The Affordable Care Act (ACA) employer mandate provision has been delayed until 2015. This news was announced July 2, 2013 by the US Department of the Treasury on behalf of the Administration.
The Affordable Care Act (known as ACA or health reform) was signed into law in 2010 and impacts many areas of health care and health insurance, including medical reimbursement programs such as HRAs, HSAs and FSAs. Here’s an overview of how health reform impacts HRA, HSA and FSA programs.
Much is being written and discussed recently about self-funded health insurance programs and their increasing appeal under Health Care Reform.
As with most things, when talking about benefit plans, one size certainly does not fit all, but there are some very specific reasons why self-funding is gaining in popularity and appropriateness for employers.
For many employers, self funding employee health benefits is an opportunity to save substantially on the cost of those benefits. There is a tradeoff to the expected saving in that the employer is giving up knowing exactly what the benefit costs will be. Variability and volatility are the price one must pay to reap those expected savings. So why is self funding cheaper on average than a fully insured plan? As is the case with any investment or financial instrument, there is a tradeoff in risk and return. This is as true in interest rates of debt and prices of equity as it is in the insurance industry. So part of the reason self funding is cheaper on average is because less of the risk is being transferred, hence less of a risk charge is paid. That is obvious perhaps, but there are some other reasons self funding is less expensive and I want to talk a little about some of these.
1. In order to qualify for the tax credit: