By our count at the Galen Institute, more than 70 significant changes have been made to the Patient Protection and Affordable Care Act, at least 43 that the Obama administration has made unilaterally, 24 that Congress has passed and the president has signed, and three by the Supreme Court.
Senate Committee on Small Business and Entrepreneurship Chairman David Vitter is questioning why Congress is able to get its health care through the Small Business Health Options Plan (SHOP) – which requires a business to have 50 or less employees – when the tax forms provided list Congress as a large employer.
In a letter written to Internal Revenue Service Commissioner John Koskinen Wednesday, the Louisiana Republican said it appears Congress is “misrepresenting itself to either DC Health Link or the IRS” and questioned whether the contradiction violates the Internal Revenue Code.
While the Affordable Care Act required lawmakers and their staff to buy insurance through state or federal exchanges, the Office of Personnel Management exempted them by qualifying Congress as a small business, allowing them to buy health care using DC Health Link to keep employer subsidies.
The senator argued the exemption “undermined confidence in government” by providing an employer contribution for premiums paid for by U.S. taxpayers that every other American purchasing Obamacare doesn’t receive.
“Congress can’t have it both ways – it cannot be both a small employer and a large employer, and we all know which it is. It’s utterly absurd that Congress was allowed to claim to be a small business just to keep the taxpayer-funded Obamacare exemption...."See also: Congress Insuring 15,000 Employees Through Obamacare Exchange for 'Small Businesses' of 50 or Less. Stating that taxpayers "currently subsidize premiums, up to $11,378 per year [for each one of those 15,000 people], for members and congressional staff who are enrolled in D.C.'s small business exchange...."
Don’t take our word for it. You can try this out yourself. Just google Surgery Center of Oklahoma and here is what you will find. For Achilles tendon repair, you will pay $5,730. That’s not an estimate with a huge variance around it. It’s a package price that includes doctor, nurse, anesthesia, room, drugs, supplies – everything.
For rotator cuff repair, the price is $8,260. For carpal tunnel release, it’s $2,750. All these prices are posted online for everyone to see. For more examples, see the table below.
The center is owned by Dr. Keith Smith, an Oklahoma anesthesiologist who started posting prices about the same time the Affordable Care Act (Obamacare) was enacted. Since then he has adjusted his prices (downward!) five times.
As Steven Brill so eloquently explained on 60 Minutes and in his book, America’s Bitter Pill, the average patient has no idea what anything is going to cost when he enters a hospital and no idea what he is being billed for when he leaves. Based on what payers actually pay, there is a three to one difference in spending for essentially the same services among the 306 hospital referral regions across the country. Within those regions, the differences are even greater. At the hospital level, there is a twelve to one difference across the country in what payers pay for an MRI scan of lower limb joints!
How refreshing, therefore, to find a hospital that quotes package prices in advance and is willing to compete for patients based on price and quality. Why are they doing it? For the simplest reason of all: to attract patients.
So what happened? Nothing happened. At least not initially. Nothing? Nothing. ...
In fact, it took two whole years before the employers realized a huge opportunity was located right in their own backyard. It began with Jay Kempton, a third-party administrator whose company contracts with many of the local banks.
Fast forward to today. Not only are Kempton’s clients using Dr. Smith’s surgery center, but so is Oklahoma County and soon (if not already) Oklahoma State employees will be using it as well. The Alaska Teachers Union has offered to fly teachers and an escort all the way to Oklahoma for their surgeries. Canadians are also customers, choosing to travel to Dr. Smith’s surgery center rather than endure lengthy waits for free care back home.
There is more good news. Dr. Smith is no longer alone. Other surgery centers around the country are also posting prices, including Monticello Community Surgery Center in Charlottesville, Virginia, Ocean Surgery Center in Torrance, California, Orthopedic Surgery Center of Clearwater, Florida, and newer centers in Ohio and South Carolina.
Here is something surprising. The prices that these centers are posting are all competitive with each other. Some of Monticello’s prices in Charlottesville are lower than Dr. Smith’s Oklahoma City prices, while others are higher – just like the price differentials you’d expect to find between grocery stores in the same town. But all of these prices are lower than the expected costs at nearby large hospital systems. ...
Then again, maybe that’s not surprising. That’s the way markets are supposed to work.
New guidance by the Department of Justice and Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE) in December has caused quite the quagmire for the country’s employers.
The Immigration and Nationality Act, which requires companies to verify work-authorization of employees using I-9 forms to prevent hiring unauthorized workers but prohibits them from taking certain factors into account when determining whether an audit is appropriate, could lead to legal issues for companies throughout the U.S.
“Internal audits should not be conducted on the basis of an employee’s citizenship status or national origin, or in retaliation against any employee or employees for any reason,” ICE says in its guidelines. “An employer should also consider whether the audit is or could be perceived to be discriminatory or retaliatory based on its timing, scope or selective nature.”
