Exciting news: Chuck Gielow received the CalCPA Distinguished Service Award!

Exciting news: Chuck Gielow received the CalCPA Distinguished Service Award! Here at CalCPA Health, CalCPA member firms have access to quality health insurance and benefit products. Chuck is one of CalCPA Health’s first Board members and was the Board Chair from 2013-2018. He is a huge advocate for CalCPA members and deserves this special recognition!

Thank you, Chuck, for all that you have contributed to the CPA profession and to CalCPA Health!

New California Law SB 1375 – Affects Many Small Firm’s Group Health Insurance

The new California Law, SB 1375, was signed by Governor Brown on September 22, 2018 and will affect many small firm’s group health insurance. SB 1375 changes the Health Insurance Code to reclassify certain small employer groups as individuals. The affected firms will have to obtain individual health insurance in 2019, rather than the small employer group plans they currently have. Individual health insurance is typically more expensive with less provider network and benefit plan choices than small group plan offerings.

Fortunately, for CalCPA members and their firms, CalCPA Health received certain exemptions from SB 1375, which generally allows us to treat the affected firms as groups, and not as individuals. Commercial carriers (Blue Shield, UnitedHealthcare, Anthem, etc.,) must comply with the new regulations and reclassify these groups as individuals.

SB 1375 defines groups that consist entirely of owners/partners, and/or W-2 employees that are spouses of owner/partners, as not eligible for group health coverage. Even though these entities may be classified as employer/employees by other regulations, (e.g. Workers’ Comp, payroll tax, etc.,) SB 1375 specifically states they do not qualify for group health coverage and may only purchase individual plans.

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Anthem Blue Cross Supporting People Affected by California Wildfires

Anthem is taking action to help people affected by the wildfires in Lake, Mariposa, Mendocino, Napa, Riverside and Shasta counties by revising medical and pharmacy guidelines that will help ensure members can continue care and access needed prescription medications. The items pertaining to pharmacy apply to Anthem’s relationship with Express Scripts. It’s important that our members know what Anthem is doing for our members in the above mentioned areas during this critical time.

For impacted members, Anthem is:

  • Relaxing time limits for prior authorization, pre-certification and referral requirements – there will be no late penalties.
  • Suspending early refill limits for prescriptions.
  •  Allowing replacement of medical equipment or supplies.
  • Extending filing deadlines for claims.

These medical and pharmacy guidelines are effective from July 26, 2018 until August 25, 2018, unless further extended.

For additional questions, members should call the phone number on the back of their membership card as associates are standing by to help.

Complimentary ID Protection for CalCPA Health Members

All CalCPA Health members have access to identity protection services at no additional cost.

Here at CalCPA Health, we know that your personal information should stay that way – personal. That is why we have taken steps to help keep your information safe.

CalCPA Health, through its partnership with Anthem, is able to provide AllClear ID to all CalCPA Health members at no additional cost. Through this partnership with Anthem and AllClear ID, all CalCPA Health members have access the following services:

  • AllClear Identity Repair– is automatically available to our eligible health plan members with no enrollment required. If you become a victim of identity theft, an AllClear investigator will act as your guide and advocate from start-to-finish until the issue is resolved.
  • AllClear Credit and Identity Theft Monitoring – is an extra layer of protection that helps you stay informed of your credit activity. They’ll send alerts when banks and creditors open new accounts in your name. If something doesn’t sound right, you’ll be able to contact them right away.   

AllClear Identity Repair is currently in place and should members become a victim of identity theft, members need to notify AllClear and if needed, an AllClear investigator will assist to resolve the issue.

CalCPA Health members who would like to enroll in the monitoring service may request a redemption code by entering their information at anthemcares.allclearid.com and a redemption code will be emailed to them once they have been confirmed as a CalCPA Health member. With the redemption code, members would create an account with AllClear at no cost to them.

Understanding Premium Rating Under the Affordable Care Act (ACA)


Applies to all small employer plans in California

Background

Two years ago the Affordable Care Act’s mandated premium rating method went into effect for small employers (under 50 employees). As of January 1, 2016, all small employers in California (under 100 employees) must be rated according to the ACA rating method. This ACA mandate applies to all insurance carriers and all groups under 100 employees in California.

