Cavalcade of Risk #192: Call for submissions

Nancy Germond hosts next week's Cav. Entries are due by Monday (the 16th).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

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What a Waste of Time

For the last several months agents have been working on educating ourselves and our clients on the various administrative atrocities of PPACA. The latest one is the so called "Notice of Exchanges". The notice is a three page document that essentially all employers must provide all employees about the Health Insurance Marketplace. The notice is to "assist" people as they evaluate options for health insurance products they are being forced to purchase in 2014.

My guess is that I have over 40 hours put into developing a plan of action for distributing the notices to my clients. Even yesterday Hank and I were exchanging emails on this topic. On top of my time, many hours have been put in across our professional organization in determining and defining things like minimum value standard and affordability.

According to the original draft, the notice was supposed to be sent out by March 1, 2013, but then there was a delay. So, now the notice must be distributed no later than October 1, 2013. The DOL guidelines state that non compliance will result in a $100 per employee per day fine. So you can see why we have such a sense of urgency behind this matter.

This came September 11, 2013 at 4:55PM. In a frequently asked questions release the DOL determined that while the notice should be distributed there are no fines or penalties for failing to provide the notice. So in the course of a couple of months the government has gone from "we will fine you" to "meh, no big deal".

Just another one of our great government efficiencies...

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Chickens, Roosting

Although the ObamaTax was heavily promoted by various unions, it appears that buyer's remorse is inexorably setting in:

"The AFL-CIO on Wednesday approved a resolution critical of parts of [the ObamaTax] ... The strongly worded resolution says ... will drive up the costs of union-sponsored health plans to the point that workers and employers are forced to abandon them."

Oh, methinks that ship sailed some time ago.

But not to worry, the new health insurance Exchanges will provide a safe landing for union members (and regular folks), so there's a silver lining.

Or maybe not:

"Obamacare is likely to have a "rocky" enrollment start on October 1 in some U.S. states, because of ongoing technology challenges facing new online health insurance exchanges"

Oh.

According to consulting firm Leavitt Partners (a Utah-based consulting firm that "has been involved in the design and development of some state exchanges and tracks exchange progress nationwide"), "not a single state appears to be completely ready" for the roll-out, scheduled to begin in less than 3 weeks.

And remember, final security testing has been put off until (literally) the last minute, so October 1st should prove, um, interesting.

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Obama to blow up cost of Drug Plans

The problem we have when people like Obama and his apostles write sweeping reform is they have no clue how the system works which leads to all sorts of unintended consequences. We have a doozy of one coming.

Large Employers and self funded plans must comply with the out of pocket (OOP) cap. For 2014 they can have separate caps if, for example, an Rx plan is administered separate from a medical plan; in 2015 they must be combined. Currently that cap is $6,350 for an individual.

Lets look at a real world situation:  we have a client with a member taking Xyrem. It cost $9,000 per month or $108,000 per year. Plan has a 20% co-pay currently so the plan pays $86,400 and the member pays $21,600.

Except the member doesn't really pay $21,600. Like most Brand name drugs Xyrem has an assistance program, the manufacturer increases the price then refunds the member some portion of their liability. In this case the member pays $35 per month; that is correct, they only pay $$420.00 a year of their $21,600 co-insurance. The pharmaceutical company writes off the rest.

Under Obama's ingenious plan though, once we show the member was liable for $6,350 we need to start paying it at 100%. Now my client will be spending $101,650 per year. That extra $15,250, is pure profit to the pharmaceutical company. In Obama's world that apparently translates into affordability.

And for the member, their OOP for the year, thanks to Pharmaceutical games, is a whopping $35.

In case you think this is an isolated problem: while not all Rx cost this much, almost every brand name drug has a similar program.

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Health Wonk Review - Big Data edition

The delightfully-named Tinker Ready hosts this week's round-up of wonky posts, with a major emphasis on the role of data, its collection and application. As always, you're sure to find something interesting and new.

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Alphabet Soup Update: Why Local Matters

As we've noted time and again, having a local expert to administer Flex Spending Accounts and Health Reimbursement Arrangements is ideal. Our local gurus, FlexBank, just proved that again. Via email, they've tipped us to a little-known - but potentially major - option for groups utilizing Section 125 plans (so-called "POP Plans").

Premium-only plans are the vehicles by which companies make it possible for employees to pay their portion of health insurance premiums pre-tax. This can be a major cost-saver for both the employee and the employer. But there are rules for these plans, one of which is that mid-year changes are verboten (unless there's a "qualifying event").

The new Exchange policies, which many employees may wish to purchase, go into effect on January 1. If your employer has a calendar-year POP plan, no problem, you make the change. But what if your employer's plan isn't on a calendar-year basis? Some employees may elect to drop their current group coverage in favor of an Exchange-based individual plan, but that's not one of the recognized "qualifying events."

Until now.

Thanks to the folks at FlexBank, we learn that the folks in Capital City have heard those pleas, and are offering a one-time only "out" for employees in this situation. The IRS has stated that employers with non-calendar year based POP plans may amend them to allow employees to drop off of (or join!) these "cafeteria" plans effective January 1, 2014.

Good news indeed.

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Another One (Thousand) Bites the Dust

As Nate noted some months ago, the Medical Device Tax has put a crimp in the medical R&D sector. The latest casualties of this component of the ObamaTax are the 1,000 soon-to-be-former employees of Michigan-based Stryker.

Adding insult to injury, the beleagured firm also owes Uncle Sugar some $100 million just from this year, and it's estimated to "cost the company fully 20 percent of its total research and development investments."

Train. Wreck.

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