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Small-Group Market Remains Stable under the ACA

A new report has concluded that the Affordable Care Act, which took full effect in 2013, did not result in a significant change in the number of employers offering health insurance, although the rate at which small employers offered coverage declined slightly by 2.6 percentage points between 2013 and 2020.

The study by the Urban Institute found that the small-group health insurance market remained relatively stable during those seven years, a period marked by employers continuing to shift more of the premium burden to their employees.

As of 2020, about half of small employers (companies with fewer than 50 employees) offered health insurance to their staff, while 99% of large companies offered health plans.

Employers with fewer than 50 workers are not subject to the ACA’s employer mandate, which requires firms with 50 or more employees to provide affordable health insurance that covers a slate of benefits mandated by the landmark law.

The study found that smaller employers are still less likely to offer health coverage than their larger peers. The share of employers of workers with group health coverage in 2020 was:

  • 81% for companies with 25-99 employees.
  • 56% for companies with 10-24 employees.
  • 30% for companies with fewer than 10 employees.

The study authors wrote that whether small firms offer health insurance coverage varies substantially. “Though many small firms such as restaurants and retail stores primarily employ low-wage and part-time workers, other small firms, such as professional services firms, primarily employ full-time and high-wage workers. Thus, average trends for all small firms may hide differences among them,” they said.

The pandemic effect

Notably, the COVID-19 pandemic had an effect on the number of small employers that offer group health insurance to their staff. Group health plan enrollment among workers in small firms dropped to 7.9 million in 2020, compared to an average of 9.2 million in the prior seven years.

The study authors say the drop was likely due to decreases in employment in small companies at the start of the pandemic.

Meanwhile, the average annual inflation rate for group health premiums remained steady between 2013 and 2020, with average increases of 3.2% in the small-group market and 3.7% in the medium- and large-group markets.

Despite that, most employers continued shifting the premium costs to their employees:

  • Workers in firms with 1,000 or more employees contributed on average 26% in 2013 for family plans, and the same in 2020.
  • Workers in firms with between 100 and 999 employees contributed on average 30.5% in 2014 and 32% in 2020.
  • Workers in companies with fewer than 50 employees paid 29% of premium costs in 2013 for family plans, a rate that had risen to 35% in 2020.
  • Employees working in firms with fewer than 10 employees have maintained the lowest contribution rates across all firm sizes for both single and family premiums over the past two decades (the report made this assertion, but provided no data).

The present

Despite early concerns that the ACA would result in many small employers dumping coverage for their workers, the changes were muted at best.

In fact, offer rates among small employers has remained steady in recent years, except for the blip in 2020. And during the 10 years prior to the enactment of the ACA, the number of small employers offering coverage had been dwindling rapidly.

Small employers have had to continue offering health benefits to remain competitive in the job market, and that shows no signs of abating now.

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How HRAs Can Help Your Employees Pay for Medical Expenses

As rising health insurance premiums and out-of-pocket costs for health care are burdening workers, more employers are looking for ways to help their staff put aside money for those expenses.

While health savings accounts have grown in popularity, you can only offer them to employees who are enrolled in high-deductible health plans. Fortunately, there is another option: a health reimbursement arrangement (HRA).

Employers fund these accounts, which reimburse your staff for qualified medical expenses and, in some cases, insurance premiums.

You can claim a tax deduction for the funds you transfer to your employees’ HRAs, and the funds they withdraw from the accounts to reimburse for medical-related expenses are generally tax-free.

Unlike HSAs and flexible spending accounts, though, HRAs are solely funded by employers. Also, unlike HSAs, they are not portable if an employee moves to a new employer.

In addition, federal regulations dictate what types of health care expenses HRAs can reimburse, and those rules vary depending on the type of HRA you offer.

Depending on the type of HRA, funds may be used to reimburse:

  • Health insurance premiums,
  • Vision and dental insurance premiums,
  • Coinsurance, copays and out-of-pocket medical outlays, and
  • Qualified medical expenses.

How HRAs work

You decide how much you want to fund your employees’ HRAs. You can fund them in one lump sum. Under federal regulations, you must fund all like employees’ HRAs with the same amount. So, if you have 12 sales reps, each one would have to get an HRA funded with the same amount, but managers and supervisors could receive a different sum.

