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Employee Benefits Legislative Update
- 1. Employee Benefits Legislative Update What Northwest Employers Need to Know February 27, 2018
- 2. Presented By Bellevue, WA. Portland, OR Bend, OR Bozeman, MT PARTNER S OF YOUR TPG JUST ONE Sarah Friend Executive Vice President The Partners Group
- 3. NW Largest Independent Benefits Team Leading Independent Northwest Broker Dedicated Local Service The Partners Group (TPG) is the largest independent benefits broker in the Northwest with more than 145 employees serving clients from five offices in Washington, Oregon and Montana. TPG’s culture puts people first. Whether it’s our employees or our customers, we always put the interest of our people and those we serve above all else. Bellevue, WA. Portland, OR Bend, OR Bozeman, MTLake Oswego, OR
- 4. A Unique Mix of Employer Services Bellevue, WA. Portland, OR Bend, OR Bozeman, MT A Unique Mix of Employer Services A highly consultative approach focused on the specific priorities of each employer.
- 5. Agenda • Federal Updates • ACA Updates • Impacts to Employers • Impacts to the Individual Market • Impact of Tax Plan on Employee Benefits • EEOC Wellness Rules Updates • State Legislative Updates
- 6. FEDERAL UPDATES What’s going on in DC?
- 7. Key messages to legislators 1. Protect tax deduction 2. Simplify administration 3. Adopt policies that address the actual price of health services 4. Stabilize the individual marketplace
- 8. Headlines News! • Federal Headline News • Not much legislative activity directly impacting employer sponsored health plans • Full repeal efforts were front page news last year • Legislative activity has shifted and now is targeting individual components of the Affordable Care Act that impact the individual market • How does this impact employer sponsored plans and why should we pay attention?
- 9. Affordable Care Act Updates
- 10. ACA Activity Impacting Employer Market Shared Responsibility Payment Letters 1 Employer Reporting 2 Cadillac Tax Delay 3
- 11. Shared Responsibility Payments • IRS letters mailed for 2015 penalties • One ACA FT employee who received a federal subsidy triggered letter • Employer must respond by due date • Employer can reply with disagreement • Don’t ignore the letter!
- 12. Employer Reporting UpdatesThis week marks the deadline for employer reporting for the 2017 calendar year Changes to the 1094 and 1095 forms for 2017 were very minimal At this time, Applicable Large Employers who are subject to reporting requirements should remain vigilant in their tracking and reporting processes Employer Reporting
- 14. Instability of Individual Market
- 15. Making the Connection • Employer-Sponsored Insurance (ESI) is the most common type of health coverage in the United States • 177 million Americans on ESI vs. 20 million on individual plans • Average premium increase for employer plans rose 3% last year • Average premium increase for individual plans rose 20% last year • A strong and stable market for ESI is directly linked to a stable individual market • If individual market implodes, costs to cover uninsured patients will be shifted to the ESI market
- 17. ACA Activity Impacting Induvial Market Repeal of Individual Mandate 1 Continued Threats to CSR Payments 2 Skinny, Short-Term Plans 3
- 18. Repeal of the Individual Mandate • Elimination of all tax penalties by 2019, effectively repealed the individual mandate • Unfortunately, this does not eliminate the reporting requirement • The IRS still requires self-insured employers and insurers to report individuals covered by their plan or face penalties
- 19. What Are CSR Payments? • The ACA helps lower cost of coverage in two ways for qualified families • Premium Subsidies (138% - 400% FPL) • Difference between cost of second lowest-cost silver plan and affordability • Cost Sharing Reductions (CSR) • Lower deductibles, copayments and out-of-pocket limits • Only available on silver-level exchange plans • 250% of FPL • Nearly 75% of exchange purchasers (6.8 million) qualify for CSR
- 20. Executive Order Eliminating CSR Payments, October 12 Cost-sharing reduction payments were expected to total $9 billion in the coming year. “The government cannot lawfully make the cost-sharing reduction payments,” the White House said in a statement. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”
- 21. Federal Poverty Chart 138% 250% 400% Family of 1 $16,643 $30,150 $48,240 Family of 2 $22,411 $40,600 $64,960 Family of 3 $28,180 $51,050 $81,680 Family of 4 $33,948 $61,500 $98,400 Family of 5 $39,716 $71,950 $115,120 Family of 6 $45,485 $82,400 $131,840 Family of 7 $51,253 $92,850 $148,560 Family of 8 $57,022 $103,300 $165,280
