On February 20, 2018, the U.S. Departments of Labor, Treasury, and Health and Human Services (Agencies) released proposed regulations that expand the availability of short-term limited duration insurance (STLDI). STLDI is offered in the individual (non-group) insurance market and is generally used by individuals such as students or individuals between jobs. Therefore, the direct impact to employers is limited; however, there is some concern that this rule may disrupt the individual and small group markets and is seen by some as a further step by the Trump administration to erode Obama-era regulations.
The rule reverses prior regulations that limited the duration of STLDI coverage to less than 3 months after the original effective date of the contract. If finalized, the rule would extend the permitted duration of STLDI to a period of less than 12 months. The rule does not require issuers to guarantee renewability of STLDI policies; however, it does not prohibit individuals from re-applying for coverage for another 364 days (which would likely be subject to medical underwriting).
The proposed regulations are in furtherance of an October 2017 Executive Order instructing the Agencies to consider ways to promote healthcare choice and competition by, among other things, expanding the availability of STLDI. The regulations are open for public comment for 60 days.
Although STLDI is sold in the individual market, it is exempt from ACA’s insurance mandates, which typically makes it more affordable than the ACA-compliant plans that are required to offer coverage in ten broad categories of essential health benefits and contain other consumer protections. STLDI, on the other hand, is not required to cover essential benefits and may contain preexisting condition exclusions and annual and lifetime limits.
There is concern that expansion of STLDI availability may result in increased morbidity in the individual and small group markets due to younger, healthier individuals being encouraged to purchase STLDI. The federal government; however, expects that a relatively low percentage of individual market enrollees will shift to STLDI plans, and that only 10% would have been subsidy eligible had they maintained their Marketplace coverage.
In addition, increasing the duration of STLDI reduces the risk of a gap in coverage for people who become seriously ill while covered. Under current rules, they may have a gap in coverage before being able to enroll in a Marketplace plan that provides more robust coverage (another STLDI plan would likely exclude their condition as pre-existing). Also, since STLDI typically is not network-based, it allows for greater choice of providers, which may be useful in rural areas where provider networks under ACA plans are limited.
The proposed rule does not include an effective date for a final rule; however, the Agencies have proposed that the rule, if finalized, would be effective 60 days after publication of the final rule.
About the Author
Stacy H. Barrow, Esq., Compliance Director
This alert was prepared by Stacy Barrow. Mr. Barrow is a nationally recognized expert on the Affordable Care Act and BAN’s Compliance Director. His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm. He can be reached at sbarrow@marbarlaw.com.
This publication is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
In Rev. Proc. 2018-18, the IRS has released adjusted contribution limits for health savings accounts (HSAs) due to changes made by the Tax Cuts and Jobs Act (TCJA). As shown below, the new HSA contribution limit for individuals with family high deductible health plan (HDHP) coverage is $6,850, a $50 reduction from the previously announced inflation-adjusted amount for 2018. Other HSA/HDHP figures remain unchanged.
HSA Contributions in Excess of $6,850
While most employees with family HDHP coverage will not have contributed more than $6,850 through salary reductions at this point in 2018, employers will need to communicate the reduction to employees and reduce elections for employees who have elected $6,900 (and who will not be age 55 by the end of 2018). If an employer has already funded $6,900 on a non-taxable basis, they should include the additional $50 in the employee’s income and the employee may take a corrective distribution to avoid excess contribution penalties.
In most cases, the only task for employers will be to inform employees of the adjustment and, specifically, inform those who elected $6,900 (or $7,900 for employees who will be age 55+ at the end of 2018) that their election will be capped at $6,850 (as adjusted for the $1,000 catch-up).
Adoption Assistance Adjustment
The TCJA also reduces the amount that can be excluded from an employee’s gross income for the adoption of a child with special needs from $13,840 to $13,810. The phase-out also begins at a lower level than previously expected – $207,140 (reduced from $207,580) and is completely phased out for taxpayers with modified adjusted gross income of $247,140 (reduced from $247,580).
Transition Relief for Certain Non-Compliant HDHPs
In separate guidance (Notice 2018-12), the IRS provided transition relief for an issue that threatened to disrupt HSA-eligibility for individuals in states that require certain health insurance policies to provide benefits for male sterilization or male contraceptives without cost sharing (reportedly, California, Illinois, Maryland and Vermont). Under IRS rules, such coverage does not qualify as preventive when provided to males because they are not preventive care under the Social Security Act, and no applicable guidance issued by the Treasury and the IRS provides for the treatment of those benefits as preventive care. Thus, the IRS concluded that under current guidance, a health plan isn’t an HDHP if it provides benefits for male sterilization or contraceptives before the minimum deductible for an HDHP is met, regardless of whether the coverage of those benefits is required by state law. An individual who is not covered by an HDHP isn’t HSA-eligible and cannot contribute or receive employer contributions to an HSA on a tax-free basis.
