Maximum Annual Contribution Limits – Single $3,250 Family $6,450

Catch-up Contribution Limit – $1,000

Minimum Annual Deductible – Single $1,250 Family $2,500

Maximum Out-of-pocket – Single $6,250 Family $12,500

An employee is treated as being eligible for the entire calendar year as long they are eligible during the last month of the calendar year. However, failure to maintain eligibility during the “testing period” will result in adverse tax consequences (including an additional excise tax). The testing period begins in December of the year in which the employee becomes eligible and ends the last day of December of the following year.

The full revenue procedure can be found here

The conflicting court decisions are as follows:

• In March 2012, the D.C. District Court found that the National Labor Relations Board had the authority to issue the rule to require employers to post the “Employee Rights” poster.
• In April 2012, the South Carolina District Court found that the National Labor Relations Board did not have the authority to issue the rule to require the “Employee Rights” poster.

The National Labor Relations Board (NLRB) is appealing the South Carolina decision.

Until further notice, the DC Circuit Court of Appeals has temporarily enjoined the NLRB’s rule requiring the posting of employee rights under the National Labor Relations Act. The NLRB will not implement the rule pending resolution of the issues before the court, therefore, until further notice; employers are not required to post the “Employee Rights” poster.

For additional information, please refer to the NLRB’s website: http://www.nlrb.gov/poster

J.W. Terrill’s HR Consulting team will keep you informed along the way of any changes to this ruling.

For more information please contact HR Consulting at:

HRConsulting@jwterrill.com or 314-594-2700

Please click here:  http://www.ssa.gov/pubs/10536.html#a0=4

Note under the “What if my income has gone down?” section that the Social Security Administration has a process in place to review and lower Part B premiums if an enrollee is presently paying income adjusted premiums at higher than standard rates.  And, the “What if I disagree?” section can help with an appeal, too.

History of Defined Contribution Retirement Plans
Defined benefit retirement plans became less common in the 1980’s as defined contribution plans rose to the forefront.  In the mid-80’s, about 80 percent of full-time employees in the United States were enrolled in some sort of defined benefit plan for retirement.  And by 2006, this percentage had dropped to only around 20%. (Miller, 2011)

As defined contribution plans grew in popularity the employer realized greater control of retirement plan costs by making a contributing payment to supplement the employee’s retirement plan in lieu of the guaranteed benefit payable under the defined benefit plan model.

Expansion into Healthcare
The concept of defined contribution for employee health insurance was first introduced in the 1990’s.  In the business climate of today, the topic of defined contribution has again become a frequent subject of discussion for the funding of employee health plans. 

As with retirement plans, defined contribution health plans are being recognized for allowing the employer greater control of expenses by dedicating a certain dollar of contribution to an employee’s health plan funding instead of a specific health plan benefit offered under the defined benefit approach.

In its simplest form, the defined contribution health plan gives the employee a specific dollar amount to use in the purchase of health insurance.  This may sound like a reasonable way for employers to control skyrocketing health care costs, however the actual implementation in the real world brings its own set of unique challenges which will be discussed later in this article.

As discussed in “Shifting Responsibilities – Models of Defined Contribution” produced for The Robert Wood Johnson Foundation, it is important to understand that defined contribution in health care is not a single arrangement, but instead a general approach presented across a continuum of models. (Martin, 2002)  

On one end of the spectrum, the employer pays a specific dollar amount to the employee who alone becomes responsible for choosing their coverage.  This has been referred to as the “voucher” approach.  The employee chooses an insurer to provide health coverage and there is no formal accountability on behalf of the employer.   In this scenario, the employee is at a higher financial risk and the employer has very little involvement in the administrative component of the employee’s health coverage.

On the opposite end of the spectrum, the employer and health plan work together to package a pre-determined set of benefits that will be made available to the employee.   The employer chooses the health plan and decides upon the dollar amount that will be paid to the employee.  Risk is spread between the employer, the employee and the health plan.  The health plan and the employer bear most of the administration of the plan. 

An example of this model can be illustrated by the employer selecting one or more insurance carriers to offer a multi-option plan arrangement with employee funding geared around a base plan typically with a high deductible.  The employee is given the opportunity to “buy-up” to higher levels of coverage in the optional plan(s) that are available.

Approaches
As with the shift in retirement plans of the 1980’s, the defined contribution approach can afford businesses the opportunity to reduce health care costs with Health Care Reform likely to hasten the implementation.  

Real world application of this implementation has the potential to take shape in a variety of arrangements which mirror the continuum of models discussed above.   Examples include:

• The State-level health insurance exchanges which are coming online as part of the Patient Protection and Affordable Care Act (PPACA).   The implementation of these exchanges could partner well with and speed along the basic idea of the employer contribution component of the defined contribution health plan (Meulemans, 2012).
• Plans marketed as “Consumer-Driven Health Plans” (CDH Plans) combining a high deductible or catastrophic insurance plan with an account-based reimbursement component.   This account-based reimbursement has potential to be shared by the employer and employee and is designed to cover some of the costs of the deductible, coinsurance or other claims.  