Key Takeaways

  • Group and individual employee premium rates may be significantly changing due to ACA’s mandated method of calculating premiums – not due to the base cost of medical insurance.
  • The largest premium increases/decreases tend to be:
    • Younger employees (increase) / older employees (decrease)
    • Family size: one child (decrease); two or more children (increase)
    • Families with children over age 21 (large increase)
    • Spouse’s age higher than the employee (increase); lower than employee (decrease)
    • Employees over age 65 with Medicare secondary rates (increase); Medicare primary (decrease)
    • Employees in certain mandated “rating areas” (increase or decrease)

Premium Rating Rule Changes Explained

The premiums calculated under the ACA and legacy (grandmother or large group) methods can have great differences. Premium rate differences between the methods may be driven by any combination of the four rating variants detailed below.

  1. Age Rating. The ACA mandates that each age has its own specific rate and also mandates the relative premium cost between each age rate. This means that each employee has a birthday increase at the start of every plan year as compared to the legacy method which only had age increases when employees crossed an age band threshold (20-29; 30-40, etc.).Compared to the legacy rating method this mandate increases rates for younger people and lowers rates for the older ages. This can result in rates doubling in the younger ages. Many parents are shocked to learn that the ACA mandates a 57.5% premium increase when their 20 year old dependent child turns 21. This is true for all insurance companies.
  2. Family Rating. ACA mandates that each member of a family is individually age-rated and then summed to an employee total. The legacy method had four rating tiers: employee only; employee+spouse; employee+children; and family. The legacy employee+children and family rating did not consider how many or how old the enrolled children were. Under the ACA mandate, the eldest three children under age 21 in each family are age rated in addition to any dependent children age 21 and older. Families with two or more children, and older children, can see significant premium increases under the ACA method. The legacy method did not consider the spouse’s age. Employee+spouse and family categories can experience sharp differences under the ACA method if the spouse is significantly older or younger than the employee.
  3. Medicare Secondary. Under the legacy rating method employees over age 65 employed by groups with fewer than 20 employees were rated below larger firms because their coverage was secondary to Medicare. ACA’s age rating rules eliminate Medicare secondary rates so all 65+’s are rated the same, which causes the legacy secondary employees to have significant premium increases.
  4. Rating Areas. The legacy rating method had nine (9) rating areas in California. California has mandated 19 rating areas under ACA rating rules. The state did not subdivide the 9 into 19 but redrew many of the boundaries. This can create significant premium variances for certain employees that were previously in a relatively lower/higher rating area and have been assigned to relatively higher/lower premium area.

Analysis

Premiums can increase or decrease, on specific employees, on dependents and on the group in aggregate. In many instances the ACA premium increases tend to affect dependent/spouse costs. Firms typically contribute relatively less towards dependent premiums which transfers much of the increase to the employee. For analyzing premium changes, firms should calculate the amount the premium increase effects their employer contribution versus the employee’s contribution. The ACA rating method can cause disruption in the employer and employee contributions based on the change to the ACA age rates. This may require companies to restructure their employer contributions to mitigate large variations in employer or employee contributions for employee only coverage.

To mitigate the rise in premiums the law has brought about since the implementation of ACA, there has been a trend of employees migrating to lower benefit (higher deductible) plans. Migrating to lower premium plans is a tactic being used by many employers and employees.

Employees with children age 21+ may look to enrolling them in a lower benefit plan in the individual market. The individual market has limited plan choices and provider networks, but these trade-offs may yield a lower premium.

If you have any ACA related questions, please email aca@calcpa.org.

 

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What’s the Buzz Around Health Insurance Captives?

Health Insurance Captives are being touted as the new, hip way for firms to beat the Affordable Care Act.  Captives are insurance arrangements owned/controlled by its participating employers, and while they may not be new, they’re complicated.

Although many terms are used interchangeable, the flavor we’ll discuss in this article is the Group Medical Stop Loss Captives. These are typically used for small and mid-sized employers, which include all but a handful of CPA firms.

With a captive, the employer is at risk and therefore can benefit from the overall underwriting performance as well as income generated by invested reserves.  The captive group is made up of companies that are too small to self-insure and are typically in the same industry.  By combining a number of employers together, critical mass to self-insure as a group is achieved.  The carrot is that employers will (somehow) achieve a lower cost of claims and administration for their employees than they could through traditional market options.