The IRS understands that states may wish to change their laws in light of the Notice; however, they may be unable to do so in 2018 because of limitations on their legislative calendars or other reasons. Without relief, residents of these states would be unable to establish or contribute to an HSA on a tax-free basis unless their plan is exempt from the state mandate (e.g., they are covered under a self-insured ERISA plan). Therefore, the Notice provides transition relief for 2018 and 2019 to participants in an HDHP that provides benefits for male sterilization or male contraceptives without a deductible, or with a deductible below the minimum deductible for an HDHP. Until 2020, these individuals won’t be treated as failing to qualify as HSA-eligible individuals merely because they are covered by such an HDHP.
About the Author
This alert was prepared for Benefit Advisors Network by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.
Stacy H. Barrow, Esq., Compliance Director
This alert was prepared by Stacy Barrow. Mr. Barrow is a nationally recognized expert on the Affordable Care Act and BAN’s Compliance Director. His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm. He can be reached at sbarrow@marbarlaw.com.
This e-mail is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
Gallup, LinkedIn, and Recruiter.com all have studies showing that recruiting and retaining millennials tops the list of the most challenging HR business objectives for employers across the country. It is not surprising when you consider the following statistics:
At 75 million, Millennials make up the largest generation, according to the U. S. Census Bureau;
They have been entering the workforce over the past 15 years and now are moving into management roles. The oldest millennials in workforce are 35+;
By 2030, seventy-five percent of the employee workforce will be Millennials.
As discussed in Part 1 of our three-part series, the Millennial generation is far different than its predecessors, the Baby Boomers and Gen Xer’s. They are challenging – and changing – the way employers manage their workforce. The Millennials have completely different career priorities, with culture being the draw versus a traditional benefits package, according to SHRM. The low unemployment rate, at 4.2% as of Sept 2017 according to the Bureau of Labor Statistics, means that employers are vying for the same talent pool.
In this part of our three-part Attraction and Retention series, we will look at the characteristics of the Millennial generation that employers should be working with to be the “employer of choice” for this new generation.
The Age of…Technology
Millennials have grown up in the Knowledge Age. This post-industrial age sees knowledge as the main form of economic growth. The ability to manage knowledge is critical to the success of today’s businesses and organizations.
Looking back through the 20th century (1901-2000), we can see how access to and sharing of information progressed and advanced into the 21st Century. The 20th century began without cars, planes, television, and computers but ended with these familiar technological inventions:
1980’s Personal Computers first hit the market;
1990’s the volume of email surpassed regular mail;
1999 Bluetooth, WIFI and social media hit the market.
Into the 21st Century we find technology growing at an even greater speed, changing the way business operates. In a short time, we have seen the invention and rapid adoption of various technologies, such as Facebook, YouTube, Nintendo WIii, Apple’s iPhone, Google’s Android Mobile phone, and 4G broadband standards, to name a few.
While the 20th Century provided what seemed like a more leisurely introduction of the technology advancements, it also gave employers time to introduce – and adapt – these inventions to their workforce. Today, the rate of speed and almost simultaneous advancements in technology creates opportunities for businesses to achieve greater efficiencies and streamline processes in ways that leave employers struggling to keep up.
We see that with these instantaneous-like advancements, technology continues to improve and expand our methods of communication. Employers have opportunities for greater bandwidth in worksite mobility, both in expanding their customer base and in an employee’s outreach – from the ability to diversify worksite opportunities to offering non-traditional working hours and instant accessibility across the country and around the globe. For Millennials, this has been their world: technology consistently providing instantaneous and current information, multi-directional access to information, and ever-changing information.
A Change in Values
Throughout the 20th and into the 21st Century, we started to see a major shift in worksite values that morphed with the Millennials. How has this played out? In the 20th Century there were multiple World Wars, the Great Depression, women entering the workplace, employers taking on more responsibility for employees (i.e. unemployment taxes and pension plans). Work that was traditionally an obligation of the men to provide stability in the family began to shift to a career focus as the two-person working family evolved. With more two parent workers, the children of the Baby Boomers, Generation X, the latchkey kids became known as the “lost generation” without a voice. This generation fights for their chance to be heard and to make an impact; and as part of the shift to viewing a job as “just a job” when not heard they jump to another employer. Promoted by cries of education first, the college debt ridden Millennials see a job as a way to get out of debt first and balance their life second.
Note how the paradigm shift evolves in the valuation a job. The Traditionalists believed in a long-term career and today Millennials see a job as a means to an end, whatever that end may be (debt, work-life, career advancement). The chart below, taken in part from the Workflow Management Coalition Generational Differences Chart, evidences the work values definition that has been created as we shifted from the 20th into the 21st Century.