The Washington Examiner first reported the new guidelines could lead to an increase in discrimination lawsuits for employers trying to determine if an employee is of legal status.
“The message is, ‘Think before you audit — Is this really something you want to undertake?’ Particularly in-house, because it is fraught with landmines,” senior executive counsel for the National Federation of Independent Business Beth Milito tells the paper. ...
The agencies say, in the case of an internal audit, employers shouldn’t request an employee’s documentation just because photocopies of documents are unclear. It also states unless a federal contractor has an E-Verify clause in its contract, it shouldn’t use the system created to check on a potential employee’s employment eligibility for existing workers.
In addition, it also says an employer is not allowed to ask for specific documents from its employees.
Even if a company finds information was falsified by a worker in the past, if new, valid information is provided, it is not required the employee be laid off. ...
Companies are also advised against using the Social Security Number Verification Service while conducting an audit.
While numerous restrictions are being put on employers when it comes to justifying an audit, if a company has “fairly inferred” information that they may be unlawfully employing someone and don’t take action, they could also possibly face legal ramifications.
Prescription painkiller abuse costs employers almost $42 billion because employees that are using are generally less productive while at work, involved in unsafe behaviors, or not at work at all. Also, employees who abuse drugs are two to five times more likely to:
- Take unexcused absences or show up late to work;
- Quit or be fired within 1 year of hiring;
- Be involved in workplace incidents; and
According to the National Institute on Drug Abuse, the number of prescriptions for opioid pain relievers such as Vicodin, OxyContin and Percocet shot up from 76 million in 1991 to 213 million in 2013, a 176% increase. These addictive medications are becoming the most abused drugs today, with fatal overdoses increasing 300 percent since 1990.
- File workers’ compensation claims, which accounts for 19 percent of workers’ comp medical costs.
The National Safety Council notes that the prescription painkiller epidemic poses a unique challenge for employers since these medications are powerful, highly addictive drugs that have the potential to cause impairment and increase the risk of workplace incidents, errors, and injury—even when taken as prescribed. Over-the-counter medications, like sleep aids and cough medicine, can also pose safety risks.
Employers have the legal responsibility to provide a safe workplace, anddoing so can help in managing accident costs such as workers’ compensation, asset damage, and production disruption.
Yet another study purporting to show that ObamaCare hasn’t caused many people to work fewer hours has set off another round of high fives among the law’s boosters.
But they should hold their applause, because there’s a strong case that ObamaCare’s employer mandate is worse than its critics feared — though not necessarily for the reasons they expected.
While ObamaCare has clearly had a negative impact on work hours, which one serious flaw of the latest study — counting 29.5-hour workers as full-time — and other data limitations help to obscure, it’s fair to say that the law hasn’t curtailed full-time work in a big way. But that’s because employers have figured out how to dodge liability by offering “affordable” coverage that costs much more than their modest-wage workers are likely to pay.
Gaming The System
This gaming of the system, which ObamaCare rules invite, has serious consequences. A few million full-time, modest-wage workers — and their spouses — have remained uninsured, with many liable for ObamaCare individual mandate penalties. Another roughly 1 million low-wage workers have opted for the kind of coverage that ObamaCare was supposed to do away with: skinny plans that won’t cover hospitalization or surgery but will let them avoid a penalty.
Many other full-time, modest-wage workers are getting more comprehensive coverage via their employers — but with $5,000-plus deductibles that could easily torpedo their finances in a health emergency.
These are the direct effects of rules that deny full-time workers access to ObamaCare subsidies — and let employers escape a fine — if they offer bronze-level coverage costing a worker close to 10% of wage income for premiums alone. For a full-time worker earning $17,500, paying $1,670 for bronze coverage qualifies as “affordable.” That’s $1,000 more than someone at the same income level would have to pay for an exchange plan that caps total out-of-pocket expenses at about $550 in 2016.
Then there are the indirect effects of employer mandate rules that leave so many low-wage, full-time workers with coverage that is of little use.
The prevalence of underinsured full-time workers partly explains why UnitedHealth (UNH), Aetna (AET) and other insurers have complained about people signing up for ObamaCare coverage midyear and running up big bills.
Without appropriate coverage, low-wage workers may have to quit their jobs, at least temporarily, to get low-deductible exchange coverage if a serious health issue arises.
When low-wage full-timers can’t afford coverage, is it any wonder that many — some older and not necessarily in robust health — have opted to work fewer than 30 hours to qualify for exchange subsidies (even if they might prefer to work longer)?
The employer mandate has simultaneously thrown low-wage, full-time workers under the bus and contributed to a narrow, relatively high-cost insured pool that is detrimental to the goal of providing affordable care.
