COBRA Will Soon be Completely Obsolete Thanks to the Affordable Care Act

There is no reason, whatsoever, to not repeal COBRA, effective January 1, 2014. The Consolidated Omnibus Budget Reconciliation Act of 1985, more commonly known as COBRA, is a federal law that provides workers and their families the right to remain on a former employer’s health plan should they lose their job for any reason, experience a transition period between changing jobs, have their working hours reduced to part-time or experience other specified life events. Individuals exercising this right must pay up to 102 percent of the cost of the health plan and can remain on the plan for 18 months.  The purpose of this law was to prevent individuals from having a coverage gap of 63 days. This is important, because before the passage of The Affordable Care Act (ACA) health insurers could only deny coverage for a pre-existing condition if the individual experienced a gap in health insurance coverage.

For plan years beginning on or after January 1, 2014, the ACA mandates that no individual can be denied health care coverage due to a pre-existing condition.  Elimination of the pre-existing condition exclusion for children took effect September 1, 2010.

COBRA applies to any employer with 20 or more workers. Human resources directors and administrators at employers subject to COBRA will often complain about the costs and complexity of administering COBRA benefits. In fact, many hire outside firms that specialize as COBRA administrators because managing this requirement with internal resources is often impossible.

Now that the Supreme Court has affirmed the constitutionality of the ACA (with one exception related to Medicaid) and President Obama has retained the White House, Congress should enact legislation to repeal COBRA effective January 1, 2014.

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Contact:

Mark Whitcher at mwhitcher@ktpadvisors.com or (401) 490-9351

Barry Eyre at beyre@ktpadvisors.com or (401) 490-9365

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Employers Can’t Avoid ACA Mandates and Penalties by Offering HRAs to Pay for Individual Policies

Health Reimbursement Arrangements (HRAs) have become more popular with employers in recent years. HRAs are Internal Revenue Service-sanctioned employer-funded and tax- advantaged accounts, established by employers, to pay the health insurance premiums or out-of-pocket medical expenses of employees. The accounts enable employers to cap their expenses and liabilities with a defined contribution approach to health benefits.

On January 24, 2013, the federal government released guidance on whether or not employers would be allowed to offer HRAs, tied to individual health insurance policies, to avoid penalties imposed by the Affordable Care Act (ACA) for not offering qualified, affordable health coverage. Under the ACA, employers who do not meet the requirements of the law face a penalty of up to $3,000 per employee per year.

imagesThe Departments of Labor, Health and Human Services, and the Treasury collectively issued a set of FAQs that clearly outlines the rules regarding HRAs. Section 2711 of the Public Health Service Act (PHS Act), as added by the Affordable Care Act, distinguishes between HRAs that are “integrated” with a group health plan from those that are not integrated, so-called “stand-alone” HRAs. Employers cannot replace group plans with HRAs, tied to individual plans, without facing stiff penalties for violating the ACA.
Continue reading “Employers Can’t Avoid ACA Mandates and Penalties by Offering HRAs to Pay for Individual Policies”

Be Ready – Major Changes to Healthcare and Related Taxes in 2013


Health insurance plans purchased on one of the health care exchanges, created by The Affordable Care Act of 2010 (ACA), will be effective January 1, 2014, which is also when federal subsidies to aid in buying health insurance will start and penalties for not purchasing it will be assessed.

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The revenue from new taxes and fees will help pay for broadening insurance coverage to about 30 million uninsured Americans in 2014.

However, in many ways the biggest changes brought about by the ACA are happening this year. These include: a wide range of tax increases, payment increases for Medicaid doctors, simplified plan language in Summary of Benefit Coverage documents, expanded coverage of Medicare prescription drug plans, and the opening of health care exchanges October 1, 2013.

Continue reading “Be Ready – Major Changes to Healthcare and Related Taxes in 2013”

Impact of Specialty Pharmacy Programs on Cost and Outcomes for Patients Using Oral Oncology Medications

specialty drugA year-long study published by The American Journal of Pharmacy Beneajpb2fits in 2012,analyzed the results of oral oncology medications on cost and patient outcomes. It concluded that specialty pharmacy programs promoting oral oncology drugs in treatment regiments increased patient adherence and lowered overall medical costs by 13 percent, or about $13,000, in the first year of treatment. According to the study, the savings largely resulted from  a reduction in outpatient hospital costs by more than 40 percent.