With a job just being a means to an end, what additional characteristics and values exist within the Millennial generation that an employer can work with to attract and retain this worker? Again, return to the collective data that has been obtained on Millennials from groups like Gallup, SHRM, and Korn-Ferry. This tech-savvy, independent, altruistic generation is seeking employers that allow them to incorporate their purpose into their jobs. What is the purpose of the Millennial generation?
Collectively, we see that the Traditionalists punched the clock and kept work distinctly separate from family life. Baby Boomers feared taking time off from work and losing the momentum up the corporate ladder. They set the 50-hour workweek standard. Seeing the workaholic behaviors of the Baby Boomers, Gen Xer’s decided that wasn’t for them. Work-life balance began to take shape as a required benefit employers needed to offer. The Gen Xer’s had employers implementing the fun things at work that spurred creativity, engagement, and collaborative work environments, such as concierge services to ensure that life continued while at work, pool tables, table tennis, and latte machines, in favor of water coolers.
Millennials have moved even further across the spectrum and the continued push for work-life balance is now expanding outside of the traditional workplace. They are searching for jobs that offer the four pillars of holistic wellness: physical, financial, social, and emotional values. They are also searching for opportunities that are supportive of developing work ethics. This includes companies that offer the opportunity to be engaged with management, collaboration with co-workers, an ability to participate in furthering the company’s purpose, and access to employer resources through technology.
Employer Reinvention
Employers are also finding that they need to reinvent their message to attract this group of employees. This in turn means that they need to reinvent themselves. With the competition in the marketplace, 6.1 million jobs and the lowest post-recession unemployment rate (4.2%), employers are continuing to find that they cannot just be marketing the skills and qualifications they are looking for in an employee. Employers need to equal the marketing efforts of other advertisers who are attempting to reach this generation. They also need to market their career openings, treating prospective employees like consumers. Employers should use techniques that provide access to current and instantaneous information that is generationally directed as well as incorporate multi-directional messaging through the use of multiple channels to demonstrate why they should be considered the “employer of choice.”
Business spends a lot of money and time gathering customer feedback and satisfaction data to create and maintain market share. This helps them survive. Consumer engagement is critical to revenue from both new and repeat customers. Why buy here when they can buy elsewhere? The same concepts apply to employees and today’s buzz phrase is “employee engagement.” However, this is not a new concept. Business 101 has always taught company owners that employees impact the bottom line. For employers, this was translated into policies and practices, that dictated long hours, high production rates, monitoring absenteeism rates, no question of management and zero tolerance for poor performance. While production and performance are still integral to the bottom line, turnover is measured differently with the changing tides of Millennials view of employment. Employers find that without changing themselves to move with the changing tides, they will continue to have high turnover rates.
In Conclusion
Employee engagement today begins with an interview flip-flop. Instead of employers asking, “Why should I hire you,” candidates are asking, “Why should I come to work here?” Has management asked itself that question? Have they asked their current workforce what is keeping them in their job? If finding that money or benefits is the key motivator, and while being competitive with compensation is still important, employers should be looking at redefining their business objectives and weigh them against the motivating characteristics of the Millennial worker.
If not, as statistics from Korn-Ferry show, the employee who is only motivated to work at the company because of money and benefits will be gone as soon as the next best offer comes around.
How can you change that culture that is driving the “I am only here for the money attitude?” In the last part of our three-part series, we will look at a how an employee engagement campaign could look to attract and retain your Millennial worker.
About the Author
Bobbi Kloss is the Director of Human Capital Management Services for the Benefit Advisors Network, a national network of independent employee benefit brokerage and consulting companies. For more information, please visit: www.benefitadvisorsnetwork.com or email the author at bkloss@benefitadvisorsnetwork.com.
On January 22, 2018, President Trump signed H.R. 195: Extension of Continuing Appropriations Act, 2018, which is a short-term spending bill that re-opened the federal government after a three-day shutdown. As discussed below, the bill:
Extends the Children’s Health Insurance Program (CHIP) for six years, through the fiscal year 2023;
Extends the existing suspensions of the Affordable Care Act’s (ACA) medical device excise tax through 2019 and the tax on high-cost employer-sponsored health coverage (the “Cadillac Tax”) through 2021; and
Suspends the annual fee on health insurance providers for 2019.
No other changes were made to the ACA as part of this bill. Last month, as part of the Tax Reform and Jobs Act, the individual mandate penalty was reduced to $0 beginning in 2019.
Cadillac Tax – Delayed until 2022
The spending bill includes a two-year delay of the 2020 effective date to tax years beginning after December 31, 2021. The Cadillac Tax – a 40% tax on employer-sponsored health coverage that exceeds $10,200 for individual and $27,500 for family coverage (indexed) – was previously delayed two years (to 2020) under the Protecting Americans From Tax Hikes Act of 2015 (PATH Act).