The ability of employers to mostly evade liability is increasingly obvious. Andy Puzder, CEO of Carl’s Jr. and Hardee’s parent CKE Restaurants, says that just 420 of 5,453 full-time workers offered a $5,500-deductible plan were willing to pay the $1,116 premium. The New York Times reports that insurance takeup by fewer than 10% of low-wage workers is commonplace.
Wendy’s Slashes Health Tab
Wendy’s (WEN) initially expected its health insurance tab to jump by $25,000 per restaurant, but cut that to $5,000 after finding few interested employees.
Employers in service occupations pay even less on health insurance per hour of work than they did when ObamaCare passed in 2010, Labor Department data show.
The latest study in Health Affairs on ObamaCare and part-time work did find a meaningful, if modest, increase in 60- to 64-year-olds and workers with less education who were clocking fewer than 30 hours per week. But the authors’ broad conclusions were skewed, in no small part, because they counted close to 5 million workers who are reported to work exactly 30 hours per week as being full-time under ObamaCare.
Yet, Census interviewers are instructed to count 30 minutes or more as a full hour, meaning an uncertain number of those workers may have their hours capped at 29.5 per week. White House economists made this same mistake, later acknowledging that its analysis “may be misleading” and advising that analysis of the law’s impact on work schedules should exclude 30-hour workers.
The incentives are highest — for employers and modest-wage employees — to reduce work schedules as they get closer to 30 hours. For employers, it means avoiding a potential spike in hourly compensation costs right at 30 hours. For employees, perhaps just $5-$10 less per week could mean the difference between being able to get affordable insurance or going uninsured.
When you exclude 30-hour workers, the picture is striking: The number of people working just above 30 hours relative to those working just under ObamaCare’s full-time threshold dropped abruptly in 2013, coinciding almost perfectly with the initial measurement period for employer penalties. The timing also matches up well with the relapse in the average workweek in low-wage industries that can be calculated from Bureau of Labor Statistics data. During that same period, there was a surge in anecdotal reports of employers cutting work hours, which IBD collected in a database that grew to 450 employers.
While the ranks of workers who can’t find full-time jobs have fallen by about 3 million in recent years as the economy recovered, they remain nearly 2 million above their level when the jobless rate was last at 5%. General service occupations have become stubbornly dependent upon part-time work, as the 2015 Economic Report of the President and a separate report from the Atlanta Federal Reserve last year both noted.
Meanwhile, those working part-time by choice are up 2 million since ObamaCare’s passage, with three-fourths of the gain coming since the end of 2013, when the law’s insurance subsidies became available. ...
By now all applicable large employers should have begun, if not finished, the process of completing the Form 1095-C. As discussed in previous articles the most challenging parts of the Form 1095-C to complete are lines 14, 15, and 16. This statement is most evident when handling COBRA rights. This article will discuss some of the more confusing COBRA scenarios. However, many more COBRA scenarios are possible that raise similar coding issues and confusion.
One common COBRA scenario occurs when an employee gains COBRA rights in the middle of the year. The final regulations for section 6056 upon which the Form 1095-C is based do not mention COBRA coverage. Similarly, the final regulations for section 6055 upon which the Form 1095-B is based or the instructions to the Form 1095-B which could both be relevant for interpreting the rules for self-insured plans do not mention COBRA coverage. Therefore, one is left to interpret the instructions to the Form 1095-C for coding COBRA coverage on line 14, 15, and 16.
The Form 1095-C instructions are clear that an individual who receives his/her COBRA rights because of a termination in service is treated differently than an individual who receives his/her COBRA rights and is still an active employee such as an employee who is no longer eligible for coverage because of a reduction in hours. First, a former employee who receives his/her COBRA rights upon a termination of employment should not be reported as having been offered coverage on line 14. Instead, an employee who receives COBRA rights upon a termination of employment in the middle of the year should be coded using code 1H for line 14, leaving line 15 blank, and inserting code 2A for line 16 for any month for which the offer of COBRA coverage applies. This is also how a terminated employee would be coded if he/she had no COBRA rights. ...
... Many companies contract with staffing agencies to provide workers in a variety of situations. In many of these contracts, the workers are often characterized as employees of the staffing agency or jointly employed by the staffing agency and the company client. The IRS has indicated the terms used by the parties to such a contract are only one of many facts that will be examined to determine who is the common law employer for ACA purposes. ...
An employer who has authority over workers supplied by a staffing agency may be at risk for having those workers characterized as its employees for purposes of the “play-or-pay” rules. Because employers do not offer health coverage to workers supplied by staffing agencies, classification of these workers as common law employees could trigger liability for the ACA penalties. For example, an employer who offers coverage to 96 out of 100 full-time employees would not owe a penalty under the 95 percent rule. But if five workers provided by a staffing agency are later determined to actually be common law employees of the employer, the employer could owe a penalty of $156,300 ($2,084 multiplied by 75 – the number of full-time employees less 30).