Advocates of the defined contribution model promote the concept of being “Consumer-Driven” thereby making the healthcare consumer more proactive in selecting their own services given the greater level of financial interest in the outcome.   However, the success in shopping for the best price in healthcare currently presents challenges which make it impractical or impossible in today’s healthcare market.

Some challenges and criticisms to the approach include limited cost control of only small to mid-dollar claims with high-dollar claims remaining unchanged.  Another is the possible increase in adverse selection as younger, healthier employees opt for lower cost plans while older and sicker populations gravitate toward richer benefits.

Conclusion
In summary, the defined contribution approach to health care will undoubtedly continue to evolve and expand in partnership with the implementation of healthcare reform.  The road to expansion will undoubtedly be marked by an extended period of adjustment for both the employer and employee alike. 

As the landscape of healthcare continues to be re-shaped we will learn if the defined contribution model is effective in controlling the upward spiral in healthcare costs or be a shift toward the employee becoming increasing responsible for paying for higher levels of health care.  Ultimately, one of the main determinants of the success of the defined contribution approach will likely be whether or not the decision-making process of the healthcare consumer can truly be shaped into a new long-term behavior.

An ACO is a network of doctors and hospitals that will share responsibility for providing care to patients. One of the requirements is that the ACOs will have to manage all of the health care needs for patients for at least three years.  A benefit of the ACOs is  they would make sure that the care of the patient, including primary care, specialists, hospitals, and home health care, would all come together for the value of the patient.  The Patient Protection and Affordable Care Act (PPACA) requires Centers for Medicare and Medicaid Services (CMS)to use ACOs to work with doctors and hospitals to get better outcomes and have them focus on keeping down the cost of care.

ACOs will be responsible for providing complete health services for patients. They will work with and offer doctors and hospitals financial incentives to provide quality care to patients while maintaining or lowering costs. They will also review any unnecessary medical care performed on patients to help keep cost down.

ACOs have already started to come together.  According to Kaiser Health News, “Hospitals, physician practices and insurers across the country, from New Hampshire to Arizona, are announcing their plans to form ACOs, not only for Medicare beneficiaries but for patients with private insurance as well.  Some of the largest health insurers in the country, including Humana, United Healthcare and Cigna, already have announced plans to form their own ACOs. Insurers say they can play an important role in ACOs because they track and collect data on patients, which is critical for coordinating care and reporting on the results.”

The guidelines for establishing an ACO can be found in Section 3022 of the PPACA. These guidelines are the necessary steps that physicians, hospitals and other health care providers must complete in order to participate. Below are the some of the requirements for ACOs:

• The ACO shall be willing to become accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it;
• The ACO shall enter into an agreement with the Secretary to participate in the program for not less than a 3-year period;
• The ACO shall have a formal legal structure that would allow the organization to receive and distribute payments for shared savings to participating providers of services and suppliers;
• The ACO shall include primary care ACO professionals that are sufficient for the number of Medicare fee-for-service beneficiaries assigned to the ACO under subsection;
• At a minimum, the ACO shall have at least 5,000 such beneficiaries assigned to it in order to be eligible to participate in the ACO program;
• The ACO shall provide the Secretary with such information regarding ACO professionals participating in the ACO as the Secretary determines necessary to support the assignment of Medicare fee-for-service beneficiaries to an ACO, the implementation of quality and other reporting requirements under paragraph (3), and the determination of payments for shared savings under subsection (d)(2);
• The ACO shall have in place a leadership and management structure that includes clinical and administrative systems;
• The ACO shall define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies;
• The ACO shall demonstrate to the Secretary that it meets patient-centeredness criteria specified by the Secretary, such as the use of patient and caregiver assessments or the use of individualized care plans;
• The ACO participant cannot participate in other Medicare shared savings programs;
• The ACO entity is responsible for distributing savings to participating entities;
• The ACO must have a process for evaluating the health needs of the population it serves;

Hopefully the future of the ACOs will help providers be able to develop better patient standards and minimize redundant medical cost.  Only time will tell if the proposed resolution of ACOs will succeed or not.  It is truly up to the ACOs to be accountable for the actions of our health care future.

The benefits of HazCom 2012 include greater consistency of hazard information, increased comprehension of chemical hazards and the ability to overcome language barriers. The most noticeable differences include the requirement for pictograms with specific hazard information on labels, as well as a new format for Safety Data Sheets (SDS) containing 16 different defined sections.

Employers have until December 1, 2013 to train employees on the new label and SDS formats.  Chemical manufacturers, importers, and distributors must comply with all provisions of the new standard by June 1, 2015.  Distributors are granted an exception and may continue to ship existing chemicals with the old labeling system until December 1, 2015.

