Author: Megro

Many employee benefit limits are automatically adjusted each year for inflation (this is often referred to as an “indexed” limit). The Internal Revenue Service and the Social Security Administration have released a number of indexed figures for 2015.
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Data in the 2014 UBA Health Plan Survey is based on responses from 9,950 employers sponsoring 16,967 health plans nationwide. Results are applicable to the small to midsize market that makes up a majority of American businesses, as well as to larger employers, providing benchmarking data on a more detailed level than any other survey. To help employers benchmark their health plan costs by organization size, the chart below shows average costs in descending order.

Copyright © 2014 United Benefit Advisors, LLC. All Rights Reserved.

Looking at the smallest employer groups, the 2014 findings show an interesting flip in rate increase patterns. Contrast this with last year’s findings, which showed the following increases over 2012 among the same groups.

Copyright © 2014 United Benefit Advisors, LLC. All Rights Reserved.

Historically, employers with 1 to 49 employees felt the brunt of increases, which ranged from 4% to 5% or more. However, in this year’s survey results, these groups saw more modest increases of approximately 1%. Conversely, employers with 50 to 199 employees have historically had more modest increases of 1% to 2%, while this year they saw increases of approximately 3% to 4%.

The ability for small groups to “renew as is” (by grandmothering or by delaying renewals) is having a huge impact on keeping their rates level, at least at this point. Many small groups had the choice of moving to a PPACA-compliant plan or staying with the plans they had (thanks to grandmothering in some states and other delay tactics). Healthy groups tended to stay with the plans they had, which often was the most cost-effective approach. As these groups move to PPACA-compliant plans and become subject to community rating, they will likely see significant cost increases. But this year, they had a reprieve.

For more information to help you benchmark your health plan, download the 2014 UBA Health Plan Survey Executive Summary or contact a local UBA Partner for a customized benchmarking report.

Premium tax credits are only available to individuals who obtain health coverage through a Marketplace. A dispute has arisen as to whether the IRS has the ability to interpret PPACA to allow the subsidy to individuals who obtain coverage through any Marketplace, or whether the language of PPACA limits eligibility to those who have obtained coverage through a state Marketplace. The U.S. Supreme Court has agreed to rule on whether premium tax credits may only be available to individuals who receive tax subsidies as a result of being enrolled in a state exchange. In the meantime, the IRS has stated that it will continue to issue tax credits to individuals in both state and federally-run Marketplaces.

If the Supreme Court decides the IRS rule that tax credits are available regardless of what type of Marketplace is in place, the current system will remain in effect. However, if it rules that tax credits are only legally available to individuals enrolled in state Marketplaces, that decision will have significant consequences, since only about one-third of the states are running their own Marketplace, while the federal government runs the Marketplace for the remaining states. If premium tax credits are only allowed in states with their own Marketplace, most Americans will become ineligible to receive the tax credits. Well over half of the people currently enrolled in a Marketplace are receiving a tax credit. Additionally, an employer owes the play or pay penalty only if an employee receives a tax credit.

If the Supreme Court rules that premium tax credits are only available to individuals enrolled in state Marketplaces, employers should expect that states that have chosen to provide coverage through the federally-run Marketplaces will be under pressure to transition to state Marketplaces from those who have benefitted from the subsidized Marketplaces. Those that are benefitting from subsidized coverage include the individuals receiving premium tax credits, hospitals that are experiencing less unreimbursed care, and insurers that have invested in providing coverage through the Marketplaces. Similarly, states that have state Marketplaces may be pressured to move to a federally-run Marketplace by employers trying to avoid penalties. Debate is already occurring as to what, exactly, is needed to qualify as a state Marketplace should a state wish to move in that direction. Employers with employees located in multiple states could have to manage a situation in which some employees are eligible for tax credits and others are not.

The decision of the Supreme Court is expected in late June 2015.

To get the latest information on other federal developments including plan designs being disallowed—such as employer reimbursement of premiums for individual coverage, incentivizing employees in poor health to enroll in the marketplace, and more—download UBA’s PPACA Advisor, “Agencies Disallow Several Plan Designs; Other Federal Developments”.