Employees can only withdraw funds from their account to reimburse them for a legitimate expense they have already paid for. Another option is to provide them with an HRA debit card, which they can use to pay for qualified medical expenses.

Once they have depleted the funds in their HRA for the year, they have to pay for medical expenses out of pocket.

Any HRA money that is unspent by year-end may be rolled over to the following year, although an employer may set a maximum rollover limit that can be carried over from one year to the next.

Expenses HRAs can’t cover:

  • Maternity clothes,
  • Gym membership fees,
  • Marriage counseling, and
  • Childcare.

Rules differ from one HRA to another and there are a number of different HRAs:

Integrated HRA — This type of HRA requires employees to also be covered by a group major medical plan. It generally reimburses out-of-pocket medical expenses.

Dental/vision HRA — This type of HRA limits reimbursements to only dental and/or vision expenses.

Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)  — This type of HRA is only available to employers that have fewer than 50 employees. The maximum annual reimbursement amount is $5,450 for self-only employees ($454.16 per month) and $11,050 for employees with a family ($920.83 per month).

QSEHRAs are typically used to (legally) allow employers to reimburse their workers for individual health insurance premiums, in addition to other out-of-pocket expenses being reimbursed.

Individual Coverage HRA (ICHRA) — This type of HRA is available to employers of all sizes, and employees must be covered by an individual health insurance plan to be eligible.

The primary intent of the ICHRA is to allow for the reimbursement of individual health insurance premiums, but other out-of-pocket expenses, such as copays and deductibles, can also be reimbursed. 

ICHRAs have only been around since January 2020 thanks to a law that allowed HRA funds to be used to pay for individual health insurance premiums.

Employees can use these HRAs to buy their own comprehensive individual health insurance with pretax dollars either on or off the Affordable Care Act’s health insurance marketplace.

Excepted Benefit HRA (EBHRA) — This HRA will allow for the reimbursement of COBRA premiums, short-term medical plan premiums, dental and vision expenses. The annual reimbursement limit for an EBHRA is $1,800 (adjusted for inflation).

The takeaway

There are a variety of HRAs that let you help your employees pay for their health care expenses. These valuable savings vehicles give both your organization and your staff a tax break on the funds, and they are another tool in helping you retain and attract talent.

In fact, you can even pair an HRA with an HSA, as long as the HRA is HSA-qualified.  

In these instances, you would need to offer a “limited-purpose HRA” that only reimburses employees for expenses that are exempt from the HSA deductible requirement.

These expenses are:

  • Health insurance premiums
  • Long-term care premiums
  • Dental expenses
  • Vision expenses.
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Health Insurance Considerations for Workers Who Move Out of State

One fallout from the COVID-19 pandemic has been an increase in the number of Americans who are working from home permanently.

With so many people being freed from the yokes of the office, many have chosen to move to other states for a variety of lifestyle or cost reasons. But while these arrangements can be a boon for workers, they can make it difficult when it comes to your workers’ group health insurance.

One of the main stumbling blocks is that most group plans are local or regional at best, as they contract with providers and hospitals in the area where an employer is located.

For employers that suddenly have staff now working far afield from their headquarters, securing health insurance coverage in other states can create headaches, particularly if they have contracted with a local or regional insurer.

And to make matters worse, some employees who are working remotely don’t bother telling their employers they are moving, which can render their coverage obsolete if they locate to a place out of their insurance policy’s coverage area.

Remote employees who fail to inform their employers when they relocate could suddenly find themselves in an area with no access to their insurer’s preferred network and they could have their claims denied if they seek out medical care. To avoid this issue, consider instituting a policy that they have to inform you of any move to another state.

What you can do

If all of your staff are working in a single location, city or state, there are usually plenty of options for group health insurance. But if you now have people working out of state, you have choices to make for how to get them covered.

Many national insurance companies don’t have the same type of network in every state, and even among those that do, health care providers may not offer the most cost-efficient networks for out-of-state employees.

Some carriers offer national group health plans that are available to employees in most states. If you now find yourself with employees who are scattered around the country, a national plan helps you avoid having to comply with different state regulations and finding carriers with good networks in other states.