Visit the OSHA webpage for Hazard Communication for an in depth look at the latest standard including the final rule, a comparison of the old and new HCS, a fact sheet, and quick cards here:  http://www.osha.gov/dsg/hazcom/index.html

So why is a 145 year old law potentially so important today? Simple the upcoming U.S. Supreme Court case, U.S. Department of Health and Human Services v. Florida, which potentially could determine the fate of the Patient Protection and Affordable Care Act hinges on it.

The U.S. Supreme Court has appointed attorneys to argue whether the TAIA applies to the individual mandate as a tax or as a penalty and have increased the time for next month’s oral arguments from 5 ½ hours to 6 hours to accommodate the arguments.

If the Court determines, that the arguments they are considering regarding the “individual mandate”  fall under the TAIA, this in turn  would preclude them from hearing the case until after the law goes into effect and after a plaintiff has paid a tax penalty to the IRS post 2014.

During fall of 2011 the 4^th Circuit ruled that the “individual mandate” did in fact impose a tax penalty and therefore fell under the TAIA. However, two other Courts determined that the TAIA did not apply in the process of determination of the constitutionality of the “individual mandate.”

It is difficult to speculate on how the Court will rule and to what extent they might allow the TAIA to limit what can be considered  by the Court prior to 2015. Regardless of the outcome it is obvious that a relatively obscure 145 year law will play a pivotal role in determining the fate healthcare reform.

This communication is for general informational purposes only and is not intended to constitute legal advice or a recommended course of action in any given situation. This communication is not intended to be, and should not be, relied upon by the recipient in making decisions of a legal nature with respect to the issues discussed herein. The recipient is encouraged to consult independent counsel before making any decisions or taking any action concerning the matters in this communication.

Under the new announced policy, religious employers (and affiliated institutions) will not be required to offer contraception and will not have to refer their employees to places that provide it. Instead, the employer’s insurance company must provide birth control for free in a separate arrangement with workers who want it.

Many opponents of the birth control policy; however, are taking a skeptical approach and are still calling for a full exemption for religious organizations and affiliated institutions.

The regulations require coverage, at no cost share for:

• Contraceptives and contraceptive counseling (FDA approved methods) Well-woman visits
• Screening for gestational diabetes
• DNA testing for HPV for women 30 years old and older
• Counseling about sexually transmitted infections
• Counseling and screening for HIV
• Counseling on breast-feeding, including breast-feeding equipment
• counseling on interpersonal and domestic violence

The requirements go into effect for plans years on or after August 1, 2012. religious affiliated organizations were and still are under the newly proposed regulations, provided with a 1 year extension until August 1, 2013.

According to regulators these rules will ensure consumers have access to two key documents that will help them understand and evaluate their health insurance choices:

• A short, easy-to-understand Summary of Benefits and Coverage (SBC);
• A uniform glossary of terms commonly used in health insurance coverage.

All health plans will provide an SBC to prospective enrollees and enrollees at significant points in the enrollment process, such as upon application or at renewal. A key feature of the SBC is a new, standardized plan comparison tool called “coverage examples.” The coverage examples will illustrate sample medical situations and describe how much coverage the plan would provide.

These Rules apply to both fully-insured and self-insured plans. It is anticipated that for fully insured plans the carriers will be creating the documents and possible distributing. Self-insured plans will need to begin discussions with their plan administrators (ASO vendor, TPA, etc) to determine who will be responsible for document creation and distribution.

Effective date:

First plan year on or after September 23, 2012

Differences between proposed and final rules:

• Premium amounts are no longer mandatory on the SBC.
• If eligible for coverage but not yet enrolled, plans may send a paper postcard electronically or through regular mail to provide instructions for accessing the SBC online.
• “Best efforts” allowed for describing terms that do not lend themselves well to plain language; e.g., tiering for prescriptions and providers. 
• Coverage examples illustrative of how plans would cover treatment and services were reduced from three medical scenarios to two (Having a baby and Managing type 2 diabetes).
• SBCs for group health plans may now be included with other documents (e.g., summary plan description) as long as it is “prominently displayed” at the beginning of the document.

Links

• FAQs Regarding Summary of Benefits and Coverage (SBC)
• Summary of Benefits and Coverage Template
• Instructions for Completing the SBC
• Uniform Glossary of Coverage and Medical Terms

The CLASS Act establishes a national, voluntary long-term care program. The program was to go into effect during 2012; however, in October the Administration announced a suspension of the program indicating that there was no viable financial path forward.

Despite evidence of the programs financial un-sustainability Democrats wish for the program to remain and be fixed.

Members of the GOP argue that maintaining the program on the books could lead to legal challenges.

Despite the Houses vote to repeal, it is unlikely that the Senate will follow suit. Additionally, the Obama administration has indicated that the bill should not be struck down and would veto any effort to eliminate the financially challenged program.