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OIA Continues Push for Legislation to Help Employers Make Better Health Insurance Decisions

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Two OIA members recently urged members of the Ohio House Insurance Committee to pass legislation that would require health insurers to release certain aggregate claims information to group plan policyholders.

OIA member Victoria McCoy of Associated Insurance Agencies, Inc. (featured in the picture to the left) in Westerville testified in conjunction with OIA’s Government Affairs Manager Carolyn Mangas. Barbara Gerken of First Insurance Group, who is also an OIA member, testified in support of the bill on behalf of the Ohio Association of Health Underwriters (OAHU).

Sponsored by Sen. Matt Huffman (R-Lima), S.B. 227 will provide a solution to a problem that OIA members have brought to our attention over the last several years.

By allowing risk advisors and employers access to claims data, Ohio employers can make better decisions regarding properly assessing health care options to potentially reduce their health care costs.

While this claims data is typically available to employers with 100-plus employees, it is not available to those that fall below this threshold. The lack of this data hinders the ability of risk advisers and employers to pursue additional funding arrangements that have become available in the last several years. While this legislation was originally drafted to apply to all employer groups, it now only applies to those with fifty or more enrolled employees in their group. The rationale for this change was that this range of employees is medically underwritten the same way as the 100+ employer group market.

Ultimately, S.B. 227 would empower risk advisors and employers with the ability to better design a health insurance program that balances the level of risk and reward.

Notably, both Louisiana and Texas have similar laws in place to require health insurers to release claims data.

Several others testified in support of S.B. 227 in addition to OIA and OAHU, including the National Association of Independent Business – Ohio. The only known opponents of the bill include the National Multiple Sclerosis Society, who have cited concerns that employers could identify employees with serious health conditions and discriminate against them.

Prior to receiving hearings in the House Insurance Committee, S.B. 227 passed the Ohio Senate unanimously. With time running short before the end of the legislative session, OIA is advocating for passage of this bill out of the House Insurance Committee. A committee vote is expected to be scheduled for next week. OIA will keep members apprised of developments on this initiative as they occur.

Also see: Ohio Independent Agents Urge Senators To Help Businesses With Health Insurance Options


Medical marijuana and its impact on Ohio workers' comp

With the upcoming implementation of medical marijuana in Ohio, you and your commercial clients may be wondering what impact, if any, this change will have on the Ohio Bureau of Workers’ Compensation (BWC) and its programs? BWC recently put together a fact sheet with information to help you understand the impact that this change will have on Ohio workers’ comp.

What does Ohio's medical marijuana law say?

In 2016, the Ohio General Assembly set up the framework to legalize medical marijuana in Ohio, effective Sept. 8, 2018.

It was approved for certain medical conditions, including pain that is either chronic and severe or intractable, PTSD, and traumatic brain injuries.

At this time, the only legal forms of medical marijuana will be edibles, oils, patches, plant material and tinctures. Vaporization is permitted. It cannot be smoked or combusted. Home growth is prohibited.

The Ohio Department of Commerce is tasked with regulating the licensure of medical marijuana cultivators and processors, as well as the laboratories that test medical marijuana. The state of Ohio Board of Pharmacy will license retail dispensaries and register patients and their caregivers.

Additionally, the State Medical Board of Ohio will regulate physicians’ requirements and procedures for applying for and maintaining certificates to recommend medical marijuana and maintain the list of conditions for which medical marijuana can be recommended.

What is the impact on the new law on the Ohio BWC?

The impact of the new law on BWC and its programs is limited.

It does not adversely affect the Drug-free Safety Program, will not require BWC to pay for patient access to marijuana, and expressly states that an employee whose injury was the result of being intoxicated or under the influence of marijuana is not eligible for workers’ compensation.

Specifically:

  1. Nothing in the law requires an employer to accommodate an employee’s use of medical marijuana.
     

  2. The law does NOT prohibit an employer from refusing to hire, discharging, or taking an adverse employment action because of a person’s use of medical marijuana.
     

  3. The law specifies that marijuana is covered under “rebuttable presumption.” In general, this means that an employee whose injury was the result of being intoxicated or under the influence of marijuana is not eligible for workers’ compensation. This is the case regardless of whether the marijuana use is recommended by a physician.
     

  4. While the law does not specifically address reimbursement for medical marijuana recommended for injured workers, Ohio law already has rules and statutes in place that limit what medications are reimbursable by BWC.

    • Administrative code provides that drugs covered by BWC are limited to those that are approved by the United States Food and Drug Administration. Marijuana has not been approved by the FDA and remains a Schedule I illegal drug under federal law.
       

    • BWC-funded prescriptions must be dispensed by a registered pharmacist from an enrolled provider. Medical marijuana will be dispensed from retail marijuana dispensaries, not from enrolled pharmacies.
       

    • BWC only reimburses drugs that are on its pharmaceutical formulary, which is a complete list of medications approved for reimbursement by BWC. Drugs not on the list are not eligible for reimbursement, and under BWC’s current rules, it cannot be included in the formulary, nor is it otherwise eligible for reimbursement.

What can employers do?

If you have not done so already, the best way employers can protect their workers and themselves is to establish a drug-free workplace, or, if they already have one, to review and update it if necessary.