In these types of plans, all of the employees in your organization receive the same group benefits regardless of where they live and work, and they all have access to the same quality coverage.

But there are just a handful of carriers that offer this type of group coverage. Talk to us if you want to know more.

One option is to find local coverage for employees in specific locations, but if you don’t have many employees in that region, you may not be able to find preferable rates for their group coverage.

If that is too difficult, you can set up a taxable stipend that your employees could use to purchase their own health insurance. A stipend is a fixed amount of money paid to an employee in addition to their basic salary, designed to cover whatever extra costs the employer allows, such as health insurance, internet and other expenses.

The takeaway

As more U.S. companies have workforces spread across many states, health insurance needs to be on the top of the list of considerations.

The health insurance you choose will depend largely on your budget and coverage preferences, and what is available to your staff in the state they are working in.

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What You Need to Know About COVID Test Kit Rules for Group Health Plans

Starting Jan. 15, the nation’s health insurers have been required to cover the cost of up to eight at-home rapid COVID-19 tests per month for their health plan enrollees.

Insurers are taking different approaches to the mandate and, as an employer, you should communicate with your covered staff about this new benefit, how it works and other advice.

According to frequently asked questions posted by the Department of Labor, coverage for over-the-counter test kits must be covered by insurers without cost-sharing and without a doctor’s order or prescription. It laid out a series of rules insurers and health plans must follow. They:

  • May require enrollees to submit reimbursement claims for OTC COVID-19 tests (the agency, however, “strongly encourages” plans to reimburse pharmacies directly instead).
  • Must reimburse plan enrollees for tests they purchase outside of their preferred network up to $12 per test if they also offer coverage for OTC tests through a pharmacy network. Health plans are authorized to provide a more generous reimbursement from tests purchased through a non-preferred provider.
  • Can limit the number of OTC tests covered without cost-sharing, as long as they cover eight per month per enrollee with no cost-sharing. That means a family of three on a family plan can be reimbursed for up to 24 tests per month.
  • Cannot limit the number of covered tests if they are ordered by a doctor after a clinical assessment.
  • Can require enrollees to attest that OTC tests they are reimbursed for are for personal use and not for work, that they are not being reimbursed for the tests by other sources and that they won’t resell the tests.
  • Can require that enrollees provide receipts as proof of purchase.

Action items

Contact us or your group health insurer for guidance on how it will handle payment for OTC tests. It is important to:

  • Check that it has pharmacy and retailer networks in place where covered individuals can obtain the OTC tests.
  • Check if it has a direct-to-consumer shipping program for kits.
  • Check if it has systems in place to handle claims and for reimbursing either participants or participating pharmacies that have point-of-sale test kits available.
  • Ask the insurer whether it has any purchase or reimbursement limits if tests are purchased at a non-network pharmacy or retailer.

Once you have those details in hand, hold a meeting with your staff covering the following:

  • An explanation of the new benefit and how their insurer will reimburse or pay for the kits.
  • Go over the claims and reimbursement process if they pay out of pocket at a non-participating pharmacy.
  • Provide a list of network pharmacies and retailers that will offer point-of-sale test kits that the insurer pays for direct. Also provide information on any direct-to-consumer purchase options.
  • Tell them about any reimbursement limits if they purchase from non-preferred pharmacies, or other limits (like the eight tests per month limit).
  • Advise your staff to keep receipts for any at-home test kits they have purchased since Jan. 15. They should also save the boxes the test kits come in as some plans may require them as proof of purchase.
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Health Expenses a Major Source of Mental Health Issues for U.S. Workers

A new study has found that more than one in four U.S. workers say expensive medical bills are having a major impact on their mental health.

Mental health issues have come to the fore during the COVID-19 pandemic, spurring employers to expect their group health plans to do more for their workers in this area.

The report on the study by the health care consulting company Centivo urges employers to consider new ways to reduce the medical financial burden some of their employees may be experiencing.

