If you’re a broker, advisor, provider, or administrator of tax-advantaged, account-based health benefits plansor an employer who sponsors these plans for your employees–you have two choices as the effects of the 2,700+ page Affordable Care Act (ACA) unfold:
- Sit back and wait to see what happens as the Obama administration develops and issues an anticipated 20,000+ pages of regulations to implement the ACA; or
- Take action now to influence and shape how those 2,700+ ACA pages are interpreted.
Members of my group, the Employers Council on Flexible Compensation (ECFC), have opted to take action.
We’re advocating for the millions of working Americans participating in Section 125 cafeteria plans.
We’re taking a stand for the middle class, who are struggling to make ends meet; who rely on employer-sponsored tax-advantaged plans to pay for the health care services they need and value most; and who count on those pre-tax benefit contributions to increase their net spendable income.
We can’t sit back while regulators determine the intricate workings of an already complex law, which will result in a cost-shift to the American worker.
At the same time, our members are at the forefront of helping employers provide affordable health care solutions to their employees through the use of tax-advantaged benefit plans. We recognize employee benefits are more than just a plan of insurance. They’re valuable recruitment and retention tools — tools that, for many companies, represent a vital core proposition to attract the best and brightest in their fields.
And we’re having an impact: recently engaging key congressional leaders and administration officials and their staffs in conversations about four key policy changes that will greatly strengthen access and affordability ofand maximize contributions toemployer-sponsored tax-advantaged benefits plans for middle class working Americans:
Policy Change #1: Eliminate the Treasury Department’s “useorlose” (UOL) policy that applies to health flexible spending arrangements (FSAs).
The $2,500 contribution cap, enacted as part of the ACA, necessitates a reassessment of the UOL rule.
An estimated 35 million Americans–most with middle-class incomes–rely on their health FSAs to help afford the care they need. FSAs can be particularly useful to chronically-ill individuals, who see multiple providers on a regular basis and incur expenses for office visits and essential medications; cost-sharing that quickly adds up.
Setting aside pre-tax FSA dollars helps people with chronic conditions pay for the care they need.
Eliminating the UOL rule would provide assurance to employees that the FSA monies they designated to help pay for their health care will be there when they need it in their current plan year, or in the future.
Policy Change #2: Preserve stand-alone health reimbursement arrangements (HRAs).
A valuable consumer-driven health care financing tool, the stand-alone health reimbursement arrangement (HRA), is at serious risk of elimination due to the ACA’s prohibitions on annual dollar limits.
These self-insured plans, funded exclusively by defined employer contributions, decrease the overall cost of employer provided health coverage by reducing insurance premiums and giving employees control of their health care expenses through a consumer-directed account.
Stand-alone HRAs can and should play an ongoing role in the post-ACA health insurance marketplace. The Internal Revenue Service (IRS) should be urged to issue guidance to allow for a new excepted benefit category for stand-alone HRAs, especially since many view these consumer-directed plans as an essential tool when combined with certain ACA provisions to improve health care efficiency.
Policy Change #3: Rescind the Affordable Care Act (ACA) requirement that a patient get a prescription in order to receive reimbursement for over-the-counter (OTC) medicines purchased through an FSA, HSA, or HRA.
The required physician-issued prescription for reimbursement for OTC medications through an FSA, HSA, or HRA has created a catalyst with the potential to drive up health care spending in the form of additional office visits, prescriptions written for more costly brand name drugs to fulfill insurance company compliance, and added administrative costs on the part of pharmacists, physicians, and their staffs.
At a time when we’re looking to curb and control costs, the prescription requirement only results in wasteful spending.
Policy Change #4: Modify HSAs to make them a stronger benefit tool.
Employers and employees are increasingly relying on HSAs to meet their health care coverage needs. In fact, enrollment in HSA plans has tripled from 2007-2012, from 4.5 million enrollees in January 2007, to 13.5 million in January 2012.
And, as the ACA is implemented, HSAs can play a significant role in helping employees better control and manage their health care expenses–in particular, as they approach retirement.
Key provision changes employers, their employees and their advisors should strongly support include:
- Allowing individuals over age 65 to contribute to a HSA.
- Allowing early retirees to use their HSA funds to pay for health insurance coverage.
- Revising the statute to clearly include high-deductible health plans (HDHPs) in the list of plan types that meet minimum essential health benefits (EHB) coverage requirements.
- Allowing HSA funds to be used for adult children’s medical expenses.
Now, more than any other time in the history of employer-sponsored health care, we need to band together–and work togetherto preserve and expand the viability of tax-advantaged, consumer-directed plans for employees.
We’re working to be heard. Loud. And. Clear.
- PPACA: Benefits Account Group Asks for Summary Standards Changes
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