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Measure Would Cap Insured Out-of-Pocket Cost of Insulin at $35

by Inoventive Solutions
April 6, 2022

The U.S. House of Representatives has passed legislation that would cap the out-of-pocket cost of insulin at $35 a month for people with group or private health insurance.

While the measure still has to face a vote in the Senate, it has broad backing after the cost of insulin has skyrocketed in recent years. People who used to pay less than $100 a month for the vital medication are sometimes paying more than $1,000, depending on their health insurance coverage.

More than 37 million Americans have diabetes, and this legislation could be a game-changer for the estimated 7 million who have to take insulin to control their condition.

In the past decade, the cost of insulin has tripled in the United States, with average out-of-pocket costs rising to about $666 a month. But some people need specific brands and can pay more than $1,000 a month for their brand.

For example, David Tridgell, a Minneapolis endocrinologist, wrote an op-ed in The Washington Post citing the costs typical diabetics face:

  • Patients with Type 1 diabetes tend to use two or three vials of insulin per month. At the current cost of one vial of Humalog 50/50, these patients would spend $780 to $1,170 on their insulin every month.
  • Type 2 diabetes patients sometimes need six or more vials a month, which would run up the costs to $2,341 or more every month.

It can be especially costly for individuals enrolled in high-deductible health plans, in which enrollees have to pay the list price for their insulin until their deductible is met. This could mean thousands of dollars out of pocket before the insurer will cover the drug. Because of the soaring costs, many people report reducing dosages or rationing to make their insulin last longer.

Diabetes can lead to other serious health complications, including kidney failure, heart disease and loss of vision.

How it would work

HR 6833 would bar private health insurers, health plans and self-insured employers from applying a deductible on insulin and require that diabetics pay no more than $35 or the amount equal to 25% of the negotiated price of the selected insulin product, whichever is lower.

For no more than $35 a month, the Affordable Insulin Now Act would require private group or individual plans to cover both vial and pen dosage forms and any of the following insulin types:

  • Rapid-acting,
  • Short-acting,
  • Intermediate-acting, and
  • Long-acting.

Medicare Part D plans, Medicare stand-alone drug plans and Medicare Advantage drug plans would be required to charge no more than $35 for whichever insulin products they cover in 2023 and 2024, and for all insulin products beginning in 2025.

HR 6833 passed on a vote of 232 to 193, with 12 Republican representatives voting with the Democrats. The measure has been sent to the Senate.  If it passes the Senate and is signed into law, it will take effect in 2023.

We’ll keep you posted if this bill lands on President Biden’s desk and he signs it.

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Flexible Benefit Plans Give Employees More Options

by Inoventive Solutions
March 18, 2022

One way you can give your staff more choice in the employee benefits they receive is to offer them a cafeteria plan, which allows them to put together a benefits package that works best for them.

Employers fund these flexible benefit plans with funds that are deducted from their employees’ salaries on a pre-tax basis. Since the salary reductions are not received by the employee, they are not considered wages for income tax purposes.

Cafeteria plans are particularly good for participants who have regular expenses related to medical issues and childcare.

The worker can choose from a menu of options into which they want to funnel the funds, and how they want those funds allocated. Options can include:

  • Health insurance,
  • Voluntary benefits premiums (like vision and dental),
  • Life insurance,
  • 401(k), and
  • Flexible spending account.

Besides the fact that your employees use money that hasn’t been taxed to pay for these benefits, the payroll deductions for them also reduce their taxable income while raising take-home pay.

A cafeteria plan is especially attractive because it lets them choose which benefits they want. This is great since one size does not fit all in the world of employee benefits.

Set-up and tax implications

Cafeteria plans are also called Section 125 plans because they were created by Section 125 of the IRS Code.

When a plan is created, the benefits are available to employees, their spouses, and their dependents. Depending on the circumstances and details of the plan, Section 125 benefits may also extend to former employees, but the plan cannot exist primarily for them.

Section 125 plans offer a number of tax-saving benefits for employers. For each participant in the plan, employers save on the Federal Insurance Contributions Act (FICA) tax, the Federal Unemployment Tax Act (FUTA) tax, the State Unemployment Tax Act (SUTA) tax, and workers’ compensation insurance premiums.

