BIGN Health Savings

While federal lawmakers wrestle with the best way to fix the Affordable Care Act (Obamacare), its wide-ranging obligations remain in place. Employers with 50 or more full-time employees or equivalents must still provide ACA-compliant health coverage to employees who work at least 30 hours per week. They must also continue to track and report all employee hours to the IRS, along with other administrative requirements.

The individual market is in serious trouble as the rates are unable to keep up with the losses. Many of the young and healthy are not participating, which leaves a disproportionate share of the older, sicker individuals in the plans cascading toward an insurance death spiral. The U.S. Department of Health and Human Services predicts that in 2018, 40% of counties could be facing a market with only one insurance carrier. The administration recognizes the value of choice in the insurance market, and at this time having one carrier in any market is not seen as a viable choice. When providers have only one carrier to negotiate with it creates a virtual monopoly, and the administration recognizes that a monopoly in the market only yields higher costs to consumers.

In a recent series of informative letters, the IRS indicated that it won't waive individual and employer mandate penalties under the Affordable Care Act, despite President Trump's January 20 executive order directing agencies to reduce potential burdens imposed by the law.

According to the American Benefits Council, Congress may consider:

• Allowing employers to give workers pre-tax dollars in order to purchase coverage in the individual market, which is a significant step toward defined contribution health coverage

• Permitting premium tax subsidies to be used for the purchase of coverage outside of the state and federally facilitated exchanges, especially if the individuals live in areas where no plans are available in the exchange

• Creating a more effective risk mitigation program for the individual market and allowing anyone—not just under-age-30 “young invincibles” —to buy less expensive catastrophic coverage

• Allowing association health plans and stop-loss coverage

Employers continue to look for ways to control cost using every means available. They are shifting more cost to employees through higher deductibles, higher co-pays, and an increase in payroll contributions, as well as moving to health care networks that limit the choice of doctors and hospitals. Employers are also utilizing RX formularies that restrict access to many newer more expensive drugs. Many are also exploring self-funding and risk sharing with other employers in captives, so as to separate themselves from high-risk, poor performing pools of employers in the fully insured market and the tax advantages that self-funding offers.