Uncategorized

IRS Lets Employers Give Workers a Break on FSA Contributions, Health Plan Rules

New guidance from the Internal Revenue Service allows employers to temporarily give their employees extra benefits leeway in making changes to their flexible spending accounts (FSAs) and health savings accounts (HSAs).

The guidance, in response to the COVID-19 pandemic, also allows employees to make changes to their health plans outside of the traditional open enrollment period.

The COVID relief bill signed into law at the end of 2020 changed the tax law. The law ordinarily requires employees to make irrevocable plan choices before the first day of the plan year; later changes are normally permitted only under certain circumstances, such as a change in employee status.

However, 2020 was an abnormal year. For example, stay-at-home orders left employees with unused money in their dependent care FSAs because they unexpectedly did not have to pay for child daycare.

The temporary changes

Recognizing the current extraordinary situation, the new guidance makes several temporary changes:

  • Employers can permit employees to carry over unused funds from their 2020 FSAs to 2021, and from 2021 to 2022. Ordinarily, these accounts have a “use it or lose it” rule under which the employee forfeits unused funds at the end of the year.
    If an employee contributed $5,000 to a dependent care FSA in 2020 but used only $3,000 because he or she worked from home, they can now carry the remaining $2,000 forward for use in 2021.
  • Alternatively, employers can extend the grace period for employees to spend unused FSA funds. Normally, employees have two and a half months from the end of the plan year to spend the money on qualifying expenses. The temporary rules permit employers to give them up to 12 months to do it.
  • Employers can allow certain employees to use dependent care FSA funds for care of children up to age 14. The normal cut-off age is 13.
  • Employers may allow employees to change their future contributions to 2021 FSAs mid-year, something that is ordinarily prohibited.
  • Employers may also permit employees to make mid-year health plan changes. Employees who did not enroll in the employer’s health plan during open enrollment will be able to do so.
    Employees can change available plans, or they can drop coverage entirely if they can show that they have replacement coverage such as through a spouse’s employer.
  • If an employee changes from a high-deductible health plan to one with copayments or lower deductibles (or vice versa), employers can also permit them to switch mid-year between contributing to an HSA or an FSA. By law, an HSA must be coupled with an HDHP.
  • Lastly, they can allow employees who stop contributing to a health care FSA mid-year to receive reimbursements through the end of the plan year.

It is important to know that:

  • The law does not require employers to make these changes.
  • The changes expire for plan years starting in 2022 and later.

The pandemic has been difficult for employers and employees alike. These temporary changes will make it a little easier for both to cope.

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Uncategorized

The Top Five Health Conditions Driving Insurance Costs

A new study has identified the top five health conditions that are driving the overall cost of group health plan outlays, and without which spending would actually be falling.

The report is enlightening, and employers can use the findings to offer programs aimed at education and prevention to help control their employees’ health care costs and cut into health insurance premiums paid by both employers and workers.

Inspecting its study data for trends, the Health Action Council (HAC) determined that 63% of its covered lives had at least one of five conditions that were driving health care costs. Most of these top five conditions are preventable or treatable with lifestyle modifications that employers can encourage. 

Here’s a look at the five conditions and the burden they put on your employees and your company:

Asthma

Average costs paid per member of the HAC for asthma treatment are increasing on average 6.4% a year. This is one of the most prevalent health conditions in the country. Three important stats:

  • The incidence of asthma was 31% higher among women than men.
  • The incidence of asthma among African American covered lives was 20% more prevalent than among other races.
  • The average age of HAC members with asthma was 31.9, two years younger than the overall membership average age of 33.9.

Diabetes

Average costs paid per member of the HAC for diabetic treatment are also increasing 6.4% a year. Three important stats:

  • Diabetes was 20% more common in men than women among the HAC’s enrollees.
  • The average age of HAC plan enrollees with diabetes was 52.
  • Although Asian covered lives amounted to only 3% of the HAC enrollees, they had the highest incidence of diabetes of all racial groups.

Hypertension

Average costs paid per member of the HAC for hypertension treatment are increasing 6.3% a year. Three important stats:

  • Hypertension was 23% more common in men than women.
  • The average age among HAC enrollees with hypertension was 53.1.
  • The risk of African Americans developing hypertension was 63% more than for other races.

Back disorders

Average costs paid per member of the HAC for back treatment are increasing 3.4% a year. Three important stats:

  • Back disorders were 27% more common in women than men.
  • The average age among HAC enrollees with back disorders was 43.3.
  • Caucasian HAC members had 14% higher back disorder prevalence than other races.