Mental health is already on the radar of employers:

  • Large businesses reported that addressing their workers’ mental and emotional health would be a top priority over the next three to five years, according to a 2021 study by Mercer Consulting.
  • Nearly 40% of employers surveyed by the Kaiser Family Foundation in November 2021 said that they had made changes to their mental health and substance abuse benefits since the pandemic started.

The Centivo report found that:

  • S. workers are increasingly having difficulties in paying for health care, particularly due to high copays, deductibles and other health plan cost-sharing elements.
  • Health care affordability also correlates to sacrifices in care, including mental health care. Twenty percent of study participants who experienced major medical expenses said they skipped or delayed needed mental health care or counseling due to cost concerns.
  • Medical expenses are a significant cause of mental health and well-being issues for both individuals and families.

Stress drivers

The report states that the findings raise concerns about whether some employees can even afford to use their health plans. It stressed two main points:

High deductibles — The report found one of the main drivers of stress was high deductibles and other out-of-pocket costs.

It found that only 10% of those surveyed had a health plan with a zero deductible.

More troubling was that 40% of those with deductibles ranging from $1,000 to $3,999 did not have enough money saved to cover a major medical expense.

Savings trumps more features — The study found that group health plan enrollees’ top priority in their health plans is to save money, both on the front end in premiums as well as the back end in out-of-pocket costs.

Respondents said they would take saving money over expanded features, even if they had fewer choices in their health care. In fact, nearly three out of four respondents said they would trade off being able to see their current provider or specialist for a plan that is 10 to 30% less expensive than their current one.

The takeaway

One interesting finding in the study was the less that employees saved for health care, the more likely they were to report that a major medical expense had affected their mental health. Only those that reported more than $10,000 in savings reported low levels of mental health issues.

That highlights the need for employees to set aside funds for health care expenses through health savings accounts, flexible spending accounts and health reimbursement accounts. These are funded with deductions from the employees’ salaries before taxes are taken out.

Centivo’s chief medical officer, Dr. Wayne Jenkins, said that employers can help their workers reduce their overall medical outlays by working with their employee benefits brokers to:

  • Eliminate or reduce deductibles,
  • Engage with health insurers to provide simple and predictable copays, and
  • Make primary care visits free (which helps physicians diagnose serious ailments earlier, resulting in lower medical costs over time).

Also, businesses may consider “skinny plans,” which typically have fewer provider choices in exchange for lower premiums and out-of-pocket costs.

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IRS to Get Tough on ACA Reporting Form Mistakes

The time when the IRS offers relief from financial penalties to employers that make errors on their group health insurance reporting forms has come to an end.

Starting this year, the IRS will no longer offer protection against reporting error penalties when “applicable large employers” (ALEs) file their Forms 1094-C and 1095-C and the employer has made a good-faith effort to comply. The change starting with the 2021 tax reporting year means that employers can face steep penalties for mistakes on their forms.

IRS Code requires employers who are obligated under the Affordable Care Act to offer their employees health insurance benefits to also file these forms annually. But since employers were required to first start filing these forms in 2018, the IRS has been lenient against those that make good-faith errors on the forms.

Typically, when the IRS identifies instances when an employer may be liable for employer shared-responsibility penalties based on information provided on the forms, the agency will send the employer a Letter 226J. These letters will identify an employee who may have received health insurance from their employer but is also receiving premium tax credits from a policy on an exchange.

To date, the IRS has allowed ALEs to ask for corrections on their filed forms, or to reduce the penalty without imposing reporting error penalties as well. That comes to an end this year when employers file their 2021 forms.

Issues to bear in mind

Here are a few issues businesses need to be aware of:

  • Starting this year, the IRS will no longer offer good-faith relief from penalties for incomplete or incorrect forms.
  • For the 2021 reporting year, these penalties are $280 per form that must be furnished to employees and $280 per form filed with the IRS.
  • According to reports, the IRS is especially focused on employers who may not be satisfying ACA requirements that all health plans they offer their staff must be “affordable,” which means costing no more than 9.83% of the employee’s household income for the 2021 tax year
  • Thanks to the American Rescue Plan Act, more Americans qualified for premium tax credits on ACA exchanges and the act drastically increased those tax credits to the point where some people were paying $1 a month for coverage. Employers could face reporting problems if any of their staff dropped their employer coverage and got coverage on an exchange.

