $10,000 in savings. Of immediate importance is the fact…

Getting Employees To Save More For Retirement

There’s no denying it. The vast majority of workers won’t be ready financially for retirement. Seventy percent are behind schedule in saving for retirement and half of all Americans have less than $10,000 in savings. Of immediate importance is the fact…

Why HSAs Linked to HDHPs are Making a Comeback | Chicago Employee Benefits

By Elizabeth Kay
Compliance and Retention Analyst for AEIS, UBA Partner Firm in San Mateo, CA

482462399According to new information from United Benefit Advisors (UBA), health savings accounts (HSAs) are outpacing health reimbursement arrangements (HRAs) in both adoption and participation rates. And now that metal tier health plans  [e.g., platinum, gold, silver, etc.] are allowed higher deductibles, employers are increasingly looking at HSA qualified plans for their upcoming plan year. Here’s a look at why this trend is unfolding.

The rising costs of health insurance are directly related to the rising cost of health care.  One of the contributing factors has been consumers saying ‘yes’ to tests or procedures that they might not really need ­ but because the insurance companies were paying for them, they may not have been motivated to say ‘no’. 

Consumer-Driven Health Plans (CDHPs) were designed to A) make plans more affordable; and B) help the consumer make better, more informed decisions about their health care since they would be paying the first thousand dollars or more of their claims.  While the strategy was great, in the small group marketplace, when HSA plans were first introduced, it sort of backfired. 

The reason it backfired was that the premiums were so affordable, an employer could move their plan to an HSA plan, fund most or all of the deductible for the employees, and still save on costs of administering their benefit plan.  In this scenario, however, employees were still spending money that was not from their own pocket. The resulting claims experience on HSA plans went up higher than projected, and so did the premiums.  

Then came ‘hybrid’ PPO plans that had a high deductible but came with an office and pharmacy copay as first dollar benefits (not subject to the deductible).  Some carriers allowed an employer to ‘wrap’ an HRA administered by a third party administrator (TPA) around these plans so that the employer could still fund a portion of the deductible to make the overall plan more affordable for their employees and their families. 

Unfortunately, this strategy has not always done well, either. Many carriers would only allow an employer to ‘wrap’ an HRA with certain plans in their portfolios that had been rated accordingly.  However, as explained earlier, when an employer funds most or all of the deductible, the carrier may see higher claims than were projected because employees are not acting as better consumers facing the loss of their own money. The result: carriers may not have collected enough premiums to cover the losses if the plan was not originally rated with this in mind.  

For example, Aetna small group in California had originally allowed all of their 2014 plans to be ‘wrapped’ with an HRA.  Some TPAs were claiming they could take a bronze level plan and turn it into a platinum plan with the Aetna bronze plans wrapped in an HRA. However, Aetna quickly changed their mind and as of March 31, 2014, no longer allows any of their plans to be ‘wrapped’ with an HRA. In fact, they now require the employer to sign a Statement of Understanding declaring that they are not funding any of the deductible unless it is an HSA plan, and they are funding to a qualified HSA account.  Most high deductible plans are rated with the assumption that claims will be less frivolous overall than a low deductible PPO plan, and the insured will be careful in their spending.  I suspect that Aetna’s quick change was due to large claim losses in the beginning of 2014. 

The flip side to an employer implementing a CDHP or an HSA plan with a high deductible, and not funding any portion of the deductible, is that some of their workforce may not be able to afford the new plan.  It can be a fine line between what is affordable for the employer, and what’s affordable for the employees and their families.  This is one way that benchmarking with the health plan survey data can be so beneficial, in that you can see what others in your industry are doing.  Having an educated advisor to help you develop a benefits plan that contains affordable plans for the entire workforce can be invaluable and aid in employee retention.

Finally, educating employees is so essential with any health plan, but especially with a CDHP/HSA/HRA plan because an employee may look at a high deductible plan and immediately think, this is unaffordable.  However, with an HSA plan for example, the employee can set aside funds into an HSA account that’s federally tax-free (and depending on the state, tax-free there as well).  This could virtually reduce their taxable income to a point where the plan becomes more affordable and, therefore, more appealing to the employee. 

Also, explain to your employees who are over age 55 that they can make an additional $1,000 annual contribution to their HSA account to save for retirement because HSA funds can be used to pay Medicare Part B & D premiums and pay for medical expenses.  With this new information, you’ll see their eyes change as the light bulb goes on! The way the plan is received and utilized makes a huge difference in perception. 

For a copy of UBA survey findings showing many differences in HSA/HRA funding levels regionally and across industries, download a copy of the 2013 UBA Health Plan Survey Executive Summary at, or request a custom benchmarking report targeted to your business. 

For a comprehensive guide on employee benefits communication strategies, download the UBA whitepaper, “A Business Case for Benefits Communications” at

Planning for 2015 – Open Enrollment and Other PPACA Issues

The Patient Protection and Affordable Care Act (PPACA) continues to phase in. Many plan design requirements took effect in 2014 for both large and small plans. This next year will bring employer-shared responsibility (“play or pay”) requirements for larger employers. PPACA has also affected the notices employers need to give as part of the open enrollment process and it affects COBRA.