Mental health, substance abuse

Average costs paid per member of the HAC for mental health and substance abuse treatment are increasing 2.7% a year. Three important stats:

  • Mental health and substance abuse problems were 39% more common in women than men.
  • The average age among HAC enrollees with mental health and substance abuse issues was 32.8.
  • Caucasian HAC members had 20% higher mental health and substance abuse issues than other races.

The takeaway

To help workers with these conditions, the report recommends:

  • Creating and implementing simple education and targeted wellness programs to address common conditions among your employees.
  • Instituting an exercise, stretch or meditation program at the beginning of a work shift to improve safety and decrease injuries. These types of practices are preventative and may decrease the severity of an injury if one occurs.
  • Evaluating benefit plan design for opportunities to implement continuum-of-care protocols. For example, employers can make chiropractic care or physical therapy mandatory for back disorders before moving to more aggressive treatments.
  • Covering medications for specific common chronic conditions as preventative care. Another option is to promote the use of patient assistance programs for medicines that may be excluded in your plan’s drug formulary.
  • Promoting virtual care for specific conditions; for example, mental health support if you have staff in rural areas.
  • Working with your health insurer or medical expert(s) to identify opportunities for provider outreach and education to your workers.
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Uncategorized

CMS Approves Medicare Coverage of ‘Breakthrough’ Medical Devices

The Centers for Medicare and Medicaid Services has issued new rules that require Medicare to cover medical devices that the Food and Drug Administration designates as “breakthrough” technology. 

The rule paves the way for giving Medicare recipients access to the latest technologies four years after they receive market approval by the FDA. The move should greatly speed up the time by which these new devices are covered by Medicare, the approval process of which can be extremely slow.

Under the final rule, the CMS will use the data for these devices during the four years after the FDA approves them, to evaluate them based on clinical and real-world experiences. If the data shows they are effective, the CMS could move to approve them for coverage under Medicare. 

The CMS said the rule was necessary because the current process hinders innovative technologies from getting to Medicare beneficiaries. Companies that make the breakthrough devices currently have to receive approval from the FDA and then receive approval for Medicare coverage, which costs them both time and funds.

Examples of breakthrough devices that were approved in 2020 include:

  • Innovative stents
  • Heart valve replacements
  • Advanced lab tests
  • Automatic defibrillator machines.

To further reduce the time it takes for Medicare to approve a device after FDA approval, the CMS has created a special “breakthrough” approval timeline that the FDA can use to approve innovative devices and potentially life-saving equipment.

Along with the expedited pathway to FDA approval, Medicare may automatically cover FDA-approved products for up to four years. After four years or the given timeframe for coverage, the CMS can reassess whether it will continue covering the device based on patient outcomes.

Qualifying requirements

Covered devices would have to fit Medicare statutory definitions of “reasonable and necessary” for treating patients. To that end, the final rule refines these definitions. Among the requirements, devices would have to be considered:

  • Safe and effective.
  • Not experimental or investigational.
  • Appropriate for Medicare patients, including the duration and frequency that is considered appropriate and whether it is covered by commercial insurers.

The new rule aims to nationalize what some state Medicare systems are already doing and avoid the possibility that a revolutionary new product may receive Medicare coverage in one state, but not another.

Making coverage of breakthrough products national also prevents the product manufacturers from having to approach individual Medicare administrative contractors for local coverage determinations, the CMS said in a press release.

The rule takes effect March 15 and is retroactive for two years before the effective date.

"Medicare
Uncategorized

Medicare Advantage, Part D Plans Get COVID-19 Leeway

The Centers for Medicare and Medicaid Services has issued new guidance regarding how Medicare Advantage and Part D plans can respond to enrollees affected by the coronavirus outbreak.

Under the guidance, the plans are authorized, but not required to waive out-of-pocket costs for testing, treatment and other services related to the coronavirus.

The rules come on the heels of many of the country’s largest insurance companies announcing that they would be treating at least COVID-19 testing as covered benefits and would waive cost-sharing for tests.

The CMS made the announcement in light of the fact that COVID-19, which is caused by the coronavirus, has the most severe effects on the elderly population, as well as people with pre-existing health conditions like heart disease, cancer, diabetes and compromised immune systems. 