- 22. CSR Uncertainty, Nothing New • 2014: House Republicans sued Obama administration • 2016: Lower court agreed but allowed payments to continue while government appealed the decision • 2017: Spending bill did not include permanent appropriations for CSR payments • August 2017: Trump threatened to eliminate CSR payments • October 12th: Executive order signed
- 23. What’s the Impact to Oregonians? • DCBS issued a statement on October 13th • Stated that there would be no changes in 2017 • DCBS allowed Oregon carriers to re-file individual silver plan rates for 2018 • Resulted in 7.1% increase to silver level plans approved by DCBS to cover estimated $49M in projected CSR payments • American Academy of Underwriters warn of unintended consequences of adverse selection, insolvency and weakened protections for individuals with pre-existing conditions
- 24. PLOT TWIST! • Cost increases to silver plans actually INCREASE federal premium subsidies for qualified families • This increase in subsidies will decrease costs for bronze and decrease the incremental costs of buying up to gold metal plans • May shift enrollment between metal plans • May increase enrollment and increase federal payments of premium subsidies
- 25. Are CSRs Really Dead? • Apparently not … • Senator Alexander and Senator Patty Murray have reached a deal to fund CSRs in exchange for giving states more regulatory flexibility with the law • Trump called it a “good short term solution” • The Deal: • Two years of subsidy funding (plus balance of 2017) • A “copper plan for people older than 30 • $106M in enrollment outreach for 2018 and 2019 • So can this deal get enough support and how fast?
- 26. County by county analysis of projected insurer participation in health insurance exchanges Released 6/13/17
- 27. Underwriting Uncertainty • The uncertainty of the current administration is adding a tremendous amount of stress on underwriters and actuaries • Uncertainty = Conservatism • Conservatism = Higher Rates • Affects the entire ecosystem of a carrier • Spill-over effect
- 28. IMPACT OF TAX PLAN ON EMPLOYEE BENEFITS
- 29. Tax Cuts and Jobs Act • The Act includes the following changes to employee benefits: • Elimination of deduction for expenses associated with qualified transportation fringe benefit programs • Employees cannot exclude bicycle commuting reimbursements from their gross income; and • Moving expense reimbursements are not deductible for employers and cannot be excluded from employees’ gross income • The Act creates a new temporary tax credit for employers that provide paid family and medical leave to their employees.
- 30. EEOC Final Rules on Wellness Plans
- 31. EEOC Wellness Update • In 2016, the EEOC issued final rules that became effective January 1, 2017 that describe how ADA and GINA apply to employer wellness programs • Under the EEOC rules, employers could offer wellness incentives valued up to 30% of the self-only premium level • AARP challenged the rules stating that 30% could create an affordability challenge to some workers thus making the program not voluntary in nature • Court ruled that the rules should be reconsidered • AARP continued to push • Court responded by vacating rules effective January 1, 2019 to give employers time to respond
- 32. STATE UPDATES Oregon, Washington and Montana
- 33. Oregon – Measure 101 • Oregon legislature passed a $550M health care tax plan they said was necessary to prevent cuts to Medicaid • Includes a tax increase on hospitals and new taxes on health insurance plans • Lawmakers attempting to close a $1.4B shortfall in the next two-year budget to maintain current programs and services • Democrats argued that without this tax increase, risk was eliminating coverage for 350K low income Oregonians • Republicans argued that a smaller tax could prevent this
- 34. Estimates of Oregon’s 2017-2019 budget hole Health insurance costs, largely Medicaid $1B Unfunded ballot measures $3M Public pension costs $3M 3/6/2018 34
- 35. Washington – Paid Family Leave • Fifth state to pass paid family leave • Applies to all Washington employers • Effective January 1, 2020 • Provides between 12-16 weeks of paid leave • Costs will be shared by employer and employee (37% employer, 63% employee) • Complex and will require assessment of current plan and planning to ensure compliance and avoid penalties
- 37. A Unique Mix of Employer Services Bellevue, WA. Portland, OR Bend, OR Bozeman, MT A Unique Mix of Employer Services A highly consultative approach focused on the specific priorities of each employer.
