How to Protect Your Home from Medicaid Seizure

The high cost of nursing home coverage has forced thousands of families to exhaust their savings trying to pay for long-term care.

When the money is gone, you may however be able to qualify for Medicaid benefits to keep you or your loved one from becoming homeless. The catch: Medicaid officials may move to seize your home after your death to pay the tab.

The Medicaid estate recovery program allows state officials to place liens on the assets of Medicaid benefit recipients to repay the taxpayers for the benefits provided on their behalf. If you are a homeowner and you go on Medicaid, this means that the state Medicaid program will put a lien on your home.

When you and your spouse both pass away, your heirs will have to repay the money owed to satisfy the lien before they can take possession of an inherited property. They could also sell the home, and Medicaid would be repaid with any available proceeds from the sale of the home before heirs can receive it.

Example
You own a home worth $300,000 outright. You develop Alzheimer’s, resulting in the need for several years’ care in an assisted living or nursing facility. The cost forces you to deplete your savings below the poverty level in your state (typically around $1,700 to $2,000 in total, excluding home equity and a few other exempt assets), allowing you to qualify for Medicaid.

Medicaid pays $200,000 on your behalf in nursing home and other medical benefits before you die, and places a lien on your home.

Your heirs will need to pay off the $200,000 lien before inheriting the property outright, or sell and collect the remaining $100,000.

 

The Long-Term Care Partnership Program

There are some strategies you can use to protect your home from Medicare estate recovery officials. One option: Purchase a qualified long-term care insurance policy.
This program enables you to protect your personal assets up to an amount covered by your long-term care insurance policy and still allows you to qualify for Medicaid benefits if and when your insurance coverage runs out.

Long term care generally comes with a maximum daily benefit for a period of years. If you own a qualified long-term care insurance policy, you can shield your home for up to the total benefit amount of your policy, under a federal initiative called the Long Term Care Partnership Program.

To qualify, your long-term care insurance policy must offer an inflation protection rider or include it in the base policy. It must also offer some non-forfeiture options that enable you to recover premiums paid if you have to cancel the policy before it pays benefits on your behalf.

 

Trusts

Alternatively, you may put your home in an irrevocable trust. This has the effect of getting it out of your estate.

But, the law allows Medicaid recovery officials to “look back” up to five years and claw back assets that have been transferred out of your name, or trigger a Medicaid ineligibility period of up to five years.  So speak with a qualified elder law attorney before relying on any strategies involving an irrevocable trust.

For more information about protecting your home and other personal assets from possible estate recovery seizure, call us today, and we can go over your specific situation.

New Rule May Reduce Medicare Advantage Drug Costs

Good news: Your out-of-pocket prescription drug costs under your Medicare Advantage plan may be coming down soon.

A recent change from the Center for Medicare Services (CMS) grants permission to Medicare Advantage plans to allow “step therapy” for Part B drugs. Essentially, this allows plans to start patients on lower-cost generics, where appropriate. Patients would still be able to move to costlier name-brand drugs on Part B medications where the generics are not effective.

Part B drugs differ from Part D drugs in that Part B treatments are delivered in health care facilities and for drugs administered in doctors’ offices, while Part D drugs are those that the consumer purchases from pharmacies. Step therapy has been routine for Part D plans for years, but has been prohibited for drugs administered in health care facilities.

The move by the CMS reverses a 2012 decision by the Health and Human Services Administration.

“By allowing Medicare Advantage plans to negotiate for physician-administered drugs like private-sector insurers already do, we can drive down prices for some of the most expensive drugs seniors use,” Health and Human Services Secretary Alex Azar said.

 

Big savings possible
According to health industry sources, the decision could save as much as 23% on immunology treatments including Remicade, Simponi and Stelera, and ultimately allow competing Medicare Advantage plans to offer premium reductions beginning in 2019.

The Health and Human Services Department notes that private medical insurance companies implementing step therapy realized savings of 15 to 20%. A portion of any savings realized would be redistributed to beneficiaries, likely via rewards programs, rebates and gift card programs.

