TASC CEO Blog

The healthcare reform bill from the Senate Finance Committee has been released.  (You can find a link to the entire bill on the TASC Healthcare Reform Watch page.)  The bill is 1,500 pages long and for the most part is pretty much what we expected.  However, there are a couple of twists.

1. The bill calls for creation of a SIMPLE Cafeteria Plan (Pages 371-374 of the bill).  Much like the SIMPLE Plans in the retirement world, this would ease the non-discrimination requirements small employers face when implementing a Cafeteria Plan.
2. There appears to be a push amongst a handful of Senators to raise and index the proposed cap on total benefits an employee can receive (Page 337 of the Committee Report).  Their proposal would index the cap tied to the Consumer Price Index plus 1 percent.  These Senators are also talking about bumping up the cap for employees 55 years or older.  This proposal would increase the cap for older employees by $1,850 a year for single employees and $5,000 a year for families.

TASC sees both proposals as positive.  Too often poorly-designed non-discrimination requirements have discouraged small employers from using these Plans.  Anything that can ease these regulations will increase acceptance, which ultimately will benefit employees.

This is a first, quick look at a very extensive document.  We will take a step back and review this material more closely.  Watch for more updates soon.

The Senate Finance Committee has approved its version of the healthcare reform bill.  Check out the latest on our website at www.tasconline.com/healthcarereform/index.html.

The eyes of the sporting nation are upon the Midwest today as the Green Bay Packers prepare to take on the Minnesota Vikings, their arch-rivals from just across the Mississippi River.  This particular contest is especially interesting because long-time Green Bay quarterback Brett Favre is lining up with Minnesota against his former team.  This drama features so many colorful characters, sub-plots, and accusations that the daytime soap operas are envious.

Many football fans in TASC’s home state of Wisconsin and in Minnesota (where TASC maintains an office with 45 employees and many more Clients and Providers) are now divided into two camps: Green Bay Packer fans, and Brett Favre fans.  Fans of the Packers believe that no matter the circumstances that caused Favre to leave Green Bay, he is now on another team, and they want him to lose.  Fans of Favre believe the Packers were wrong not to bring back the man who three times was voted Most Valuable Player, and they are pulling for Favre to obtain revenge on the Packers.

I for one, belong to the first group.  I believe that no one player is more important than the team.  And I take it one step further: once an individual is considered indispensable to the success of an organization, ensuing problems are bound to occur.   And just as Brett  Favre didn’t win the Super Bowl all by himself, no one individual is solely responsible for TASC’s success.  No matter the size of the role, the efforts of everyone here at TASC contribute to the success of our organization.

The Favre-Packers saga has also prompted me to think about what it takes to keep an organization moving forward.  I hold fast to one major key to success: never allow your organization to get too satisfied.  This means never stop investing in your organization, never stop diversifying your products and services, and never stop training your staff.  Failure in any of these areas will make you vulnerable to competitive forces.  I don’t blame the Vikings for believing that signing Brett Favre improves their team’s chances this season.  And I don’t blame the Packers for thinking it was time to move forward without him.  Every team wants high performing players that fit into the overall scheme of the team.  That is certainly what TASC looks for in new hires.  It’s also about never being completely satisfied with your organization and always looking for ways to improve it.  That is something all football fans can agree on.

Go Pack!

In July and August of 2009, Nielsen Consumer Research conducted a survey of Flexible Spending Account (FSA) Participants.  The purpose of the research was to better understand the number and types of consumers who are currently covered by FSAs, how they use FSAs, and their perceptions of FSAs overall.  As the debate over healthcare and the proposed changes to FSAs continues, the findings of this survey help put this issue in perspective.