- 38. 2018 Webinar Schedule Feb AHA Wellness & ACA update Mar TBD Apr FMLA Update May Benefit Admin Solutions Jun TBD Jul Retirement Plan Consulting Aug Total Absence Management Sep Wellness Oct. ACA Update Nov. Total Absence Management
- 39. Specialized Experts TEAM TAM YOUR Patty Borst Absence Management Consultant Jean Shearer Absence Management Consultant Brycie Repphun Account Executive
- 40. Specialized Experts CONSULTING WELLNESS ADVANCED ALEXA GALLUZZO Alexa Galluzzo Managing Consultant The Partners Group
- 41. Specialized Experts CONSULTING PLAN RETIREMENT ALEXA GALLUZZO Nicole Pond Managing Consultant The Partners Group
Notas do Editor
- Good morning and thank you for joining the TPG Webinar Series today entitled Employee Benefits Legislative Update, What Northwest Employers Need to Know. As we all know, there was a lot of potentially really big legislative changes proposed in 2017. We were on the edge of our seats ready to roll out the executive summaries, overviews and education sessions but there just wasn’t enough support for any of the major repeal efforts to move forward. Now just because the tsumani legislation didn’t pass, doesn’t mean that nothing has happened so we thought we should go ahead and pull together summary information of all of the bits and pieces of legislative changes. Because there isn’t any one single piece of legislation that we will be focused on today, think of this session as more of a trip through the information buffet. You’ll get a small portion of a lot of different topics. Just know that if there is a topic you are interested in learning more about, all you have to do is reach out to your TPG team and they can provide you all of the information you need on whatever area you are interested in or have concerns about. A few of you attended our webinar in October. Since the majority of attendees today were not on that call there were be a few points of information that was covered in October that I will be providing updates to. A few housekeeping items before we get started. All attendees will be on mute since we have such a large audience today but I would encourage you to use the question box in the go to webinar toolbar on the right hand side of your screen to list your questions so that I can respond to those via email to everyone as a follow up. Will we be asking polling questions?
- My name is Sarah Friend and it’s my pleasure to present to you this morning. While I frequently host these types of educational webinars, I am just one of a large group of subject matter experts at The Partners Group ready to help you solve a wide variety of challenges and build strategies for your organization’s future. Like most of our Employer Services team at TPG, I have been in this business for more than 20 years. Our team has dedicated their working careers to being your “Go To” resource for our clients and we hope that at the end of this hour you agree that it was time well spent and that we provided you and your teams valuable information and insight on legislation
- If you don’t know The Partners Group, I will give you a brief introduction. We are a financial and insurance services firm serving both businesses and individuals and families. Our largest division in our company is dedicated to serving Employers and we have grown to now be the largest independent employee benefits firm in the NW. We have nearly 150 employees in offices in ….
- Our Employer Services division offers four core areas of service including: Employee Benefits Healthcare Intelligence Health & Productivity which includes advanced wellness consulting and also total absence management consulting And finally group retirement plan consulting The topics of today’s webinar relate to Employee Benefits Total Absence Management – Washington Paid Sick Leave Wellness – EEOC rules We are fortunate to have deep bench strength with a variety of subject matter experts to allow us to cover a broad range of topics.