Important dates

Jan. 31, 2022: Deadline for furnishing 1095-C forms to employees.

Feb. 28, 2022: Deadline to file paper 1094-C and 1095-C forms with the IRS (only for employers with fewer than 250 employees).

March 31, 2022: Deadline to file forms electronically with the IRS.

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Employers Curtail Health Cost-Shifting to Workers

One of the health insurance trends that went largely unnoticed in 2021 was that employers halted cost-shifting to their employees by reducing or holding steady workers’ deductibles and other cost-sharing.

That’s according to a new study by consulting firm Mercer, which points out that concerns about health care affordability for lower-wage workers, coupled with a difficult hiring environment and the need to attract and retain talent, has prompted many firms to not pass on cost-sharing in the form of higher deductibles and out-of-pocket maximums.

Additionally, despite average group health premiums growing 6.3% in 2021, employers did not increase employee’s share of premiums significantly.

The trend is the result of the ongoing COVID-19 pandemic and a hot labor market, in which most companies are struggling to find staff as well as keep current employees from seeking out new opportunities. Companies are also adding extra benefits for workers and focusing on the overall health of their staff, who are demanding improved access to mental health and substance abuse benefits, and more.

Mercer found that:

  • Among small employers (50-499 employees), the median deductible for individual coverage in a preferred provider organization dropped to $900 in 2021 from $1,000 the year prior.
  • Among large employers (500 or more workers), the median PPO deductible for individual coverage remained steady at $750.
  • Among large employers, the median individual deductible in high-deductible health plans dropped to $1,850 in 2021 from $2,000 in 2020.
  • Among small employers, the median individual deductible in HDHPs stayed steady at $2,800.
  • The average employee share of premiums for employees enrolled in an individual PPO plan rose just $7 to $167 in 2021, and $12 for family coverage ($590 to $602).

While PPOs are still the most popular type of group health plan in the country, the percentage of workers enrolled in HDHPs continues to grow, hitting 40% in 2021, up from 38% in 2020.

The other shoe

The pandemic forced a great deal of suffering on a large swath of Americans, creating a number of personal challenges to their mental and emotional health as well as help in dealing with substance abuse problems that also increased during the pandemic.

As a result, employers have been increasing access to mental health and substance abuse services, with 74% of large businesses rating improved access as important or very important in the Mercer survey. The number is even higher for employers with 20,000 or more workers, with 86% of them rating access to these services as the most important benefits issue for them.

“In today’s extremely tight labor market, generous health benefits can help tip the scales in attracting and retaining staff,” says Tracy Watts, national leader for U.S. Health Policy at Mercer. “Beyond that, in the wake of the pandemic many employers committed to help end health disparities, and ensuring care is affordable for their full workforce is an important part of that.”

Managing costs with no cost-shifting

Instead of cost-shifting, many employers are absorbing the higher premiums, which have averaged 6.3% in 2021, according to the study. Mercer found that 60% of employers aren’t making plan changes of any type in order to reduce cost increases.

Employers are instead looking at ways to optimize their health benefits with quality initiatives, increased use of virtual care and personalizing benefits.

Firms are also tapping into ways to control drug costs for their employees. This includes more closely evaluating their spending on expensive specialty drugs, such as biologics that are injected or infused. Employers are encouraging the use of biosimilars as lower-cost, clinically effective options.

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Pandemic Fallout: Employers Boost Mental Health, Substance Abuse Benefits

The COVID-19 pandemic has had profound effects on health insurance in the U.S., with many employers improving mental health and other benefits to help their workers during this trying period, according to a new report by the Kaiser Family Foundation.

Despite the disruptions caused by the pandemic, the proportion of employers that offer their staff health coverage has remained steady, while health insurance premiums and out-of-pocket expense increases have remained moderate, according to KFF’s “2021 Employer Health Benefits Survey.”

With the stress of the pandemic weighing on workers in all industries, as well as the effects on their families and society from lockdowns and other changes brought on by COVID-19, many Americans have been struggling with mental health as well as substance abuse.