Some key survey findings include:

• An estimated 33 million Americans participate in FSAs either as a Participant or as a dependent of a Participant.
• Forty-two percent of FSA Participants contribute more than $2,000 a year; the mean contribution per Participant is $1,569 per year.
• Almost 35 percent of Participants live in households income with less than $55,000, while for 73 percent household income is under $100,000.  The mean household income for all FSA Participants is $77,625.
• Participation is disbursed across all age groups, with nearly 60 percent under the age of 44.
• Participants use their FSA dollars for these top five types of expenses: prescription drugs, medical office visits, dental office visits, eye care, and over-the-counter medications.

The findings clearly indicate that a large number of middle-class Americans participate in a FSA.  Also interesting is the number of Participants who contribute more than $2,000 a year to their FSA.  The $2,000 yearly cap on FSA contributions that has been proposed in the Senate Finance Committee’s America’s Healthy Future Act would affect nearly half of all Participants.

Beyond the numbers, there some other enlightening facts to be gleaned from the survey findings.  For example, 89 percent of FSA Participants believe the benefit is important and 51 percent claim that losing the benefit would have detrimental effect on them. Seventy percent of the respondents feel that participation in a FSA is an essential part of their family’s healthcare budget, with 62 percent stating that if they had no FSA they would have to take funds from other important sources to afford their family’s healthcare.

Not surprisingly, 91 percent agree that FSAs should remain an option for Americans, 87 percent agree that more Americans should be able to have access to a FSA, and 85 percent agree that continued availability of FSAs should be part of any healthcare reform legislation.  Also not surprising, 84 percent of the Participants stated that they would contribute more to their FSA if there was no risk of losing funds at the end of the year.

So what is the big takeaway from this survey?  Large numbers of middle-class Americans depend on FSAs to afford healthcare and strongly believe that any healthcare reform bill should include continuation of Flexible Spending Accounts.  At TASC, we agree 100 percent.

On Saturday morning the Senate Finance Committee posted a list of amendments to the America’s Healthy Future Act it released last week.  In total, there were more than 500 amendments.  Roughly 18 of the amendments related to our industry, and all of the 18 – which were proposed by Democrats and Republicans alike — are seen as very positive for our industry and for employers and employees who benefit from these types of Plans.  The amendments include proposals to increase the cap on Flexible Spending Accounts (FSAs), to set-up better indexing of the cap, and to retain the tax deductions for over-the-counter medications.  Senator Max Baucus (D-MT) and the Senate Finance Committee expect to begin deliberations on the Act later this week.

Here is a sampling of some of the proposed amendments:

• Senator Charles Schumer (D-NY) proposed increasing the FSA cap to $3,000 and applying the same index to the FSA cap as that applied to the threshold for the excise tax.
• Senators Olympia Snowe (R-ME) and Mike Enzi (R-WY) proposed increasing the FSA cap to $3,000 as well.
• Senator Pat Roberts (R-KS) proposed increasing the FSA cap to $5,000 and allowing for the rollover of unused funds.
• Senators Jon Kyl (R-AZ), John Ensign (R-NV), and John Cornyn (R-TX) all proposed eliminating the cap on FSAs.
• Both Senators Orrin Hatch (R-UT) and Jim Bunning (R-KY) want to amend the bill so that over-the-counter medications qualify as medical expenses.
• Hatch and Roberts also want to amend the bill to exclude FSAs from determination of threshold for excise tax.

As you can see, both Republicans and Democrats are proposing amendments, and so far all of the proposals are favorable from our standpoint.  Perhaps the real message here is that we are still along way from this becoming law.  The bill is moving through the process and will likely undergo a lot of changes before it hits the President’s desk.  Stay tuned…

As promised, the Senate Finance Committee released America’s Healthy Future Act of 2009 shortly before noon today (9/16/09).  A quick review of the 220-page Act indicates that our expectations stated in a previous post are generally in line with the Act.  Four items in the Act affect TASC and our customers:

1. The cap on Flexible Spending Accounts (FSAs) is set at $2,000 per year.  No surprise there.
2. The cap on healthcare is set at $8,000 for singles, and at $21,000 for families. The penalty for exceeding the cap is 35 percent of the amount that exceeds the thresholds.  The penalty (excise tax) is higher than I expected.
3. Over-the-counter medications are no longer an eligible expense under FSAs, Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs).  This would go into effect in 2010!
4. The caps (on FSAs and on overall healthcare) are tied to the Consumer Price Index (CPI). The first adjustment to these caps will not take place until 2014.

