2016 Benefits Preview: What to Expect

2016 Benefits PreviewAs 2015 draws to a close, we look to 2016 and preview what’s to come in the benefits world. Here’s a glimpse at several noteworthy changes we’ll see next year.

1. Medical Costs Will Increase

“According to a 2016 Segal Health Plan Trend Cost Survey, medical costs will increase for most medical plans, with Fee for Service plans expected to rise 10.4%, and high deductible and Preferred Provider Organization plans rising about 8%. Prescription drug costs are also expected to jump by double digits. […] If there’s one thing that most pros agree on, it’s that your total medical costs—insurance, doctor’s fees, prescriptions, tests and other expenses—are expected to rise. ”

2. No Benefit Increase for Social Security

“For just the third time in four decades, Social Security recipients won’t get an annual cost-of-living adjustment. The announcement […] means many older Americans may see a reduced standard of living, particularly 30% of Medicare beneficiaries — an estimated 17 million Americans — who could see their Part B premium and deductible rise 52% because of provisions in the Social Security law.”

3. 2016 Health Savings Account Contribution Limits

“The IRS said on May 4 that the maximum contribution that can be made next year to an HSA linked to a high-deductible plan will be $6,750 for employees with family coverage, up from $6,650. The maximum contribution for those with single coverage will remain at $3,350.”

4. OSHA Fines to Increase Significantly

“OSHA fines will increase for the first time in a quarter century, under a provision in the recently signed congressional budget deal. […] Now, OSHA is directed to issue an interim final rule increasing its penalties to account for current inflation levels, which would raise proposed fines by about 80 percent. This would mean the maximum penalty for a willful violation would rise to about $127,000 from the current $70,000. The adjustment must occur before Aug. 1, 2016. In subsequent years, OSHA also will be allowed – for the first time – to adjust its penalties levels based on inflation.”

5. ACA Changes in 2016

  • ALE definition. By law, the employer provisions and mandate of the ACA only apply to what are defined as “applicable large employers” – i.e., those with 50 or more full-time equivalent employees. While ALEs with fewer than 100 FTEs were granted transition relief in 2015, beginning in 2016 all ALEs with 50 or more FTEs will be required to comply with the ACA’s employer provisions and mandate.”
  • MEC offer requirement. Under the Tier 1 penalty of the ACA, employers are required to offer minimum essential coverage to at least 95% of their full-time employees and their eligible dependents (defined as children to age 26). While that requirement was reduced to just 70% for 2015, it will increase back to 95% beginning in 2016.”
  • Affordability requirement. As part of the ACA, the IRS is tasked with setting the threshold percentage used to determine whether health coverage offered by an employer is considered “affordable.” Beginning in 2016, the IRS will increase the threshold percentage will by one-tenth of a percentage point (from 9.56 to 9.66), which means that healthcare plans will not be considered affordable if an employee’s contribution to the plan for employee-only coverage exceeds 9.66% of the employee’s household income.”

6. SCOTUS Rulings to Watch for

  • Montanile vs. Board of Trustees of the National Elevator Industry Health Plan – “The issue before the Court is whether a member of a benefit plan governed by the Employee Retirement and Income Security Act can get out of an agreement to repay health benefits from the proceeds of a lawsuit arising out of an automobile accident, by spending the money first.”
  • Gobeille v. Liberty Mutual Insurance Company – “The case brought by the state of Vermont, challenges the 2nd Circuit Court of Appeals’ ruling on the ERISA preemption that bars the state from requiring self-insured employer-sponsored health plans to submit claims data to Vermont’s all-payer claims database (APCD).”
  • Birth control mandate – “Most recently in early November 2015 SCOTUS announced that it would hear more than half a dozen cases dealing with just how far employers can go to prevent employees from receiving birth control coverage under their employer-sponsored health plans.”