Provisional data from the Centers for Disease Control’s National Center for Health Statistics indicate that there were an estimated 100,306 drug overdose deaths in the United States during the 12-month period ending in April 2021, an increase of 28.5% from the 78,056 deaths during the same period the year before.

Besides drugs, alcohol abuse has also skyrocketed during the pandemic, according to the CDC.

Another report by the CDC found that 40% of U.S. adults had reported struggling with mental health or substance abuse:

  • 31% reported symptoms of anxiety and/or depression.
  • 26% reported symptoms of trauma/stressor-related disorder.
  • 13% started or increased substance abuse.
  • 11% reported seriously considering suicide.

It’s no surprise then that since the pandemic started, 39% of employers surveyed said they’d boosted their benefits covering these issues.

Of those that made changes:

  • 31% increased the ways employees can access mental health services, such as telemedicine.
  • 58% of employers with 200 or more employees and 38% of those with 50 to 199 employees expanded online counseling services.
  • 16% started offering employee assistance programs or other new resources for mental health.
  • 6% expanded access to in-network mental health providers.
  • 4% reduced cost-sharing for such visits.
  • 3% increased coverage for out-of-network services.

How did employers act? For example, after the pandemic hit, Rhode Island-based Thundermist Health Center’s employee health plan reduced the copayments for behavioral health visits to zero from $30.

As to employees, they responded by taking advantage of the new and expanded services:

  • 38% of large companies (1,000 or more workers) said their workers had used more mental health services in 2021 than the year before.
  • 12% of companies with at least 50 employees said their workers had increased their use of mental health services.

What you can do

With so many people suffering from mental health and substance abuse issues that may have been exacerbated by or are a direct result of the pandemic, it’s certain that most employers have staff who are struggling.

Talk to us about what your current plan choices offer in terms of substance abuse and mental health counseling benefits. Many insurers, in response to rising demand, have been increasing access to these treatments.

If you do not have one, you may also consider an employee assistance program, which will provide a set amount of counseling appointments as well as substance abuse treatment to complement your health plan.

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Hospital Indemnity Insurance a Key Voluntary Benefit

Most employers offer major medical coverage to their full-time employees. But that still leaves workers and their families with significant exposure to financial hardship in the event of a serious medical emergency.

For example, even with insurance, treating a broken leg or undergoing emergency appendicitis surgery can mean thousands of dollars in out-of-pocket medical costs.

Meanwhile, most households can’t afford to cover a $1,000 emergency. Fortunately, employers can help by offering their workers voluntary hospital indemnity insurance that can provide peace of mind in case they have a serious medical episode.

Hospital indemnity insurance

This coverage offers a cash payment directly to the insured worker in the event of the hospitalization of themselves or a covered family member.

The worker can use this cash benefit for any purpose, including:

  • Deductibles
  • Copays
  • Coinsurance
  • Drugs
  • Transportation
  • Medical equipment, such as wheelchairs or walkers
  • Offset lost wages
  • Hiring home care assistance.

How coverage works

One of your employees calls in and says she had to take her daughter to the hospital the previous night with severe stomach pain.

The doctor diagnoses the girl with appendicitis, and schedules her for immediate surgery. She spends two days in the hospital. She’ll be fine. But your employee now has some significant medical bills.

The average cost of appendix-removal surgery is over $30,000. Your group medical plan will pay for most of it. But if you have an 80-20 plan, your worker is still responsible for her deductible (averaging over $1,600), plus 20% of that cost, or over $6,000.

That leaves your worker exposed to a total out-of-pocket cost of over $7,600.

If she takes a few days off work to care for her daughter at home while she recovers, the net cost is even greater.

Few people can cover that. When faced with medical bills like that, many of them go into debt, or skip needed medical care, which can lead to still greater costs down the road.

In fact, medical bills are a major contributing factor to personal bankruptcy ― even for people with health insurance.

Little or no cost to the employer

Hospital indemnity coverage is generally offered as part of a voluntary benefits package, and often at little or no cost to the employer.

Employees pay part or all of the premiums via payroll deduction. Coverage specifics vary, but plans are designed to be affordable for all kinds of workers.

Coordination with group health insurance

Many employers use hospital indemnity coverage to help close the gap between the worker’s needs and what an existing group medical plan will cover.