The final regulations under the “pay-or-play” rules permit an employer to take credit for an offer of coverage made by a staffing agency, but only if the employer pays the staffing agency more for a worker who accepts the offer of coverage than the employer would pay if the worker did not accept the offer of coverage. The typical staffing agency contract prior to the enactment of the final regulations contained no such provision for distinguishing offers of coverage. The contracts were considered to spread the cost of any benefits among all the workers used under the contract, as opposed to distinguishing them. Since this is a new provision for many contracts, it is important to make certain your contracting team understands the importance of providing for a distinct coverage line item. ...
[T]o comply with the reporting requirements in the final regulations, Applicable Large Employers (“ALEs”) will need to identify their full-time employees. When calculating the hours of service performed by their employees, ALEs may need to determine if persons receiving short-term or long-term disability benefits are full-time employees for purposes of the ACA.
In Notice 2015-87, the Internal Revenue Service provided further guidance on what constitutes an hour of service under the Employer Shared Responsibility provisions. Specifically, the IRS provided guidance on whether an employee who is not working, but is receiving certain disability payments, should be credited with hours of service. In part, the regulations provide that an hour of service is each hour for which an employee is paid or entitled to payment during the applicable computation period.
For purposes of calculating hours of service, an individual receiving payments from a short-term disability (“STD”) or long-term disability (“LTD”) arrangement might be treated as a full-time employee. Two of the determining factors are whether the recipient of disability payments retains his or her status as an employee and who paid for the disability arrangement. However, hours of service will only result from disability payments made to a person who has not terminated employment with the employer. If the person retains their status as an employee, there are no limits on the number of hours that may be credited during the period that the employee is receiving disability benefit payments. Unless the exception explained below applies, each hour of service an employee receives either STD or LTD is counted as an hour of service. This result is the same even if the employee is receiving less than 100% of regular compensation (e.g. an employee receiving STD equal to 60% of their compensation for 40 hours per week would still be credited with 40 hours of service).
Some types of disability and wage replacement benefit payments will not result in hours of service. If the employee pays for the disability arrangement with after-tax dollars and the employer makes no contributions to the arrangement, benefit payments will not result in hours of service. Also, periods in which an employee is not working, but is receiving workers compensation wage replacement benefits will not result in hours of service.
Therefore, unless the exception above applies, an employee receiving 130 or more hours of LTD or STD will be a full-time employee if you are using the monthly method. And if you are using the lookback method, hours the employee receives on LTD or STD must be counted in the average. ...
In yet another sign of trouble for the Affordable Care Act exchanges, Blue Cross and Blue Shield of North Carolina (BCBSNC) is projecting a loss of more than $400 million on its ACA policies for 2014 and 2015, the News & Observer reports.
As a result of those significant losses, which the newspaper says the insurer announced to insurance agents last week, BCBSNC will eliminate sales commissions for agents, stop accepting applications for ACA policies online and terminate its advertising of ACA policies.
Those moves echo the steps taken by the country's largest insurer, UnitedHealth, to respond to its losses in the individual market, which totaled $720 million in 2015. In addition, United may stop offering ACA policies altogether in 2017. Losses in individual business also dragged down the fourth-quarter earnings of major insurer Anthem.
Aetna Inc. said Monday that its public health insurance exchange business remained unprofitable in 2015 despite narrowing its losses and, for its overall business, improving its underwriting margins.
Despite its exchange business losses, Aetna recorded net income of $320.8 million for fourth quarter of 2015, an increase of 38.3% over the year before, the company said in a statement. Revenue climbed 1.9% to $15.05 billion.
Medical membership as of Dec. 31 was 23.5 million, a less than 1% decline compared with a year earlier.
Aetna's individual policies sold on the public exchanges authorized by the Affordable Care Act narrowed losses to a loss of 3 to 4 percentage points from the mid-single digits earlier in the year, Shawn M. Guertin, Aetna's executive vice president and chief financial officer, said during a conference call Monday with investors.
Mr. Guertin attributed the reduction in ACA exchange losses to Aetna's exiting certain markets such as Kansas, which was “driving a big piece of our headwinds related to margins in the public exchange,” increasing rates, promoting medical cost initiatives and “doing better on risk-adjusted revenue.”
The quarterly results were boosted by strong results and membership in the insurer's Medicare [oldsters] business, which CEO Mark T. Bertolini said during the earnings call was a “key growth engine” for the company.
Still, despite the improvement in its exchange business, Mr. Bertolini said, “We continue to have serious concerns about sustainability of the public exchanges.”
Key areas of concern include the stability of the risk pool and the lack of transparency and predictability of the risk adjustment program, as well as Centers for Medicare and Medicaid Services' “regulations on network adequacy and standardization of benefits that would limit our ability to offer affordable, innovative on-exchange products,” he said.
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