Combined with the other tax savings, a Section 125 plan usually funds itself because the cost to open the plan is low.

Also, it’s estimated that participating employees can save 20% to 40% of every dollar put into the plan. The employee chooses how much they want to put into the plan each year and this is deducted from their paycheck automatically for each payroll period.

Remember: Flexible benefit plans are not without their drawbacks. But if you want to attract and retain key personnel with competitive benefit packages while keeping your own costs low, they can be an attractive alternative to standard benefit plans.

Call us for more information on how you can set up a flexible benefit plan for your staff.

There are several types of flexible benefit plans, including cafeteria plans and flexible spending accounts.

Flexible spending accounts

An FSA lets your employees pay for medical-related expenses and dependent care that may not be covered by their health plan. They can later use these funds to pay for an array of expenses such as:

  • Out-of-pocket medical costs,
  • Acupuncture, chiropractic services and the like,
  • Medical equipment,
  • Day-care provider fees,
  • Elder care.

Also, employers can allow the employee to carry over a portion of the funds in an FSA to the first few months of the next year. The maximum permitted carryover amount is $550.

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Digital Health Benefit Tools Can Help Your Employees Save Money, Stay Healthy

by Inoventive Solutions
March 10, 2022

It’s no secret that most employees do not fully understand all of their health insurance benefits, which can lead to worse health outcomes and them spending more money than they need to for some medical procedures.

A recent survey of 226 executives by Harvard Business Review Analytic Services concluded that employees and employers could enjoy better outcomes if it were easier for employees to find, understand and use the benefits available to them.

One of the biggest roadblocks to making that possible, the survey indicates, is the difficulty workers have in navigating their benefits programs.

Fortunately, a number of health technology companies have come to the fore to help employees see better health outcomes, shop around for medical services, educate themselves about their health and disease management, and choose the health plan that is best for them.

These tools can help employees make informed health care decisions, while their employer can save money. The tools can help them choose proper care that meets their needs and is within their budget. Some of the new tools on the market include:

Quizzify — This tool gamifies learning about health care through humorous, trivia-style quizzes, reviewed by doctors at Harvard Medical School. The system can help employees build knowledge about diagnostics, medical procedures, dental care, how to shop around for health services, and more.

The creators of Quizzify said they want to address the problem of Americans making far too few primary care visits, while they also receive too much health care that is unnecessary. All of that costs employees because:

  • Missing regular doctor’s appointments and preventative services can result in health emergencies later, and
  • Overtreatment and unnecessary treatments can lead to worse health outcomes and higher out-of-pocket costs.

Employees who use the tool rave about it, particularly how it helps them negotiate medical costs and provides them with advance knowledge that can help them save thousands of dollars in health care expenses.

Jellyvision’s Alex platform — This tool gives employees advice about accessing their health benefits and using their health savings accounts (HSAs) more effectively. It’s mainly geared towards large companies, but there are similar products being developed for the small and mid-sized employer market.

Some of Alex’s features include:

  • Personalized guidance during enrollment and ongoing engagement during the year, as it sends out reminders and tips about an employee’s health insurance and health maintenance.
  • A focus on reducing the cost to employers of employee confusion.
  • A built-in HSA that actively promotes investing in the account throughout the year.
  • Chronic disease management tools.
  • Benefits videos.
  • Engagement tools that help employers and staff improve their health literacy and save money.

League— This online tool and app is designed to help your employees choose which health plans are best for them, and to identify health risks and help them access preventative care. The platform also includes a mobile-first communications channel for employers.

League provides employees with a personalized health profile, as well as a digital wallet that holds employee assistance program information and other programs that you may be providing, such as HSAs.

The main features for employees include:

  • Digital wallet — This also holds HSA funds and allows your employees to pay for health and wellness services, review benefit coverage, and keep tabs on their HSA balance.
  • Marketplace — League can help your staff book appointments with over 1,000 local, vetted health professionals and access discounts on services and products.
  • Health concierge — They can talk to a registered nurse directly for instant advice.
  • Claims reimbursement — They can submit claims digitally to get reimbursed for services.
  • Tailored content — They can receive AI and data-driven recommendations and nudges regarding healthy behavior or recommendations for health screenings or procedures.