- With introductions out of the way, let’s dive right into our agenda. Here are the items that we will be covering in our hour together: Headline News! Federal Legislative Update ACA Updates Shared Responsibility Payments Employer Reporting Elimination of Individual Mandate Minimum Essential Coverage Impact of Tax Plan on Employee Benefits EEOC Wellness Rules Updates State Legislative Updates (Oregon, Washington and Montana)
- Earlier this month, a few of our team members traveled to Washington DC to find out and to carry a few key messages to legislators with us. It was an interesting time to be in DC because it was the week of the budget vote so all of the representatives and Senators were in DC and at work. Generally when you go to DC, it is rare that you actually get to meet with members of Congress. Typically you are meeting with staffers and praying that your message gets through. This trip was different and it was great to have direct conversations about topics that are so important to our employer groups directly with members of Congress. We took with us a few key messages: Protect tax deductibility of employer sponsored health insurance for both businesses and families Simplify burden of administration on employer plan administrators Adopt policies that address the actual price of health services Stabilize the individual insurance marketplace The budget vote was looming and the debate over DACA was heated. This picture above with Nancy Pelosi was taken the night before her 8 hour speech. It was also interesting to hear from Cory Booker who many predict will be a front runner for the democrative nomination for president in 2020.
- So what are the big headlines for federal healthcare legislation? After some failed attempts at major repeal legislation last year, Healthcare is no longer the hot topic for the GOP and it seems evident that any appetite for major healthcare legislation has subsided and moving forward the approach was to tackle healthcare one topic at a time. President Donald Trump said his administration’s actions on healthcare, such as eliminating the individual mandate and allowing skimpy “short-term plans,” are gradually chipping away at the Affordable Care Act. Legislative activity has focused primarily on issues that relate to the individual health marketplace or exchanges. Given that, it may be tempting for all of us who don’t rely on the individual marketplace to be overly concerned personally with it. Why do we care about a sustainable individual marketplace? I’ll cover that in just a moment.
- Let’s dive right into ACA updates. We’’ll start with the updates that impact employers directly
- So what are the big headlines for federal healthcare legislation? Healthcare was not the hot topic at the time and it seemed evident that any appetite for major healthcare legislation had subsided and moving forward the approach was to tackle healthcare one topic at a time. President Donald Trump said his administration’s actions on healthcare, such as eliminating the individual mandate and allowing skimpy “short-term plans,” are gradually chipping away at the Affordable Care Act. Trump made these comments at the Conservative Political Action Conference on Friday. “I think we may be better off the way we’re doing it, piece by piece, Obamacare is just being wiped out. The individual mandate essentially wipes it out, so I think we may be better off. And people are getting great healthcare plans, and we’re not finished yet,” Trump said. Why do we care about a sustainable individual marketplace?
- Starting with Shared Responsibility Payments Nothing quite gets your attention like a letter from the IRS addressed to your “finance department” stating that your company owes millions of dollars in ACA penalties. How can that be? You offer MEC coverage to full time employees and have been tracking your offer rates. Late last year, IRS announced it would be sending employer shared responsibility letters for the year 2015 by the end of 2017 ALEs with at least ACA full-time employee that received a federal subsidy were at risk of getting a letter Employer must respond by stated due date, generally 30 days. Employer can reply with disagreement Don’t ignore the letter!
- Starting with Shared Responsibility Payments Nothing quite gets your attention like a letter from the IRS addressed to your “finance department” stating that your company owes millions of dollars in ACA penalties. How can that be? You offer MEC coverage to full time employees and have been tracking your offer rates.
- The "Cadillac tax" isn't dead but it will stay suspended a while longer. On Jan. 22, Congress passed and President Donald Trump signed into law a two-year delay on the Affordable Care Act's 40 percent excise tax on high-value health care plans. The provision was part of the measure to restore funding to the federal government through Feb. 8, ending a partial government shutdown. Both political parties supported the provision to postpone the so-called Cadillac tax from taking effect until 2022, instead of in 2020—as did the Society for Human Resource Management (SHRM). In December 2015, Congress passed and President Barack Obama signed an initial two-year delay of the Cadillac tax, changing the effective date from 2018 to 2020. "The IRS has not yet issued regulations on this tax," commented Sharon Cohen, JD, and Richard Stover, consultants with Conduent HR Services, in an alert. "With another delay, it's unlikely the IRS will issue regulations soon. But unless and until the tax is revoked, employers should keep an eye on their plan designs with this tax in mind." "There continues to be wide bipartisan support for repealing the Cadillac tax," noted an online post by ADB Insurance & Financial Services. "However, there is no consensus approach to replacing the lost revenue from full repeal. While it remains unlikely that the tax will ever fully take effect, the long planning process required to prepare for its effect will continue to make employers nervous each time the effective date closes in."