“Medicare beneficiaries are at the greatest risk of serious illness due to COVID-19 and CMS will continue doing everything in our power to protect them,” CMS Administrator Seema Verma said in a prepared statement. She added that the new guidance was aimed removing “barriers that could prevent or delay beneficiaries from receiving care.”

In the new COVID-19 guidance Medicare Advantage and Part D plans can:

  • Waive cost-sharing for testing.
  • Waive treatment cost-sharing, including primary care, emergency department, and telehealth services.
  • Eliminate prior authorizations for treatment.
  • Eliminate prescription refill restrictions.
  • Decrease limitations around home or mail prescription delivery.
  • Increase patient access to telehealth care.

These waivers are aimed at breaking down barriers to accessing care and allow plans to work with pharmacies and providers to treat patients.

Medicare Advantage rule changes

Under the new guidance, if a state of emergency is declared in your state, Medicare Advantage insurers are required to:

  • Cover Medicare Parts A and B services and supplemental Part C plan benefits furnished at non-contracted facilities, as long as they have participation agreements with Medicare.
  • Provide the same cost-sharing for enrollees at non-plan facilities as if the service or benefit had been furnished at a plan-contracted facility.
  • Make changes that benefit the enrollee effective immediately without the typical 30-day notification requirement (such as changes like reductions in cost-sharing and waiving prior authorizations).

The CMS said it would continue toexercise its enforcement discretion regarding the administration of Medicare Advantage plans’ benefit packages in light of the new emergency guidance.

Part D changes

Under the new rules:

  • Part D insurers may relax their “refill-too-soon” rules if circumstances are reasonably expected to result in a disruption in access to drugs. The rules may vary, as long as they provide access to Part D drugs at the point of sale. Part D sponsors may also allow an affected enrollee to obtain the maximum extended day supply available under their plan, if requested and available.
  • Part D insurers must ensure enrollees have adequate access to covered Part D drugs if they have to get their prescription filled at an out-of-network pharmacy in cases when those enrollees cannot reasonably be expected to obtain covered Part D drugs at a network pharmacy.
    Plan cost-sharing levels would still apply and enrollees could be responsible for additional charges (i.e., the out-of-network pharmacy’s usual and customary charge), if any, that exceed the plan allowance.
  • If enrollees are prohibited by a mandatory quarantine from going to a pharmacy to pick up their medications, Part D insurers can relax any plan-imposed rules that may discourage mail or home delivery, for retail pharmacies that choose to offer these delivery services in these instances.
  • Part D insurers may choose to waive prior authorization requirements at any time that they otherwise would apply to Part D drugs used to treat or prevent COVID-19, if or when such drugs are identified. Any such waiver must be uniformly provided to similarly situated enrollees who are affected by the disaster or emergency.

The takeaway

With these new rules and guidelines in place, if you are a Medicare recipient, this news should give you comfort as it should mean reduced costs and access to care and medicine as the outbreak continues.

If you are concerned about coverage, you can contact your Medicare Advantage plan to confirm that it has made the necessary changes to ease the burden on policyholders during the coronavirus crisis.

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Industry News

Generic Drug Makers Sued over Pricing Practices

One of the country’s largest health insurers has sued a number of pharmaceutical companies, accusing them of running a price-fixing cartel of common generic drugs.

Humana Inc. has accused the companies of colluding on the prices of generics to the detriment of health insurers that have to pay for these drugs. Humana said in its lawsuit that this collusion prevented fair competition among insurers that could have reduced the cost of many of these drugs.

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Healthcare, Industry News

The ‘Cadillac Tax’ May Finally Be Repealed

The much-maligned “Cadillac tax,” which was supposed to be implemented as a tax on high-value group health plans with premiums above a certain level, may finally be seeing the end of the road.

Already the implementation of the tax, which was created by the passage of the Affordable Care Act, has been postponed twice. It was originally supposed to take effect in 2018 under the ACA. The tax was delayed two years by Congress in 2016, pushing implementation ahead to 2020. It was delayed again in 2018 and is currently scheduled to take effect in 2022.

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Finance, Healthcare

Small Employers Can Reimburse for Medicare Part B, D Premiums

As the workforce ages and many employers want to keep on baby-boomer staff who have the experience and institutional knowledge that is irreplaceable, one issue that always comes up is how to handle health insurance.

Once your older workers reach the age of eligibility for Medicare, under current law you can help them pay for Part B and D premiums with a Medicare Premium Reimbursement Arrangement. These types of arrangements became legal after legislation was signed into law in 2013 to help employers provide benefits to their Medicare-eligible staff.

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