Winds of Change,
Time of Opportunity
The consultative approach means more now than ever to broker success
Published Jan. 28, 2021
Remember when it cost $695 or 2.5 percent of income for an adult to not have health insurance? In a year or so, the Internal Revenue Service (IRS) may issue painful reminders to those waiving off their group plan without other Affordable Care Act (ACA) compliant coverage.
This should mean more lives on your group plans, depending how other Trump-to-Biden reversals materialize.
The individual mandate of the ACA has never actually been rescinded but only reduced to an amount not worth the time of IRS auditors – $0. With his campaign pledge to build on Obamacare (aka: the ACA), President Joe Biden is expected to press Congress to elevate the penalty back to somewhere near its former levels.
This expected eventuality requires another ACA victory at the Supreme Court in a decision expected this spring. If the Court leaves the ACA largely intact, expect re-inflation of the individual mandate. Some legislative maneuvering will be required: either removing the Senate filibuster or including the mandate penalty in budget reconciliation. The latter requires a simple majority vote in which a 50:50 tie would be broken by Vice President Kamala Harris.
These assumptions presume continued polarization of opposing political party affiliations in Congress, as sure a bet as death, taxes, and Tom Brady in the Super Bowl.
Employer Penalties Intact
The employer penalty package, unaffected by numerous Trump Administration ACA tweaks, rises to $2,700 per employee (minus 30 penalty waivers) for employers of 50 or more that do not offer health insurance, or $4,060 for each employee who eschews the group plan and obtains subsidized coverage at HealthCare-dotgov.
Employers may soon be slightly more susceptible to the $4,060 employer penalty. That’s because the Biden Administration is expected to reduce the subsidy qualification to insurance costing just 8.5 percent of income, down from 10 percent.
America’s 46th President hit the ground signing on Inauguration Day and since. Several executive orders relating to healthcare dealt with issues involving the COVID-19 pandemic and vaccine distribution.[i]
Biden also enacted what’s being called a block or a freeze of Health and Human Services Department orders Trump issued last year that required community health centers to pass on insulin and epinephrine savings to patients[ii]. The measure is now under a 60-day review.
One high-profile Trump executive order remains in effect so far, the one enacted January 1 requiring hospitals to make public the rates they pay commercial health insurers for common healthcare items and services.[iii] According to a recent article in the Washington Post:[iv]
“Revising the hospital transparency rules — if that’s even something the new administration wants to do — would likely be far down on the priority list, despite heavy lobbying by the hospital industry to suspend enforcement of the new rule.”
More relevant to group brokers, President Biden’s nominee for HHS Secretary, California Attorney General Xavier Becerra, is among the plaintiffs in a lawsuit challenging a 2018 Department of Labor rule that would allow small businesses to band together through association health plans. Becerra also opposed allowing insurers to sell short-term, limited-duration health plans that provide coverage for up to three years,[v] and bypass ACA requirements.
The Biden-Harris transition team announced on Inauguration Day that more than 100 federal agency regulations inherited from the Trump Administration are to be reviewed along with a freeze on new regulations not yet finalized.[vi]
If the change in administrations isn’t enough to put employee benefits in a swirl, employers also have to figure out their most advantageous strategies as it relates to the Consolidated Appropriates Act of 2021[vii] and any other forthcoming paycheck protection and loan programs as part of pandemic relief.
There is much in a state of flux.
Campaign chatter about a public option and/or lowering the age of Medicare eligibility will be addressed here at a future date, if developments move in that direction.
Meanwhile, there’s a clear suggestion – almost a warning – signaled by articles in the industry press.
Be CFO Ready
Reports are coming out, with an ever-louder drumbeat, that companies are shifting employee benefits responsibility to the chief financial officer (CFO)[viii]. Of course, in small companies that may merely be a change of hats but it’s a move into the C-suite of larger companies.
Because they haven’t walked through numerous cases of employees accessing their benefits the way the human resources departments typically do, it’s unlikely the CFO has mastered the nuances of coverage types. That’s why articles on this subject suggest compiling an arsenal of Power Points, infographics and white papers of a Benefits 101 nature.
Our just-released white paper, Zeroing In On Cost-Effective Employee Health Coverage, should be included in your arsenal. With their proficiency in number crunching, a CFO should appreciate building a plan that starts with the lowest cost option and cost:benefit analyzing brick by brick.
The OptiRater provides the speed and efficiency to sort options, assuring them of an ultimate plan design that delivers an attractive return on investment.
But they’ll need your help.
Survey results reported in Benefits Pro[ix] contend “these CFOs are not intending to go it alone. They understand that forecasting health plan costs is not in their wheelhouse; less than one quarter say they are well-positioned for predicting and managing health care cost volatility.
“So they will turn to benefits consultants for guidance.”