Author: Site Staff

More than three-fourths of employers say they will wait until the effective date to comply with a provision in the health care reform law that requires group plans to extend coverage to employees’ adult children up to age 26, according to a new survey.

Among 661 employers responding to the survey by New York-based Towers Watson & Co., 16 percent said they would extend the coverage before the required effective date, 78 percent said they would wait until the effective date, and 6 percent did not yet know.

The law requires the extension to be made on the first day of the plan year that starts after September 23. For calendar-year plans, which are the most common, the effective date is January 1, 2011.

Few employers intend to comply early because of the demands that would put on company resources, said Randy Abbott, a Towers Watson senior consultant in Wellesley Hills, Massachusetts.

“Early adoption means more communications and more administrative issues to deal with. At a time when many employers are resource-constrained, they are prepared, unless there is overwhelming demand, to wait until the effective date,” Abbott said.

So far, just one major self-funded employer—United Technologies Corp. in Hartford, Connecticut—has said it will comply early. Effective immediately, the company is continuing coverage of employees’ adult children enrolled in its plan who would have lost coverage for reasons that include graduation from school.

Then on July 1, coverage will be offered to employees’ adult children up to age 26 regardless of whether they are covered now, unless they are eligible to enroll in another employer’s health care plan.

A top company executive earlier said United Technologies is complying sooner than required because it is the right thing to do and because such action is consistent with its practice of providing competitive benefits.

Interim final regulations published by the Internal Revenue Service, and the departments of Labor and Health and Human Services estimate that the coverage expansion would increase premiums by an average of 0.7 percent in 2011.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The Internal Revenue Service soon will be sending out questionnaires to about 1,200 sponsors of 401(k) plans as part of a project to provide the agency with information on a wide range of issues.

Among the 69 questions the IRS is asking are:

• What was the average contribution—as a percentage of salary—made by highly and non-highly compensated employees in 2006, 2007 and 2008?
• Does the plan permit participants to take loans?
• How frequently are participants required to make loan repayments?
• For what situations does the plan permit hardship distributions
• How often can participants change the percentage of salary contributed to the plan?
• Does the plan have an automatic contribution feature?

The IRS says it is conducting the survey to “determine potential compliance issues” as well as to help it decide where to focus enforcement efforts.

A previous IRS study found that 401(k) plans are the “most non-compliant plan type in the retirement plan universe.” Since 401(k) plans have become the dominant employment-based retirement plan, “it is important to the future of the private retirement system these plans maintain the highest level of compliance possible,” the IRS said in a preface to the questionnaire.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Chicago Public Schools this fall will open the city’s first high school specializing in health care, a move local hospitals hope will help relieve chronic workforce shortages.

The school, which recently used a lottery system to enroll a freshman class of 160, will have a heavy emphasis on math and science. Juniors and seniors will be able to earn credits by shadowing hospital workers and interning as assistant nurses and in other professions.

Planners aim to prepare students for health- and science-related college programs and certify them for entry-level jobs in health care, such as pharmacy technicians or assistant physical therapists.

“There’s a tremendous need for us to prepare the next generation of health care professionals,” said Juan Salgado, president of Instituto del Progreso Latino, a nonprofit career development group in Pilsen. “If we don’t do a better job of that in our city neighborhoods and communities of color, we’re going to fall short.”

The Instituto Health Sciences Career Academy will set up shop temporarily on the Chicago campus of National-Lewis University. It will seek a permanent site in the Pilsen neighborhood.

Instituto del Progreso Latino and the Metropolitan Chicago Healthcare Council, a trade group of hospitals and other medical providers, applied to CPS to form the school. It’s one of nearly 100 city schools formed under Renaissance 2010, the city’s 6-year-old plan to open innovative schools in poor neighborhoods.

Chicago-area hospitals had openings for more than 3,000 registered nurses as of March, according to the Illinois Department of Employment Security. They’re looking for hundreds more physical therapists, pharmacists, lab technicians, computer specialists and other professionals.

“The shortage of nurses and allied health professionals continues to exist, and it’s going to become a bigger problem,” said Kevin Scanlan, CEO of the health care council. “This is an innovative program that relies on hospitals to provide opportunities to students.”

Filed by Mike Colias of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Enrollment in health savings accounts linked to high-deductible health insurance plans surged to 10 million people as of January 1, a 25 percent increase in a year, according to an annual census released Wednesday, May 19.

HSA enrollment rose in all markets, according to the Washington-based America’s Health Insurance Plans.

The large-employer market registered the largest percentage gain. Employers with at least 51 employees had 5 million people in HSAs as of January 1, an increase of about a 33 percent in the past year.

In the small-employer market—employers with up to 50 employees—HSA enrollment increased to about 3 million people, up about 22 percent. Meanwhile, the individual market climbed to just more than 2 million people, a 12 percent rise.

HSAs, authorized under a 2003 law that added a prescription drug benefit to the Medicare program, became available on January 1, 2004, and enrollment has risen steadily since then. AHIP said 1 million people were enrolled in HSAs in March 2005, 3.2 million as of January 1, 2006, 4.5 million in 2007, 6.1 million in 2008 and 8 million in 2009.

The key factor driving HSA growth is that premiums for high-deductible health insurance plans, to which HSAs must be linked by law, tend to be lower than more traditional health plans.

This year, the minimum deductible for single coverage through an HSA-linked health plan is $1,200. The minimum deductible for family coverage is $2,400.

The AHIP census is based on 93 insurers and their subsidiaries offering HSA-linked health insurance plans. AHIP said it believes its census covers virtually all people enrolled in plans linked to HSAs.

Copies of the census are available at www.ahipresearch.org.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Under a provision tucked into the new health care reform law, a 40 percent excise tax will be imposed starting in 2018 on premiums exceeding $10,200 for single coverage and $27,500 for family coverage. The tax on the so-called Cadillac health care plans will be paid by insurers and third-party claims administrators, but they are expected to pass that added cost on to employers.

Benefit consultant Towers Watson & Co. of New York estimates that in 2010 the average cost for single coverage will be $5,184 and family coverage will cost $14,988. If costs increase at an 8 percent annual clip, more than 60 percent of the employer plans Towers Watson analyzed would be hit by the tax in 2018, the consultant estimates.

“All it takes to drive costs above the excise tax cap for six in 10 employers is an 8 percent average annual cost increase.

And without making plan design changes, that’s what many employers are projecting,” Dave Osterndorf, Towers Watson chief health actuary in Milwaukee, said in a statement. “This rate of increase has been typical for the past several years.”

On the other hand, if employers hold down cost increases to 6 percent, many will not be hit by the excise tax until 2023. “These top performers may avoid hitting the excise threshold until 2023 or beyond due to their focus on workforce improvement, wellness, chronic condition management and communicating the prudent use of health care goods and services,” Osterndorf said.

Still, there is good news, said Randy Abbott, a senior Towers Watson consultant in Wellesley Hills, Massachusetts.

“Employers have a long runway to plan for 2018, so there is time to approach the issue strategically and thoughtfully,” he said.

The analysis is based on health care plans sponsored by 552 employers, mainly Fortune 1,000 companies. 

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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