While the delay was welcome news for many employers, efforts to fully repeal the Cadillac Tax are likely to continue as many employers believe it will increase both employee and employer costs and will cause employers to reluctantly cut benefits to avoid the tax.
Medical Device Tax – Extension of Moratorium for 2018 and 2019
The spending bill includes a two-year extension of the moratorium on the ACA’s 2.3% tax on the sale of medical devices. Under the spending bill, the tax will not apply to sales during the period beginning on January 1, 2018, and ending on December 31, 2019. The PATH Act had placed a two-year moratorium on the medical device tax for 2016 and 2017, which is now extended for 2018 and 2019.
Annual Fee on Health Insurance Providers – Suspended for 2019
The spending bill places a one-year moratorium on the annual fee on health insurance providers for the calendar year 2019. The PATH Act had placed a one-year moratorium on the fee for 2017. Although it remains in effect for 2018, it will be suspended again for 2019. The tax applies to fully insured medical, dental and vision plans based on the carrier’s net premiums and is typically passed through to employers that sponsor such plans.
About the Author
Stacy H. Barrow, Esq., Compliance Director
This alert was prepared by Stacy Barrow. Mr. Barrow is a nationally recognized expert on the Affordable Care Act and BAN’s Compliance Director. His firm, Marathas Barrow Weatherhead Lent LLP, is a premier employee benefits, executive compensation and employment law firm. He can be reached at sbarrow@marbarlaw.com.
This message is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
President Trump Executive Order issued intended to minimize the economic and regulatory burdens of the Affordable Care Act (“ACA”). The order is somewhat symbolic and has no immediate effect on employers, many of whom are in the process of complying with the ACA’s onerous reporting requirements (Forms 1094 and 1095), which are not rescinded by the order.
The order directs HHS and the heads of other departments and agencies (e.g., U.S. Department of Labor, Treasury Department) to exercise all available authority and discretion to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications. It should be noted that employers are not among those explicitly listed as requiring protection from regulatory burdens.
The order is broadly drafted and does not specify which provisions of the law should be targeted. However, to the extent that following the order would require revision of regulations issued through notice-and-comment rulemaking, the agencies will need to comply with the Administrative Procedures Act (“APA”).
Under the APA, agencies cannot rescind existing regulations until they engage in a new notice-and-comment rulemaking process (including required public comment period and delayed effective dates) and observe other procedural requirements. In practical terms, the APA makes it difficult for an incoming President to overturn final regulations implemented by a predecessor. Regulations that haven’t taken effect can be suspended while they are reviewed to determine if they conform to the new administration’s agenda, or if modification or revocation is necessary. To that end, the President’s chief of staff has instructed federal agencies to cease issuing new regulations and withdraw rules that have been sent to the Office of the Federal Register until they can be reviewed by the new agency heads.
The order is somewhat symbolic given the constraints imposed by the APA, yet is has some substantive effect. The directive gives HHS wide latitude when granting hardship exemptions from the individual mandate (it does not, however, waive the requirement for individuals to maintain minimum essential coverage). The order also signals to states that the federal government may be more receptive to granting Medicaid waivers, which afford states additional flexibility in designing and administering their programs. Another section of the order instructs the agency heads to work with states to encourage the sale of insurance across state lines, to the maximum extent permitted by law. Current law (the McCarran-Ferguson Act), protects insurance companies from interstate competition by permitting states to regulate health plans sold in their state, creating a patchwork of state insurance laws across the U.S.
From an employer perspective, employers with 50 or more full-time equivalent employees and sponsors of self-insured health plans are preparing to comply with the ACA’s reporting requirements (Forms 1094 & 1095) over the next couple of months. They may be tempted to view the order as a sign that the Internal Revenue Service will not enforce the employer mandate or ACA reporting. However, until further regulatory guidance is released, the final regulations implementing the employer mandate and its reporting requirements remain in effect and are subject to enforcement by the IRS. The IRS recently indicated in FAQ guidance that it intends to begin notifying employers of their potential liability for an employer shared responsibility payment for the 2015 calendar year “in early 2017”.
Once President Trump’s appointments to the regulatory agencies are seated we’ll likely see new regulations proposed to ease the ACA’s economic and administrative burdens, although the process will take some time. Also, now that President Trump has taken initial action on the ACA, it may ease the pressure on Congress to attempt an immediate repeal or find a replacement.
About The Authors
This alert was prepared for Benefit Advisors Network by Stacy Barrow and Mitch Geiger. Mr. Barrow and Mr. Geiger are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm. They can be reached at sbarrow@marbarlaw.com or mgeiger@marbarlaw.com.
This is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.