Another item will affect customers of our HSA services: the tax on distributions from a HSA for non-medical expenses will increase to 20 percent of the disbursed amount.  This change is scheduled to be effective January 1, 2010.

We will continue to keep our customers informed and will monitor developments closely as this progresses through the political process.

Yesterday, I talked about the Senate Finance Committee getting close to releasing its version of the healthcare reform bill.  (See my post from September 15, 2009 for more detail.)  The latest word is that Finance Committee Chairman Max Baucus (D-MT) is scheduled to introduce his health care reform bill at noon today. The bill is the product of months of negotiations by the bipartisan “Gang of Six” and carries a price tag of approximately $880 billion.  Besides requiring individuals to buy insurance, it will contain a non-profit co-op component instead of a public option, and it will pay for itself with a combination of fees and spending cuts from within the healthcare system.  Senate Majority Leader Harry Reid (D-NV) has stated he would like to have healthcare on the floor on Monday, September 28.

Now, as we wait for that release, word comes from Washington that the Obama Administration will be making two announcements today.  First, Secretary of Health and Human Services (HHS) Kathleen Sebelius, Director of White House Office of Health Reform Nancy-Ann Min DeParle, and Vermont Governor Jim Douglas will announce a Medicare demonstration project in which the states will test practices in the program to improve the quality of care.  Second, Secretary Sebelius will release data on the uninsured based on the most recent census data and broken down by state. The White House also will be speaking about the Senate Finance Committee bill that will be introduced today.

Despite months of bipartisan negotiations the bill is unlikely to have any Republican support. Several ranking Republicans, including members of the Gang of Six, have stated that they are unlikely to sign off on the bill for now.  That’s not the only challenge that Senator Baucus faces; indeed Committee Democrats are complaining publicly about the bill, as well.  Committee members of both parties are developing amendments and strategies for next week’s mark-up.  And on top of all that, several industries have concerns as well; insurance companies, clinical labs and medical device makers oppose the fees in the bill (described as “pay-fors”).

While the Senate Finance Committee bill represents the best chance for 60 votes in the Senate, Chairman Baucus has a tough political situation on his hands. Senators Charles Grassley (R-IA) and Mike Enzi (R-WY) are under tremendous pressure from Senate Republican leadership to refrain from signing onto the Baucus bill, making it harder for Baucus to obtain Republican support. The lack of Republican support strengthens Senate and House liberals’ argument that the Chairman delayed progress for months, all the while going after Republican support that was never going to exist, and that leadership should move to pass a bill that satisfies the left.  But Chairman Baucus has two trump cards.  First, the bill is likely to be supported by the 17 moderate Democrats whose support is necessary to pass a bill through the Senate.  And second, the White House has sent clear and strong signals that it supports the Senate Finance Committee bill, which may ease liberal opposition.

Things are beginning to move.  I will make a new post later today after we have an opportunity to review the Senate Finance Committee’s bill.

Our U.S. Representatives and Senators are back at work after their summer break and the President is turning up the heat.  From all appearances, efforts to reform our country’s healthcare system are gaining traction.  Senator Max Baucus (D.-Montana), Chair of the Senate Finance Committee has indicated that a bill could be released as early as this week with or without the level of support he was shooting for.

Once a bill is released by the Senate Finance Committee, it will be coupled with the Affordable Health Choices bill from the Senate Committee on Health, Education, Labor and Pensions (HELP) Committee and brought to the Senate floor.  Most likely, the bills will be merged into a blended, compromise bill.  This will occur in the Senate, while the Affordable Health Choices Act of 2009 bill from the House remains in play. The House bill and the Senate Finance Committee bill will be approaching the issue of how to “pay-for” the reform effort from different angles. Ultimately, the bills will need to converge into one cohesive bill to then finally arrive at the President’s desk. Closer, but still a way to go.