Over the past decade oncology treatments have shifted toward increased use of highly targeted oral medications. This has enabled patients to receive treatment at home rather than in an inpatient or outpatient setting.
Continue reading “Impact of Specialty Pharmacy Programs on Cost and Outcomes for Patients Using Oral Oncology Medications”

Firm Targets Soaring Health Costs

Anyone who’s taken an interest in the finances of their local city or town in recent years is aware of the challenges posed by retiree health care obligations.

Now KTP Advisors of Newport, which has managed health care benefits for corporations and nonprofits since 2002, wants to help.

KTP Advisors has begun offering its Medicare experience to
communities in need of benefit guidance.

Read more to hear what Barry Eyre, Vice President of Product Development, has to say…

KTP

 

Health Group Subsidizing Barnstable

imagesAt the Barnstable Town Council meeting on Oct. 18, Longfellow Benefits, a Boston-based benefits consulting firm, delivered good news in its report to town officials. The town had commissioned the study on whether it could get better health care plans for its employees and retirees by leaving a regional purchasing coalition of neighboring communities. To the surprise of town officials, the report highlighted that the town had received an average of $3.7 million more in benefits in each of the past three years than it paid into the Cape Cod Municipal Health Group, or CCMHG.

More…

Brockton, Massachusetts – A Model for Municipal Reform of Retiree Health Care

stethoscope-squeezing-moneyEfforts to reform municipal health care plans are seen as a political third rail because of resistance to change at many levels. Savings in health care plans typically revolve around shifting costs from a municipality to employees and retirees. There are, however, successful examples of public employee unions and municipalities working together to reduce costs rather than shift a greater percentage to beneficiaries.

Continue reading “Brockton, Massachusetts – A Model for Municipal Reform of Retiree Health Care”

Selling Bonds to Fund OPEB is a Bad Idea

The Michigan Legislature has just passed bill No.1129, which allows municipalities to sell bonds to fund their post-employment benefit obligations. The idea is that in this low interest rate environment municipalities can put aside enough money to cover future obligations for retiree healthcare and reduce the strain on municipal budgets. This well-intentioned law is of dubious value and may be disastrous for Michigan taxpayers in the future.

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The law, which does not require voters to approve the issuance of the bonds, requires that prior to issuance a municipality makes available to the public a comprehensive financial plan that includes Section 518 (1) (b) which states: “Evidence that the issuance of the municipal security together with other funds lawfully available will be sufficient to eliminate the unfunded pension liability or the unfunded accrued health care liability.”

Continue reading “Selling Bonds to Fund OPEB is a Bad Idea”

OPEB Liability – Does it Matter?

There is a lot of discussion about OPEB liability and how municipalities can control it. OPEB (Other Post-Employment Benefits) refers to a municipality’s financial obligation to provide retiree healthcare. Most municipalities fund the cost of healthcare benefits for current retirees from the current operating budget. However, many municipalities fail to set aside funds to pay for the benefits promised retirees in the past or future obligations for healthcare benefits promised to current employees when they retire. As a result, unfunded OPEB liabilities grow over time. That funding shortfall is estimated to be in the trillions of dollars when aggregated over the entire country.

GASB 45, the standard issued by the Government Accounting Standards Board on financial reporting of OPEB liability by employers, has done a service to taxpayers by bringing this discussion to the forefront and forcing municipalities to put a number on their balance sheets for this long-term obligation. However, like many well intentioned efforts, this has had some negative, unintended consequences.

What is an OPEB Liability

Continue reading “OPEB Liability – Does it Matter?”

We’ve Moved!

NEWS RELEASE

Contact: Mark Whitcher, 401 490-9351

mwhitcher@ktpadvisors.com

For Immediate Release

Health Benefits Firm Chooses Newport for National Headquarters

38 washington squareNEWPORT, R.I. –  July 10, 2012 – Retiree Benefit Solutions©, a health benefits advisory firm, has relocated from South Kingstown, R.I., to Newport and, along with the move, has changed its name to KTP Advisors™. Continue reading “We’ve Moved!”