Governor Wolf Unveils 2018-19 Budget Plan

Pennsylvania Governor Tom Wolf’s 2018-19 budget proposal once again includes a severance tax on the natural gas industry and an increase in the minimum wage to $12 per hour. Revenue from the gas tax and social service savings from increasing the minimum wage would pay for workforce development programs and an increase in education spending of $225 million. The Governor’s plan, unveiled Tuesday, Feb. 6, would increase spending by nearly $990 million to $32.9 billion.

A summary of the budget is available online. Budget hearings will be held in the House and Senate in the coming weeks.

Strategy and Analysis: How Alternate Funding and Tools Can Help Control Small Group Health Plans

From ChamberChoice and Smart Business Pittsburgh

Today’s health care environment is riddled with complex plan designs and rigorous government regulations, leaving many employers to feel as though their hands are tied when it comes to finding unique, innovative and cost-saving solutions.

But a new concept is emerging that will enable small employers to identify current and future risk, influence behavior and control costs. 

Smart Business spoke with Aaron Ochs, a consultant at JRG Advisors, about strategic analysis and risk management in the small group health insurance market.

How is the small group health insurance market changing?
Typically, small employers have been unable to maximize the value of their medical benefits due to lack of claims utilization and analysis from their insurance company. In the typical buying arrangement, the small group market is a fully insured contract that does not offer the employer much control over the health plan. Self-funding works differently.

In addition to providing protection against excessive costs in years with high claims and the opportunity to keep the profits from favorable years, the availability of data, including claims utilization, is a significant advantage for the employer. Knowing the health and risk factors of the employee population helps the employer determine the appropriate benefits strategy.

Self-funding is not a new concept; but it is new to the smaller employer — with many insurance companies offering level-funding premium options (a form of self-funding) to groups with as few as 10 insured employees.

With level funding, the employer puts aside enough money to cover anticipated claim expenses and the monthly premium remains level for the entire plan year. If claims are less than the funded amount at the end of the year, a rebate or credit is issued. If claims exceed the funded amount, the employer is protected by stop loss.

How can employers use data as a tool to help?
The ability to anticipate or predict claims costs hasn’t been available in the small group market due to the absence of claims data from the insurance companies — until now.

This is where newly developed risk management and predictive modeling tools come into play, making it possible to take a much ‘deeper dive’ into the composition and risk of the smaller employer, proactively identifying members with markers for chronic illness to predict health risks and determine if self-funding is a viable solution.

The deeper dive begins with employee data that is captured through a custom access portal, scrubbed and reviewed. The portal is an insurance company-accepted, Affordable Care Act and HIPAA compliant online benefits application tool designed to reduce the amount of time, cost and paperwork for employers. Employees are asked to complete an online enrollment interview. The employer receives a confidential de-identified aggregate report with an overall analysis.

This expert analysis guides the business owner through the benefit decision process with the power of knowledge. Gaining insight into the composition and health status of the group means plan design decisions can be strategic rather than an annual game of ‘pinning the tail on the donkey’ to find a tolerable solution.

What kind of results can employers expect?
Often, the same portal technology can reduce or eliminate many administrative burdens by providing the added support of employee enrollment, communication and plan election/waivers. The solution is a faster and more efficient approach to benefits. This means employers can essentially build their own health plan, which can lead to generous cost savings, greater transparency and understanding, and better overall cost control.

Over half of an average employer’s health care budget is spent on members with preventable conditions. It’s time for small employers to take control of their health care plans. Talk to your advisor to learn how these funding arrangements and risk analysis tools can help with your strategic benefits planning needs.

PA Chamber Applauds Wolf Administration For Working to Reduce Regulatory Red Tape

From PA Chamber of Business & Industry

On Friday, Jan. 26, Gov. Tom Wolf held a press conference to announce that his administration was working toward making several positive changes to the state’s existing and cumbersome regulatory and permitting process – reducing permit backlogs, modernizing permitting processes and better utilizing technology to improve regulatory oversight and efficiency. This will include a request in Gov. Wolf’s budget of hiring more people within the Department of Environmental Protection.

Other efforts will include expanding the e-permitting system with several key development permits, to reduce paperwork between DEP and industry; creating a new analytics program to track permit times; releasing new review processes and registration practices to make application processes easier; and supporting legislation to bring permitting in line with the industry it is engaged with – for example, extending permit terms and allowing multi-well pad permitting.

Following the press conference, PA Chamber President Gene Barr issued a statement applauding the governor for taking steps toward reducing long-term regulatory burdens for the private sector. “Today’s announcement is a step in the right direction to making it easier for job creators to operate in the Commonwealth,” Barr said. “We look forward to working with the legislature and the Wolf administration on additional steps to improve the state’s regulatory and overall business climate.”

Stopgap Funding Bill Makes Notable Changes to Affordable Care Act Deadlines

From PA Chamber of Business & Industry

After a brief government shutdown, a stopgap funding measure was signed on Jan. 22 that also contains a few provisions that makes changes to the federal Affordable Care Act and will have a direct impact on certain employer plans. Among the notable changes are:

  • A two-year delay of the “Cadillac” tax – the ACA provision that levies a 40 percent excise tax on the cost of healthcare plans above specific IRS limits delays the tax an additional two years, setting its new effective date to 2022. According to financial consulting firm Conrad Seigel, the delay on the tax (this is the second time it has been delayed), coupled with bipartisan opposition to it has raised speculation over whether the “Cadillac Tax” will ever be fully implemented.
  • One-year suspension of the Health Insurer’s Tax in 2019 – Two years ago, Congress and the president issued a one-year suspension on HIT – a provision in the ACA that imposes a tax on health insurers. The delay was in place for 2017, so the tax became effective again this year.
  • Two-year suspension of the Medical Device Tax – A 2.3 percent excise tax on U.S. medical device revenues was delayed in 2016 and 2017 and under the new law will continue to be suspended through 2018 and 2019.
  • Restoration of federal funding to the Children’s Health Insurance Program – The new stopgap funding bill provides an additional six years of federal funding for CHIP, following months of speculation about the program’s future after its budget expired on Sept. 30 of last year. The funding will assist states in providing health coverage to children and pregnant women in need.

ERISA Penalty Adjustments Announced

From ChamberChoice

The Employee Benefits Security Administration (EBSA) is the enforcement arm for the Department of Labor (DOL) as it relates to employee benefit plans. The EBSA enforces ERISA’s fiduciary, reporting and disclosure provisions. Civil monetary penalties can be assessed for compliance failures of any of these requirements. Penalties however, become less effective when they have not been raised to keep up with inflation. Therefore, based on the Inflation Adjustment Act, new penalty amounts are adjusted annually in January.

Increased penalty limits for 2018 are scheduled to be effective as of Jan. 2, 2018 when they will be published in the Federal Register. Employers need to be aware of these penalties as many are applicable to employee benefits they offer. 

At right is a brief table outlining some of the increases.

Although the DOL does not typically assess the maximum permissible penalty under the law, the looming penalties may spur plan sponsors and administrators to more closely scrutinize their compliance efforts.