The takeaway

Online or digital tools alone won’t work for every worker. Some need a more human-centered approach to help them understand their benefits, how to get the most out of them and improve their health.

But tools like the above can go a long way towards educating them about their health and health benefits.

While many of your workers will easily adopt electronic price transparency tools, others will need time to get used to them. It’s important that you provide training for any benefit tool you roll out, and also leave the door open for employees to access one-on-one advice so they can make the right choices.

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Your Staff Are Susceptible to Medical Identity Theft

by Inoventive Solutions
March 3, 2022

Medical-related identity theft accounted for 43% of all identity theft in the United States in 2020, according to the Identity Theft Resource Center.

And the majority of documents criminals steal are the same ones your employees receive from their group health insurers. If an employee becomes a victim of medical identity theft it can take them years to undo the damage, particularly if their identity is stolen in the process.

That’s why it’s important for any employer with a group health plan to warn its staff about the importance of safeguarding their medical and health insurance information, including plan information and health insurance cards.

Medical identity theft is when someone uses another person’s personal information — like their name, Social Security number, health insurance account number or Medicare number — to see a doctor, get prescription drugs, buy medical devices, submit claims with the victim’s insurance provider, or get other medical care.

If the thief’s health information is mixed with the victim’s, it could affect the medical care the victim is able to receive, or the health insurance benefits they are able to use. It could also hurt their credit.

People often learn they are victims of such fraud when they get a medical bill or a notice from their health insurance company about what will be covered for a procedure they never went in for.

Alert your staff

The most important advice for your staff is that they should take good care of their health insurance card. This includes:

  • Making sure they get their health insurance card back every time they use it.
  • Cutting up their old card whenever they receive a new one for a new policy year or other reason. The new one should be put in their wallet.
  • Reporting a loss immediately to their insurance company if the card is lost or stolen. They can issue a new one and void the old one, so that nobody can use it for doctor’s visits or to purchase medication.

Your employees should also keep their medical records, health insurance records and any other documents with medical information in a safe place. This includes:

  • Health insurance enrollment forms
  • Prescriptions
  • Prescription bottles
  • Doctor and medical provider billing statements
  • Explanation of Benefits statements from their health carrier.

Any of the above documents should be shredded when it’s time to replace or discard them.

Also, since thieves will sometimes steal mail from mailboxes, you can recommend that your workers sign up for paperless communications from their insurer.

How to identify fraud

Safeguarding the above information can go a long way towards avoiding medical identity theft, but it can still happen. Your employees should know the warning signs. The Federal Trade Commission recommends being on the lookout for the following:

  • You get a bill from your doctor for services you didn’t get.
  • You notice errors in your Explanation of Benefits statement, like services you didn’t get or prescription medications you don’t take.
  • You get a call from a debt collector about a medical debt you don’t owe.
  • You review your credit report and see medical debt-collection notices that you don’t recognize.
  • You get a notice from your health insurance company saying you reached your benefit limit.
  • You are denied insurance coverage because your medical records show a pre-existing condition you don’t have.

Action steps

If you think someone is using your personal information to see a doctor, get prescription drugs, buy medical devices, submit claims with your insurance provider, or get other medical care, taking the steps below will help you limit the damage:

  • Thoroughly review your medical records.
  • Contact your insurance company and each provider and pharmacy where a thief may have used your information, and ask for copies of these medical records. You may have to submit records requests and pay fees to get copies.
  • Review the records and look for errors, like visits or services you didn’t receive.
  • Report the errors to each provider, pharmacy and your insurance carrier, with backup documentation that shows the incorrect information and an explanation of why it’s wrong — and ask that they remove the visits and services from your records.

Under federal law, health insurers have 30 days to respond to your requests.

For good measure, your employees should also review their credit reports.

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Small-Group Market Remains Stable under the ACA

by Inoventive Solutions
February 16, 2022

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

by Inoventive Solutions
February 9, 2022

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

by Inoventive Solutions
February 3, 2022

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

by Inoventive Solutions
January 27, 2022

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

by Inoventive Solutions
January 12, 2022

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

by Inoventive Solutions
January 5, 2022

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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