The current Finance Committee bill features four items that would impact our customers negatively:

1. The health Flexible Spending Account (FSA) benefit will be capped at $2,000.
2. No longer will over-the-counter medication be tax deductible; these items will not be considered a qualified expense in FSAs, Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs).
3. An excise tax will be placed on health benefits totaling more than $8,000 for singles and more than $21,000 for families.
4. The cap and the amounts related to the excise tax will be tied to the Consumer Price Index (CPI).

I’ve closely studied these four items, and believe the proposed cap on FSAs will have no material affect on whether a person will or will not participate in a FSA.  Of the several hundred thousand Participants in our FlexSystem service, fewer than 20 percent run more than $2,000 through the Plan annually. To state that differently, 80 percent of our Participants will feel no affect from this proposed cap (at this time…see reference to CPI discussed later in this post). I believe that even those who contribute more than $2,000 a year will continue to participate up to the limit for the tax savings available. The net tax relief to those funding more than $2,000 will decrease, but their participation is expected to continue.

Our industry on behalf of our customers is attempting to improve the FSA by inserting a provision into the bill to eliminate the use-it-or-lose-it rule.  TASC believes doing so would prompt a positive reform of the FSA and place it on par with other health accounts.  Keep in mind that the window of opportunity for adding anything to this bill is quickly closing.  Soon, the only items that will be considered are those which could directly affect the chances of the bill getting that much needed vote(s) to pass in Congress.

In point two, the removal of the over-the-counter deduction returns FSAs to pre-2003 status.

I believe point three will receive the lion’s share of attention from the media, because so many individuals could be impacted.  In effect, this excise tax will place a limit on all health benefits, by acting as as a penalty for those exceeding an aggregate tax free health care benefit limit.  While there are potential negative effects of such an excise tax, this still would not mean a complete loss for taxpayers.   Depending on the final details, it remains likely that we will see a tax value for benefit amounts that exceed the limit, with the net tax value likely reduced as a result of the excise tax.

The cap/limits being tied to the CPI mentioned in the fourth point may represent a more significant impact as we move forward.  Over the past decade or so the average increase in the CPI has been about two to three percent annually.  In fact, for 2009 the CPI has decreased, not increased.  Over the same time period, healthcare costs have risen by a percentage several times larger than the CPI.  If healthcare costs continue to increase at a faster rate than the CPI, any caps/limits will become more painful.  Meanwhile, if cap/limits aren’t implemented until 2013, you will lose ground right out of the gate, simply because a $2,000 medical expense cap set in place for 2013 is roughly equivalent to $1,500-$1,600 in today’s dollars.

As I have stated before, I do not believe these proposed changes will dramatically hurt those who benefit from our services.  Don’t mistake my matter-of-fact communication on this subject to imply that I am “okay” with these possibilities. Most of our customers fall within our nation’s middle class and will feel a tax increase–an increase in the cost of their healthcare. In his speech just a week ago this increase is something the President vowed not to let happen. We are not pleased that some customers will face increased healthcare costs.  At the same time, we are pleased that most of our customers will be able to continue receiving the many benefits of our services and the tax savings they represent.

I encourage you to voice your concerns to your representatives in Congress.  Let them know how strongly you feel about continuing tax-free medical expenses. Visit savemyflexplan.org to learn more and voice your opinion.

This post was made before the release of the bill that is expected to surface from the Senate Finance Committee.  This bill is expected to arrive for public consumption any day now. Look for a post in the near future notifying you of the bill’s release and any changes (corrections) to what I’ve written here. Closer, but still a way to go.