“As soon as next year, drug prices can start coming down for many of the 20 million seniors on Medicare Advantage, with more than half of the savings going to patients,” Azar said.  “Consumers will always retain the power to choose the plan that works for them: If they don’t like their plan, they don’t have to keep it.”

Step therapy for Part B drugs can begin on new prescriptions beginning in 2019. We’ll be monitoring Medicare Advantage prices as they adjust to the news and begin announcing their prices for 2019 and 2020.
Doctors’ groups have noted some potential downsides to the decision: Requiring patients to try generics first before authorizing brand name drugs could cause effective treatment delays, as the process requires patients to put off taking more effective chemotherapies or other drug regimens.

The CMS is restricting the step therapy directive to new prescriptions only. So, if you’re currently taking a more expensive brand name medication, you won’t have to stop taking your current drug in order to see if the generic is effective for you. You can keep taking your current medication.

However, if you develop a new medical condition, your Medical Advantage plan may need to start with a generic before your plan would authorize the more expensive drug.

 

Appeals process

If a physician believes that step therapy would be inappropriate and ineffective for a patient, and there is a medical necessity for the patient to proceed directly to a more expensive drug, bypassing the step therapy process, they are to use the appeal procedure established by the plan.

Not all plans will be participating in the step therapy program. If you want to switch to a Medicare Advantage plan that does or does not participate in step therapy, call us before or during the Medicare Advantage open enrollment period of October 15 to December 7. We’ll be able to help you assess your needs and choose the plan that’s best for you.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Five Vital Estate Planning Tips

Under current law, federal estate tax applies to all individual estates worth at least $5.6 million.

But, because assets transfer tax-free to the surviving spouse upon the death of a husband or wife, a married couple can shield up to $11.2 million from the federal tax. Only amounts above this level that are still left in your taxable estate (or that of a surviving spouse) are subject to the tax.

However, planning for an orderly transmission of your financial legacy to your loved ones is still important, even for estates too small to meet the estate tax exemption. Here’s what you should do:

  1. Get a will

If you die without a will in place, you won’t be able to determine who gets what assets, nor determine who will get custody of any minors. Instead, the state will do it for you, via your state’s intestate laws, and through a lengthy, expensive and frustrating legal process called probate. This process can delay inheritances for months or even years in complicated cases.

Furthermore, without a will, probate laws force courts to divide your assets among surviving relatives without regard to how close your relationship is with them or their role in your life. Many stepchildren and beloved life partners have been accidentally disinherited by the failure to create a will.

  1. Establish a trust

When you establish a trust to hold money or property, and you do so in such a way that you cannot undo the action (i.e., an irrevocable trust), you move property out of your taxable estate.

Doing so not only sidesteps estate taxes, but also avoids costly probate. This allows assets to effectively pass to heirs free of an estate tax consequence. Meanwhile, it can also help shield assets from the claims of creditors.

Note: It’s not enough to establish a trust. You must also formally transfer ownership of the assets to the trust itself.

  1. Purchase life insurance

When a wealthy family member dies, often surviving members of the family must scramble to raise the cash required to pay federal estate taxes as well as state inheritance taxes. Too often, heirs must sell valuable property and treasured family heirlooms at fire-sale prices just to pay the estate tax.

A properly structured life insurance policy will provide large amounts of cash within days of the death of the insured, that can be used to pay estate taxes, taxes on income with respect to the deceased, probate costs, travel costs, legal fees and other costs.

Often, this type of planning requires insurance planning with permanent insurance products, as term insurance may expire before the insured passes away.

  1. Implement a strategic gifting program

The allowable annual gift you can give to an individual without triggering tax ramifications will be $15,000 until Jan. 1, 2025. This means that you and your spouse can give a combined $30,000 per year to any family members or loved ones – and another $30,000 to their spouse.

  1. Prepare a living will

Your living will, also called an advanced directive, communicates your wishes concerning end-of-life care or care in the event you are incapacitated and cannot make decisions yourself. Combined with a properly drafted power of attorney document, your living will empowers selected trusted individuals with the power to make vital decisions regarding your health care.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Why You Need Short- and Long-term Disability Coverage

Nobody plans on becoming disabled and missing work, but it can happen. An illness or an accident could cause you to be unable to work for months, or even years.

While you health insurance will cover their medical expenses, it won’t cover the cost of living while you recover.

Only 30% of American workers in private industry currently have access to employer-sponsored long-term disability insurance coverage, according to the U.S. Bureau of Labor Statistics.

That means most workers – and their families – do not have adequate protection against one of the most significant financial risks that they face.

That’s why you need your own short-term and long-term disability insurance.

These policies provide income replacement to enable individuals who can’t work to pay the bills, including mortgages and college expenses, and to maintain their standard of living.

Disability insurance replaces a percentage of pre-disability income if an employee is unable to work due to illness or injury.

There are various policies to choose from, including short-term disability coverage, long-term disability coverage, or integrated short- and long-term coverage.

Disability policies have two different protection features that are important to understand:

Non-cancelable– This means the policy cannot be canceled by the insurance company, except for non-payment of premiums. This gives you the right to renew the policy every year without an increase in the premium or a reduction in benefits.

Guaranteed renewable– This gives you the right to renew the policy with the same benefits and not have the policy canceled by the company. However, the insurer has the right to increase the premiums.

Policy Options

In addition to the traditional disability policies, there are several options you can choose from:

  • Additional purchase options. The insurer gives you the right to buy additional insurance at a later time.
  • Coordination of benefits. The amount of benefits you receive from the insurance company is dependent on other benefits you may receive because of your disability.The policy specifies a target amount you will receive from all the policies combined, so this policy will make up the difference not paid by other policies.
  • Cost of living adjustment (COLA). The COLA increases disability benefits over time based on the increased cost of living measured by the Consumer Price Index. You will pay a higher premium if you select the COLA.
  • Residual or partial disability rider. This provision allows you to return to work part-time, collect part of their salary and receive a partial disability payment if you are still partially disabled.
  • Return of premium. This provision requires the insurer to refund part of the premium if no claims are made for a specific period of time declared in the policy.
  • Waiver of premium provision. This clause means that you do not have to pay premiums on the policy after you are disabled for 90 days.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Why You Should Consider Disability Insurance

What would happen if you were permanently injured or became too ill to work?

You might qualify for disability payments from Social Security, but would you be able to survive on the average payout of $1,171 per month? Maybe you have some savings, but would it be adequate to cover your living expenses until you’re old enough to collect retirement benefits?

If you answered “no” to either of these questions, you should consider buying disability insurance.

Disabilities are surprisingly common: One in three women and one in four men will have a disability that keeps them out of work for 90 days or more at some point during their working lifetime, according to The Life and Health Insurance Foundation for Education.

Disability insurance basically protects your income, which is especially important during your peak earning years between 40 and 55 years of age. Not only do most people earn their highest salary during this time, they actively use it to pay down debt and save for retirement.

As most insurers won’t offer disability policies to individuals over the age of 59, now is likely your best time to buy one that will carry you through to full retirement age.

As with health and life insurance, the older you are, the more expensive disability insurance becomes. If you have health problems, it may even become difficult to secure – if at all. You may still be able to purchase a policy, but it may include exclusions for health issues such as back problems or ailments related to high blood pressure for which you’ve regularly sought treatment.

Before you pursue an individual disability insurance policy, check with your employer about group policies. If the company you work for offers one, you may be able to obtain coverage without submitting to a medical examination. This can make the process easier and save you money.

If your employer does not offer supplemental disability insurance, we can work with you to find an insurance company that offers guaranteed renewable policies with fixed costs and terms.

In general, experts recommend a disability insurance policy that will replace 60 to 70% of your salary.

 

Two types of coverage

Short-term disability insurance. A short-term policy typically is designed to replace 80% or more of your gross income for a short duration of time, like 60 to 180 days.

Long-term disability insurance. These policies typically kick in after you’ve been out of work for an extended period of time, such as 180 days.

Long-term policies typically cover only about 60% of your salary. The coverage can last for years and even through the rest of your life, depending on the design of the policy.

 

How it works

The car accident

Bob suffered extensive injuries in a car accident and was unable to return to work for three years.

Typically, after six months, long-term disability insurance would begin to replace a portion of his income. Once he returns to work, the disability coverage will end.

Long term disability

Elizabeth was diagnosed with Parkinson’s disease, and as she deteriorated she was unable to work. Her insurance will continue to pay a portion of her salary for a set amount of time, typically until age 65 or through the end of her life, depending on the policy.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Employers Rethink HDHPs as More People Struggle with Medical Bills

As the number of employers offering high-deductible health plans continues growing, the spotlight recently has highlighted an inconvenient truth: some employees are going broke and filing bankruptcy because they cannot afford all of the out-of-pocket expenses and deductibles they must pay in these plans – just like the bad old days in the 1990s and 2000s.

Besides being in plans with high deductibles, many employees are also paying more for coverage as employers have shifted more and more of the premium burden to their staff.

Making matters worse, studies are showing that many people with HDHPs are forgoing necessary treatment and not taking the recommended dosages of medicines because they can’t afford the extra costs.

Consider:

  • Enrollment in HDHP plans grew to 21.8 million in 2017, up from 20.2 million the year prior, and 5.4 million in 2007, according to a report by America’s Health Insurance Plans.
  • Nearly 40% of large employers offered only high-deductible plans in 2018, up from 7% in 2009, according to a survey by the National Business Group on Health.
  • 50% of all workers had health insurance with a deductible of at least $1,000 for an individual in 2018, up from 22% in 2009, according to the Kaiser Family Foundation.

 

Despite that, a 2017 report by the Centers for Disease Control and Prevention found that 15.4% of adults in HDHPs in 2016 had issues paying bills, compared to 9% of those with other types of insurance. And there have been a number of news reports about the deep financial toll on HDHP enrollees that have suddenly been hit by serious maladies.

Meanwhile, the average deductible for a family had risen to an average of $4,500 in 2017 from $3,500 in 2006, according to the Kaiser-HRET 2017 survey of employer-sponsored health plans.

As a result, some employers are rethinking their use of these HDHPs and trying to reduce the burden on their workers, according to news reports.


Skimping on care

Studies show that many put off routine care or skip medication to save money. That can mean illnesses that might have been caught early can go undiagnosed, becoming potentially life-threatening and enormously costly for the medical system.

 

A study by economists at University of California, Berkeley and Harvard Research, published in the Journal of Clinical Oncology

Findings:  When one large employer switched all its employees to high-deductible plans, medical spending dropped by about 13%. That was not because the workers were shopping around for less expensive treatments, but rather because they had reduced the amount of medical care they used, including preventative care.

The study found that women in HDHPs were more likely to delay follow-up tests after mammograms, including imaging, biopsies and early-stage diagnoses that could detect tumors when they’re easiest to treat.


A report by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, published in
Translational Behavioral Medicine

Findings:  People with HDHPs but no health savings accounts are less likely to see primary care physicians, receive preventive care or seek subspecialty services. Compared to individuals with no deductibles, those enrolled in HDHPs without HSAs were 7% less likely to be screened for breast cancer and 4% less likely to be screened for hypertension, and had 8% lower rates of flu vaccination.

The study authors noted that although more individuals have health insurance under the Affordable Care Act, premiums and deductibles have increased, leaving many Americans unable to afford these costs.

Oddly, many people in HDHPs are also forgoing preventative care services, even though they are exempted from out-of-pocket charges, including the deductible under the ACA. This is likely because most people don’t know that the ACA covers preventive care office visits, screening tests, immunizations and counseling with no out-of-pocket charges. As a result, they do not benefit from preventive care services and recommendations.

Companies with second thoughts

A few large employers – including JPMorgan Chase & Co. and CVS Health Corp. – recently announced that they would reduce deductibles in the health plans they offer their employees or cover more care before workers are exposed to costs.

CVS Pharmacy, part of CVS Health Corp., in 2013 had moved all of its 200,000 employees and families into HDHPs. During routine questionnaires, CVS later found that that some of its employees had stopped taking their medications because of costs. The company, in response, expanded the list of generic drugs its employees could buy for free to include some brand name medications, as well as insulins.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

A New Health Care Model Tackles Costs, Quality Care

As group health insurance costs continue rising every year, more employers are embracing a new plan model that aims to both cut costs and improve outcomes for patients.

This trend, known as value-based primary care, is a bit of an umbrella term for various models that involve direct financial relationships between individuals, employers, their insurers and primary care practitioners. Insurers are experimenting with different model hybrids to find better care delivery methods that reward quality outcomes and reduce costs.

This new approach was made possible by the Affordable Care Act and the Medicare Access and Child Health Plan Reauthorization Act. And as the future of the ACA remains in doubt, the enabling parts that allowed for this system of payment reform that rewards health care providers that produce better quality outcomes for lower costs will likely remain intact.

And now more health plans are adopting this model. The 2016 “Health Care Transformation Task Force Report” found that the share of its provider and health plan members’ business that used value-based payment arrangements had increased from 30% in 2014 to 41% at the end of 2015.

In a McKesson white paper, payers reported that 58% of their business has already shifted to some form of value-based reimbursement.

 

How does it work?

First, let’s look at what the value-based primary care model is not: it’s not a fee-for-service system, under which when doctors see a patient and deliver care, they then bill the insurer a fee that is directly tied to the service they provided.

Fee-for-service arrangements have a fee schedule that lists the usual and customary charges for thousands of different procedures. The payment amounts will vary also based on the

reimbursement rate negotiated between the insurer and health care provider.

The part of the equation that’s missing is that the there is no direct link between the payment and the outcomes of the care. The insurer does not look at if a person was cured or has recovered successfully. There is only a link between the service provided and the payment.

Many value-based models provide a payment bonus to doctors and hospitals that produce better quality outcomes, like if they have more patients who don’t relapse or who recover at a slower pace and require more doctor visits.

Providers of value-based primary care typically charge the health plan a monthly, quarterly or annual membership fee, which covers all or most primary care services, including acute and preventive care.

The main goal is to get away from the fee-for-service system which puts pressure on doctors to only provide very short primary care visits with their patients, who will often send the patient out for unnecessary high-margin services such as scans and specialists and/or write excessive prescriptions. By eliminating this billing structure, doctors are able to practice more proactive care, which can reduce or eliminate certain future health care costs.

But just because the model is patient-focused, it does not mean that costs are higher. Proponents of value-based care say the focus on patients, and focusing on preventative and forward looking care rather than reactive care, reduces overall costs, which should be reflected in premiums.

Some benefits to patients include:

  • More time with their doctor
  • Same-day appointments
  • Short or no wait times in the office
  • Better technology, e.g., e-mail, texting, video chats, and other digital-based interactions
  • 24/7 coverage by a professional with access to their electronic health record
  • More coordinated care.

 

Vale-based care also improves provider experience and professional satisfaction, which, in turn, is known to improve the quality of care.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Four Life Insurance Myths Shattered

Life insurance is a straightforward concept: Buy a policy and pay a relatively small premium, and the beneficiary will get a large cash benefit if the insured dies while the policy is in force.

But there are many variations on this basic theme – and just as many misconceptions about how life insurance works. Here are some of the most common myths.

 

I already have enough life insurance through my job.

Many people believe they have coverage from work. But in many cases, the amount of coverage from a workplace group policy is not nearly enough to provide meaningful protection for the employee’s family.

The reason: Section 7702 of the tax code, which governs employer-paid group life insurance benefits, only allows employers to deduct premiums for a death benefit of $50,000 or less. That’s only a fraction of the true need for most working families.

Many financial experts recommend owning between 10 and 12 times one’s salary or more – especially if you are relatively young. The reason: If the unthinkable happens, the family will need that life insurance to replace many years of a breadwinner’s salary.

Furthermore, if you get sick and lose your job, you may lose your life insurance just when you need it most. And you may not be able to qualify for life insurance then.

Owning your own policy ensures that you can select the amount of protection that suits your needs, and that your policy follows you even if you change jobs or leave the workforce. If you have coverage at work, you may want to explore owning additional coverage for yourself and your family.

 

I’m young and healthy and don’t need it.

The best time to buy life insurance is when you are young and in good health. Accidents and injury, not illness, are the leading cause of death for Americans under age 44, and the fourth leading cause of death for Americans of all ages, according to the Centers for Disease Control.

These deaths include:

  • Car accidents
  • Accidental drug overdoses, including prescription drug overdoses
  • Medical error
  • Falls
  • Drowning
  • Accidental shooting
  • Electric shock
  • Fires
  • Traumatic brain injury
  • Crime

 

Any of these events can strike the young and healthy at any time. More than 235,000 Americans died of injuries and accidents in 2016, according to the CDC –  105,296 of them, or 43%, were age 45 or younger.

I don’t qualify for life insurance.

Medicine has improved a great deal in recent years – and life insurance underwriting has changed with it. You may still be able to qualify even if you have controllable diabetes, cancer (in remission, usually for five years or more), or if you smoke or are overweight, have high blood pressure or cholesterol.

Yes, you’ll likely have to pay a higher premium, or settle for a lower amount of life insurance.

 

I can’t afford it.

It’s more affordable than you think. Some 80% of Americans vastly overestimate the cost of life insurance, according to LIMRA. Millennials overestimate the cost by 213%, and Gen Xers by 119% .

The fact is today’s life insurance carriers are able to offer meaningful protection for just a few dollars per week – and often less than the cost of a single dinner out per month. This is especially true if you buy it while you are still relatively young and healthy.

Besides, if you think you can’t afford it now, imagine how devastated your family would be if they suddenly lost you!

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Employers Expect 6% Hike in Health Costs for 2019

The IRS has released the inflation-adjusted amounts for 2019 used to determine whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s employer shared responsibility provisions.

For plan years beginning in 2019, the affordability percentage has increased to 9.86% (from 9.56% in 2018) of an employee’s household income or wages stated on their W-2 form. The higher rate is indicative of the anticipated small group plan inflation that continues hitting premiums.

If you are an applicable large employer under the ACA (with 50 or more full-time staff), you should examine the affordability percentages for your lower-waged employees so you don’t run afoul of the law. Fortunately, as the percentage has increased, you’ll have more flexibility when setting your employees’ contribution rates.

A recent study by PricewaterhouseCooper’s Health Research Institute found that employers and insurers are expecting a 6% increase in health care costs in 2019. While that rate is just slightly above the average 5.6% increases since the ACA took effect, many employers have increasingly been passing the inflationary costs on to their covered employees.

The report by PwC noted three trends that are having the largest effect on health care costs.

 

Abundance of treatment options – With covered individuals demanding more convenience in their treatment options, employers and health plans have responded by giving them more ways to obtain care, like retail clinics, urgent care clinics and electronic physician consultations. While the long-term goal is to reduce health care spending on services, currently the increased offerings have resulted in higher utilization.

 

Mergers by providers – Hospitals and other health care providers have been consolidating for the better part of a decade, and that trend is expected to continue in light of several recently announced mega-deals. Prices tend to rise when two health systems merge and the consolidated entity gains market share and negotiating power.