- So what are the big headlines for federal healthcare legislation? Healthcare was not the hot topic at the time and it seemed evident that any appetite for major healthcare legislation had subsided and moving forward the approach was to tackle healthcare one topic at a time. President Donald Trump said his administration’s actions on healthcare, such as eliminating the individual mandate and allowing skimpy “short-term plans,” are gradually chipping away at the Affordable Care Act. Trump made these comments at the Conservative Political Action Conference on Friday. “I think we may be better off the way we’re doing it, piece by piece, Obamacare is just being wiped out. The individual mandate essentially wipes it out, so I think we may be better off. And people are getting great healthcare plans, and we’re not finished yet,” Trump said. Why do we care about a sustainable individual marketplace?
- The ACA provides tax credits to individuals with low and moderate incomes to help make health insurance premiums more affordable. Under the ACA, premium subsidies are calculated using the difference between the cost of coverage (which is based on the second lowest-cost silver plan available in a market) and affordability (which is based on a percentage of an individual’s income). To help people with low and moderate incomes manage out-of-pocket costs, the ACA requires payers to provide cost sharing reductions (CSR), which serve to lower deductibles, copayments, and out-of-pocket limits. CSR subsidies are only available under silver-level exchange plans, and they are only available to people earning 250 percent or less of the federal poverty level (FPL). Nearly three-quarters of the people (6.8 million) who purchased 2017 health insurance via the federal exchanges had incomes meeting that threshold and thus could qualify for CSR. Under the ACA, the federal government is supposed to reimburse payers for their cost of providing CSR. For the 2016 benefit year, the government provided $7 billion; for the 2017 benefit year the payments are expected to hit $10 billion, assuming funding continues through year-end. These payments are viewed by some as critical to payers’ continued participation in the ACA exchanges.
- The future of the payments has been in doubt because of a lawsuit filed in 2014 by House Republicans, who said the Obama administration was paying the subsidies illegally. Judge Rosemary M. Collyer of the United States District Court in Washington agreed, finding that Congress had never appropriated money for the cost-sharing subsidies. The Obama administration appealed the ruling. The Trump administration has continued the payments from month to month, even though Mr. Trump has made clear that he detests the payments and sees them as a bailout for insurance companies. Advertisement This summer, a group of states, including New York and California, was allowed to intervene in the court case over the subsidies. The New York attorney general, Eric T. Schneiderman, said on Thursday night that the coalition of states “stands ready to sue” if Mr. Trump cut off the subsidies. Graphic
- In 2014, House Republicans sued the Obama administration, claiming Congress never appropriated CSR funds and that the payments by the administration were unconstitutional. In 2016, a lower federal court agreed with House Republicans that the administration had circumvented the appropriation process and was unlawfully using unappropriated money to fund reimbursements due to insurers and ordered the government to stop making CSR payments, but it allowed the payments to continue while the government appealed the decision. Industry groups lobbied Congress to incorporate permanent appropriation for CSR payments into the recent spending bill. And many cautioned that not including it would lead to a spike in premiums and seriously damage the exchange market. Already this morning, HHS notified the Court of Appeals for the District of Columbia (the federal court hearing the case), that the next CSR payment, scheduled for October 18, will not occur. The White House Press Secretary declared, “The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abuses taxpayer dollars and skirted the law to prop up a broken system.”