The push for quality, affordable healthcare in this country lost a staunch advocate recently with the passing of U.S. Senator Edward (Ted) Kennedy.  Where you fall on the political spectrum will likely determine what you think of his healthcare legacy.  At the same time, there can be no denying that his work to expand access to healthcare for children and seniors, and to increase regulation of health insurance, biohazards, and tobacco has been far reaching.

Senator Kennedy played an instrumental role in bringing into law some important health-related legislation:

• The bill that added prescription drug benefits to Medicare
• The bill that empowers the FDA to regulate tobacco
• The Consolidated Omnibus Budget Reconciliation Act (COBRA)
• The Protection and Advocacy for Mentally Ill Individuals Act of 1986
• The Nutrition Labeling and Education Act of 1990
• The Ryan White Comprehensive AIDS Resources Emergency Act of 1990
• The Americans with Disabilities Act of 1990
• The National Institutes of Health Revitalization Act of 1993
• The Freedom of Access to Clinic Entrances Act of 1994
• The Health Insurance Portability and Accountability Act (HIPAA) of 1996
• The Food and Drug Administration Modernization Act of 1997
• The Children’s Health Insurance Program (CHIP) of 1997
• The Children’s Health Act of 2000
• The Project BioShield Act of 2003
• The Pandemic and All-Hazards Preparedness Act of 2005
• The Genetic Information Nondiscrimination Act of 2008

As you can tell from the list above, Senator Kennedy’s healthcare agenda was broad.  In addition, he also played a key role in writing the legislation that helped bring Section 125 Flexible Spending Accounts into law.

For almost 50 years, Kennedy pushed unsuccessfully for legislation that would reform the healthcare system and ensure coverage for all Americans.  What affect will Ted Kennedy’s passing have on the current effort to reform our healthcare system?  Of course, the answer to that question remains to be seen.  Ironically, some political analysts have been commenting that with his death chances may increase for a sweeping healthcare bill that Kennedy was unable to achieve during his lifetime.

Whatever the future holds for our healthcare system one fact remains: million of Americans have benefited from the improved protection and regulation, enhanced research, and increased access to healthcare thanks to the untiring efforts of Ted Kennedy.  He called healthcare reform the cause of his life.

Death Panels. Government access to your bank account. No vision care until you lose sight in one eye.  The list of untruths goes on and on.  Out of all the information being disseminated regarding healthcare reform, far too much has been half-truths, distortions, and outright lies.  And what about the actions of attendees at town hall meetings held by legislators this summer?  If their anger is any indication, a lot of citizens believe what they have heard.  This is a tragedy.

These lies and distortions do nothing to advance the effort.  This is not a constructive conversation by respectful participants working toward a greater good.  These are ugly, chicken-hearted, sniper-type attacks.  Those who continually travel in the realm of lies and falsehoods usually have only two goals in mind: (1) to disrupt the effort at any cost, and (2) to keep their names in the spotlight.  Contrary to what these individuals want you to believe, they do not have the concerns and well-being of ordinary Americans at heart.

I urge you to look past the sensationalized headlines and obnoxious talking heads.  You will need to work a little harder, dig a little deeper and be a lot more diligent to uncover the truth; but it is out there.  On the websites of almost every major media outlet you will find “fact checks” regarding healthcare reform.  Search out a more objective view of the issues at hand.  Or read the proposed legislation and make up your own mind.  If you contact your legislators, do it respectfully and while you are at it make a point to really listen to their answers.  If you raise your concerns respectfully, you will get a respectful response in return.

That’s the point; if you listen to those who twist the truth, then you are not in control of your own opinion.  It’s like the old computing axiom: garbage in–garbage out.  This is an important issue.  The decisions made now could affect the healthcare your children and grandchildren receive in the future.  Do you want the decisions made by a roomful of people yelling and screaming lies or through a respectful, constructive dialogue with people from varying backgrounds and experiences?  I will choose Democracy over mob rule any day.

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Keep your healthcare costs tax exempt.  Visit savemyflexplan.org to learn more about this issue and express your concerns to your congressional Representatives.