In many cases, the availability of a direct cash benefit in the event of a qualifying hospitalization or emergency room visit can coax employees to opt for a lower-cost high-deductible health plan reducing overall costs for the business, while giving the worker peace of mind that they can foot the bill in case of emergency.

We can help you customize your voluntary benefits package and coordinate it with your existing group medical offering.

Note: Hospital indemnity insurance is a supplemental insurance product. It does not constitute comprehensive health insurance and is not intended to replace a qualifying major medical insurance plan.

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2022 Health Insurance Outlook, Changes

As we enter 2022, there are a number of changes on the horizon that plan sponsors need to be aware of as they will affect group health plans as well as employees enrolled in those plans.

Some of the changes concern temporary rules that were implemented during the COVID-19 pandemic. In addition, new rulemaking is likely to be introduced in 2022 that will affect health plans, including non-discrimination rules for wellness plans and new rules governing what must be included on insurance plan ID cards.

Here’s a list of what to expect in 2022.

HDHP telehealth services — The CARES Act, signed into law in 2020 after the pandemic started, temporarily allowed high-deductible health plans to pay for telehealth services before an enrollee had met their deductible.

That comes to an end Dec. 31, 2021, and for plan years that start on or after Jan. 1, 2022, HDHPs must charge enrollees for telehealth services if they have not yet met their deductible.

Mid-year election changes — The Consolidated Appropriations Act of 2021 (CAA) and ensuing guidance from the IRS relaxed a number of rules that will come to an end for plans incepting on or after Jan. 1, 2022. These rules were all not mandatory and employers could choose whether to relax them or not.

Here are the rules that will sunset at the end of 2021:

  • Allowing employees who had declined group health insurance for the 2021 plan year to sign up for coverage.
  • Allowing employees who had enrolled in one health plan option under their group health plan to change to another plan (such as switching insurance carriers or opting for a silver plan instead of a bronze plan).
  • For health flexible spending accounts (FSAs), allowing participants to enroll mid-year, increase or decrease their annual contribution amount, or pull out of the plan altogether and stop contributing.
  • For plan years ending in 2020 and 2021, permitting employers to modify their FSAs to include a grace period of up to 12 months to spend unused funds from the prior policy year.
  • Allowing for a higher FSA carryover amount than the typical $500.

Any plans that allowed these changes would have to have been amended to reflect that, and for 2022 they’ll have to be amended to reflect reverting to the old rules that forbid such changes.

Affordability level falls — Under the Affordable Care Act, employers with 50 or more full-time or full-time equivalent workers are required to provide health coverage to at least 95% of their full-time employees. The ACA requires that the coverage is “affordable” for the worker, which is set as a percentage of their household income.

For 2022, the affordability level will be 9.61% of their household income, down from 9.83% in 2021.

Electronic filing threshold drops — Starting in 2022, employers with 100 or more workers will be required file their 2021 ACA-related tax forms with the IRS electronically, as a result of changes brough on by the Taxpayer First Act. That’s a change from the prior threshold of 250. This applies to forms 1094-C, 1095-C, 1094-B and 1094-B.

While the IRS has yet to release guidance for this change, it’s expected it will do so by the end of 2021.

More guidance coming

The CAA created a number of new requirements that affect health insurance and coverage. Look for various government agencies, chiefly the Centers for Medicare and Medicaid Services, to provide new guidance on:

Insurance plan identification cards — Part of the CAA requires health plans and issuers to include information about deductibles, out-of-pocket maximum limitations and contact information for assistance on any ID cards issued to enrollees on or after Jan. 1, 2022.

Continuity of care requirements — The CAA also requires insurers to offer anyone who is a “continuing care patient” of a provider or facility the option to elect to continue to receive care for up to 90 days from the provider or facility, even when there’s a change in that provider’s contract status with a health plan that could normally result in a loss of covered benefits.

If certain conditions apply, this transitional care would be provided as if the contractual relationship with the provider had not changed.

Wellness program incentives — The Equal Employment Opportunity Commission is expected to issue new regulations on what kind of incentives are permissible for employer-sponsored wellness programs. The main focus is on incentives and if they are discriminatory to some workers.

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