The second day of the OPM AHIP FEHBP carrier conference was held on Friday morning.
The keynote speaker was Dr. Julian Harris, the healthcare director for the Office of Management and Budget. He is the White House lead on the ACA, Medicare, Medicaid, and the FEHBP, among other federal government healthcare programs. He provided an overview of the Administration’s triple aim programs.
OPM then provided an in depth explanation of its new plan performance assessment program. The implementing regulation will be published soon. OPM reviewed a draft carrier letter that will be finalized next month.
The it was time for the FEHBlog to speak. The FEHBlog greatly appreciated the opportunity to speak on challenges facing carriers over the next three to five years. The FEHBlog focused on the 40% excise tax on employer sponsored health care coverage a/k/a the Cadillac tax. FEHB premiums, healthcare flexible spending account contributions, employer or pretax contributions to health savings accounts, certain employee assistance program costs, and certain medical clinic costs count toward the excise tax thresholds of $10,200 for self only coverage and $27,500 for self and family coverage. Costs in excess of those thresholds which are subject to certain one time and annual adjustments will be taxes at a 40% rate beginning in 2018, less than three years away.
All group health plans need to at least begin planning for the tax now. It’s possible that the tax may be repealed before 2018 but it’s would be foolhardy to count on repeal. The key is that the tax’s other than self only threshold is 2.7 times the self only threshold. Plans need to harmonize their premium structure with this ratio. The IRS indicated in the February excise tax guidance that employers can apply an enrollment weighted average of self only and self and family premiums toward the tax’s other than self only threshold.
Also it also is very important from a tax planning perspective for employers beginning in 2018 to replace healthcare flexible spending accounts with limited scope dental and vision flexible spending accounts and to stop making pre-tax contributions to employee health savings accounts. It must be recalled that the Congress which passed the ACA was no fan of flexible spending accounts or health savings accounts. (The FEHBlog is a fan of HSAs and now has one. )
The FEHBlog also spoke about how the problem of lack of interoperability in electronic medical records affects the new plan performance measurement system and the risk of data breaches.
Following the FEHBlog’s talk (which was only 20 minutes long) OPM discussed the excise tax with carriers. It was a productive exchange. At the closing, OPM announced that a new data breach carrier letter is in the offing.