Regulatory roundup

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

Council of Economic Advisers report: Trends in healthcare cost growth and the role of the ACA
The White House’s Council of Economic Advisers has published a report analyzing recent trends in healthcare costs, the forces driving those trends, and their likely economic benefits. The report includes the following findings about recent trends:

• Healthcare spending growth is the lowest on record. According to the most recent projections, real per capita healthcare spending has grown at an estimated average annual rate of just 1.3% over the three years since 2010. This is the lowest rate on record for any three-year period and less than one-third the long-term historical average stretching back to 1965.
• Healthcare price inflation is at its lowest rate in 50 years. Recent years have also seen exceptionally slow growth in the growth of prices in the healthcare sector, in addition to total spending. Measured using personal consumption expenditure price indices, healthcare inflation is currently running at just 1% on a year-over-year basis, the lowest level since January 1962. (Healthcare inflation measured using the medical Consumer Price Index [CPI] is at levels not seen since September 1972.)
• Recent slow growth in healthcare spending has substantially improved the long-term federal budget outlook. The Congressional Budget Office (CBO) has reduced its projections of future Medicare and Medicaid spending in 2020 by $147 billion (0.6% of GDP) since August 2010. This represents about a 10% reduction in projected spending on these programs. These revisions primarily reflect the recent slow growth in health care spending…

To read the entire report, click here.

IRS updates ACA section 1341 transitional reinsurance program FAQs
The Internal Revenue Service (IRS) has updated its “ACA Section 1341 Transitional Reinsurance Program FAQs” webpage.

Section 1341 of the Patient Protection and Affordable Care Act (ACA) establishes a transitional reinsurance program to help stabilize premiums for coverage in the individual market during the years 2014 through 2016. The statute requires all health insurance issuers and third-party administrators on behalf of self-insured group health plans to make contributions under this program to support payments to individual market issuers that cover high-cost individuals (payment-eligible issuers). Regulations proposed by the U.S. Department of Health and Human Services (HHS) to implement the Reinsurance Program specify that self-insured group health plans are liable for the contributions, although a plan may utilize a third-party administrator or administrative-services-only contractor for transfer of the contributions.

The U.S. Department of Labor has advised that paying required contributions under the Reinsurance Program would constitute a permissible expense of the plan for purposes of Title I of ERISA because the payment is required by the plan under the ACA as interpreted in the proposed rule issued by HHS.

To view the updated webpage, click here.

IRS presentation: Healthcare-related tax provisions that affect businesses
The IRS has published a slide presentation entitled “Healthcare-related tax provisions that affect businesses.” Topics include:

  • Transition relief for 2014 under sections 6056, 6055 and 4980H
  • Applicable large employer (ALE) status
  • Tax provisions for ALEs: Information reporting for ALE (section 6056), employer shared responsibility provisions (Section 4980H)
  • Tax provisions for small employers: Small business healthcare tax credit (section 45R)
  • Tax provisions for all employers that sponsor self-insured plans regardless of size: Reporting of minimum essential coverage (section 6055)

To view the entire slide presentation, click here.