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Meet the Trustees: Michael Allmon

Michael AllmonLooking at Michael Allmon today, a successful CPA and a Trustee of CalCPA’s Group Insurance Trust, it’s hard to imagine that he was once a starving student at the University of Texas studying Psychology and Philosophy. Allmon needed a job after his sophomore year and since neither the Psychology nor Philosophy departments had work for him, he was told he should see if the School of Business, which was one of the largest in the country at the time, had a position for him. It was at that time that Allmon thought to himself, “I better take some business classes, just in case I want a job when I graduate”. Shortly thereafter, he landed a job in marketing and when he began taking business classes, he quickly learned accounting was the language of business and changed his major to accounting.

With much hard work and while still in college, Allmon eventually became the Treasurer of a non-profit organization and learned the practical side of accounting.   After graduation, he received several job offers, both in marketing and accounting.  Being the realist that he is, Allmon chose the profession that he knew to be “safest” in regards to job security – accounting.

Allmon’s first job was with Alexander Grant, now Grant Thorton. The firm’s policy was if you wanted to advance, you needed to be well-rounded, and a well-rounded accountant included being active in the profession.  Today, he is grateful to have started with a firm that so strongly supported the profession and encouraged advancement through professional outreach.

A family medical situation led Allmon to interact closely with CalCPA Health staff.  Impressed with his grasp of insurance concepts, estate planning and fiduciary fundamentals, the Health plans’ governing body, the Group Insurance Trust, subsequently invited him to join the Trust as an Appointed Committee Member. He accepted the opportunity and embraced the challenge of becoming knowledgeable in the many aspects of the insurance trust’s oversight and administration.

Allmon notes that the Trustees serve as fiduciaries to the participants in the CalCPA Health program. He added, since his firm participates in the plan, he’s able to evaluate the day-to-day effects of committee and board decisions on the “customers” and is able to take part in ensuring the plan continues to operate towards its intended goals and that members’ interests and needs are a priority.

Allmon believes health care costs are one of the most important issues of American society today and will be increasingly important in coming years. When asked what he would like to see the Trust doing for members five years from now, Allmon states his hope is that the Trust continues to focus on its goals of quality healthcare coverage at a reasonable cost for CalCPA members. He adds that a “reasonable cost” is harder to identify nowadays and with public health insurance, it is likely that these costs will continue to climb. With this knowledge, Allmon aims to help the Group Insurance Trust be the trusted resource CalCPA members turn to for healthcare coverage and information.

 

Meet the Trustees: Greg Burke

Greg BurkeGreg Burke – “I’m really an accidental accountant” answered Greg Burke when asked how he became an accountant.

When looking at the accomplishments of Greg Burke, it is amusing to know he refers to himself as an “accidental accountant.” When hearing his story, however, one can see that it wasn’t an accident at all.

In college Burke avoided taking accounting courses because he felt they were boring. He graduated with a degree in economics with a minor in geology. At the time, Burke was interested in working for the energy commission because of his interest in the environment. He decided to take the federal entry level exam and the only organization hiring was the IRS. Burke left his job selling backpacking equipment and headed off to the IRS.

Burke soon realized that honing his accounting skills would lead to future opportunities, so he enrolled in accounting classes. Much to his surprise, he enjoyed the classes and realized they weren’t so boring after all! It didn’t take long to realize that getting his CPA license would open up even more doors; he was right.

While Burke was at the IRS as a revenue agent, one of those doors unexpectedly opened in the form of public accounting. When Burke entered the door of John Waddell and Company, little did he know that thirty years later, he would still be there, enjoying every moment of it.

John Waddell and Company has a history of supporting CalCPA. With the company’s encouragement, Burke joined CalCPA’s Sacramento Chapter tax committee and eventually became the chair of the committee. His service as Chair was the doorway to a path that led him to a series of leadership roles within CalCPA and the Education Foundation including serving as Chair of the 2008-2009 CalCPA Board of Directors. While attending a meeting of the Group Insurance Trust (GIT) during his chairmanship year, Burke impressed the Trustees with his interest and grasp of the Board’s mission and in 2013, he was elected to the Board of Trustees. Read more