 

Physician consolidation and employment – Hospitals, health systems and medical groups are hiring more and more doctors out of private practice. And when that happens, costs tend to go up since these organizations tend to charge higher prices than independent practitioners.

In 2016, 42% of physicians were employed by hospitals, compared to just 25% in 2012, according to the PwC report. Hospitals and medical groups tend to charge between 14% and 30% more than physicians in private practice.

 

Restraining factors

At the same time, there are some factors that are dampening overall cost increases:

  • Expectations that next year’s flu will be milder than this year’s main virus.
  • More employers are offering care advocates who help covered individuals navigate the insurance system to find the best quality care at the best price. According to the survey, 72% of employers offered health-advocacy services to their employees in 2018.
  • More employers are using “high-performance networks,” also known as “narrow networks.” In essence, a plan will use a narrow network of doctors who care for the bulk of covered individuals. Not contracting with as many doctors means lower overall outlays for medical services.
    While the doctors in these networks are not always the least expensive providers, they typically are ones who have proven over time to yield the best results.

 

The takeaway

We are here to help you get the most value for your and your employees’ health care spend. Talk to us about any of the tools mentioned above to see if we have a program that might work for your organization.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Wellness Plans Can’t Offer Discounts for Medical Questionnaires, Exams Starting in 2019

Regulations governing how wellness plans offer discounts on health premiums are set to sunset in January 2019, and with no prospects of replacement regulations in sight at the Equal Employment Opportunity Commission, this means that the shackles will be lifted on the plans.

The rules which allow an employer to grant up to a 30% discount on health insurance premiums to employees that fill out health questionnaires or take various health evaluation tests, were found to be “arbitrary” by an appellate court judge about a year ago. But, to avoid disruption in the marketplace and for employers who had already set their wellness plans in motion, the judge ordered the regulations to sunset on Jan. 1, 2019.

The judge agreed to delay the sunsetting to that date to allow the EEOC to write up new proposed regulations for wellness plans.

In making his order, he instructed the agency to write new regulations by August 2018. However, in March, the EEOC announced that it had no immediate plans to issue new wellness regulations regarding the definition of “voluntary.”

 

Why are the regulations sunsetting?

In July 2016, the EEOC issued rules under the Americans with Disabilities Act (ADA) and the Genetic Information Non-discrimination Act (GINA) stating that, in connection with such plans, employers could implement penalties or incentives of up to 30% of the cost of self-only coverage to encourage employees to disclose ADA-protected information, without causing the disclosure to be involuntary.

The disclosures in question would be part of wellness program questionnaires and exams designed to help employees improve their health and fitness.

The American Association of Retired Persons filed suit challenging the regulations and a federal district court in Washington, D.C. nullified the EEOC’s rules for how employer wellness programs could be offered in compliance with the ADA and GINA.

Beginning Jan. 1, 2019, companies may no longer assess penalties (some of which triple what an employee pays for health insurance) to workers who decline to participate in wellness questionnaires and exams.

With no guidance forthcoming from the EEOC, affected employers will need to make a decision. Should they continue with current programs, considering the risk of EEOC enforcement or private legal action, or should they come up with a plan B?

While it may be tempting to expect the EEOC to come up with regulations that are similar to the current ones but in compliance with the court’s decision, that could come back and haunt you.

Pundits suggest creating a path for employees this year that allows them to achieve their full points total without medical exams or inquiries. You can put together a plan that focuses on other wellness issues that they can instead participate in.

Some alternatives to medical questions and exams that employers may want to consider are:

  • Healthy lifestyle training.
  • Distributing Fitbits or similar fitness trackers.
  • Allowing employees to participate in online health education games.

What’s next?

Considering the Trump administration’s history on regulatory matters, it’s likely things will revert to the old guidance for wellness plans: that employers could neither require participation nor penalize employees who do not participate.

But for now, employers need to tread carefully and should consider changing their wellness plan rules if they include incentives for medical questionnaires and exams.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.