- The Oregon Department of Consumer and Business Services (DCBS) is committed to the stability of Oregon's health insurance market and ensuring access to statewide comprehensive health coverage. After analyzing the announcement and its implications, DCBS has determined that there will be no change for 2017 health plans and is implementing a plan to ensure stability beyond this year. Rate Increase This increase will affect plans both on and off HealthCare.gov, and will compensate for the $49 million worth of cost-sharing reduction payments that the federal government will no longer be making to Oregon insurance companies in 2018. “These rate increases are necessary to ensure the stability of the health insurance market,” said Acting Director Straight. “Oregonians who receive financial assistance through the Marketplace will find that premium assistance will also increase, shielding them from most of the increase.” Oregonians who do not qualify for premium assistance through HealthCare.gov are encouraged to work with an agent to shop around and consider a non-silver level plan that might work for their situation.
- Sen. Lamar Alexander says he and Sen. Patty Murray have reached a deal to fund the Affordable Care Act's cost-sharing subsidies in exchange for giving states more regulatory flexibility with the law. Shortly after Alexander announced the deal to reporters, President Trump called it a "good short term solution." What we're watching: Whether this deal can gather enough support to pass — and if so, how quickly. What's in the deal: Two years of subsidy funding, along with funding for the rest of 2017. There will also likely be additional steps to help enrollees with their premiums in 2018. A "copper plan" for people older than 30, which would be less comprehensive than other ACA plans but would have a lower premium. $106 million in enrollment outreach funding in 2018 and 2019. Shorter review time for states seeking waivers from some of the ACA's coverage requirements. It's unclear what other waiver NAHU issued a statement on October 18th supporting the bill.
- On December 22, 2017, the Tax Cuts and Jobs Act was signed into law
- The legislation,, includes a tax increase on hospitals and new 1.5% premium tax on health insurance plans. Gov. Kate Brown supports the bill, and said that passing this bill was among her three top priorities for lawmakers to approve before they went home in July. Opponents of the tax gathered enough signatures to put this new tax to a vote Oregonians passed the tax in January 2018
- Much of that deficit comes from the Oregon Health Authority, and Democratic budget writers warned in April that they would have to throw more than 350,000 low-income Oregonians off Medicaid if they could not raise more than $500 million. Republicans pushed back against the claim, saying the state could preserve the low-income health plan with a smaller tax.
- The legislation,, includes a tax increase on hospitals and new 1.5% premium tax on health insurance plans. Gov. Kate Brown supports the bill, and said that passing this bill was among her three top priorities for lawmakers to approve before they went home in July. Opponents of the tax gathered enough signatures to put this new tax to a vote Oregonians passed the tax in January 2018
- Our Employer Services division offers four core areas of service including: Employee Benefits Healthcare Intelligence Health & Productivity which includes advanced wellness consulting and also total absence management consulting And finally group retirement plan consulting The topics of today’s webinar relate to Employee Benefits Total Absence Management – Washington Paid Sick Leave Wellness – EEOC rules We are fortunate to have deep bench strength with a variety of subject matter experts to allow us to cover a broad range of topics.
- The legislation,, includes a tax increase on hospitals and new 1.5% premium tax on health insurance plans. Gov. Kate Brown supports the bill, and said that passing this bill was among her three top priorities for lawmakers to approve before they went home in July. Opponents of the tax gathered enough signatures to put this new tax to a vote Oregonians passed the tax in January 2018
- The legislation,, includes a tax increase on hospitals and new 1.5% premium tax on health insurance plans. Gov. Kate Brown supports the bill, and said that passing this bill was among her three top priorities for lawmakers to approve before they went home in July. Opponents of the tax gathered enough signatures to put this new tax to a vote Oregonians passed the tax in January 2018
- The legislation,, includes a tax increase on hospitals and new 1.5% premium tax on health insurance plans. Gov. Kate Brown supports the bill, and said that passing this bill was among her three top priorities for lawmakers to approve before they went home in July. Opponents of the tax gathered enough signatures to put this new tax to a vote Oregonians passed the tax in January 2018