This is important because certain sections of the new law reference the use of medical marijuana in violation of an employer’s drug-free workplace policy, zero-tolerance policy or other formal program or policy regulating the use of medical marijuana.

For what this means to your specific workplace, consult your human resources or legal department.
 

View BWC fact sheet


New tax regulation is a big win

Tax reform red tape

Written by Jennifer Webb, Big “I” federal government affairs counsel, originally published by IA Magazine

Yesterday, the Internal Revenue Service issued a draft regulation on a key provision of the 2017 tax law (26 U.S.C. §199A) that allows for a 20 percent deduction on “qualified business income” for owners and shareholders of pass-through businesses.

Under the draft regulation, owners and shareholders of insurance agencies and brokerages can take the 20 percent tax deduction on qualified business income, no matter their taxable income levels, because the IRS does not consider insurance agents and brokers to be a “specified service trade or business.”

Owners and shareholders of specified service trades and businesses cannot take advantage of the deduction if their taxable income is over a certain level.

What does that mean?

The relevant part of the draft regulation reads as follows:

“Proposed §1.199A-5(b)(2)(x) uses the ordinary meaning of “brokerage services” and provides that the field of brokerage services includes services in which a person arranges transactions between a buyer and a seller with respect to securities (as defined in section 475(c)(2)) for a commission or fee. This includes services provided by stock brokers and other similar professionals, but does not include services provided by real estate agents and brokers, or insurance agents and brokers.”

Section 199A provides the 20 percent tax deduction to an owner or shareholder of a pass-through entity where the owner or shareholder’s annual taxable income does not exceed $315,000 for joint filers and $157,500 for single filers in 2018.

In other words, all owners or shareholders that are organized as pass-throughs under the above income thresholds can utilize the full 20 percent deduction, and any regulations or guidance released by the Treasury Department, including the draft released yesterday, will not impact this.

However, an owner or shareholder of a specified service trade or business with an annual taxable income between $315,000 and $415,000 (joint) and $157,500 and $207,500 (single) will see the deduction phased out.

Those with an annual taxable income above $415,000 (joint) and $207,500 (single) will be prohibited from utilizing the new deduction.

Why was this an issue for insurance agents?

While the regulation is only in draft form, it was previously unclear whether insurance agencies and brokerages would be considered specified service trades or businesses.

Because insurance agencies and brokerages are not a specified service trade or business, it means that those with annual taxable income above the $315,000 (joint) and $157,500 (single) thresholds can take advantage of the deduction.

But, the total amount of the deduction for those at these upper income levels cannot exceed 50 percent of employee W-2 wages, or 25 percent of W-2 wages plus 2.5 percent of capital assets (e.g. tangible property purchased for the business), whichever is greater. Alongside the draft rule the IRS released a proposed procedure for calculating W-2 wages.

The Big “I” has been aggressively advocating before Congress and the Treasury Department that insurance agencies and brokerages should not be considered a specified service trade or business.

In April, the Big “I” sent a letter to key Treasury Department officials and had a meeting with the department. As a follow-up to the meeting, the Big “I” sent another letter to the Treasury Department, specifically addressing questions about the term “brokerage.” The Big “I” has also had a number of meetings with key congressional offices on this issue.

Beyond the “specified service trade or business” definition, the draft regulation covers several issues related to the Section 199A deduction which may impact agents and brokers depending on individual circumstances.

For example, financial advice and retirement planning services would qualify as specified service trades or businesses, and consulting is considered a specified service trade or business to the extent that a fee is charged for such services. However, “consulting that is embedded in, or ancillary to, the sale of goods, if there is no separate payment for consulting services” is not considered a specified service trade or business.

Also of note, a trade or business is not a specified service trade or business if it has “gross receipts of $25 million or less (in a taxable year) and less than 10 percent of the gross receipts. . .[are] attributable to the performance of an SSTB.”

If gross receipts are above $25 million, the relevant percentage is 5 percent. This means an insurance agency that has predominantly a property-casualty book of business, but also has a small retirement planning, consulting or financials services component, would not be considered a specified service trade or business under the draft regulation.

Where things stand right now

The Big “I” is currently reviewing the draft regulation, which is open for a 45-day public comment period. A public hearing on the regulation is tentatively scheduled for Oct. 16. Because the regulation is in draft form and open for public comment, changes may occur before the rule becomes final.

The Big “I” will provide comments to the IRS and additional guidance to members over the next few months. Final regulations are expected before the end of the year.

OIA will keep members informed as we learn more.


Ohio independent agents urge senators to help businesses with health insurance options

Senate Bill 227 Testimony - Alex Due - Stapleton InsuranceSenate Bill 227 Testimony - Brian Thompson - Hummel GroupTwo OIA members recently urged members of the Senate Insurance and Financial Institutions Committee to pass legislation that would require health insurers to release certain aggregate claims information to group plan policyholders.

OIA member Alex Due of Stapleton Insurance Group in Sylvania testified in conjunction with OIA’s Government Affairs Manager Carolyn Mangas. Brian Thompson of the Hummel Group, who is also an OIA member, testified in support of the bill on behalf of the Ohio Association of Health Underwriters (OAHU).

Read full testimony

About the bill

Sponsored by Sen. Matt Huffman (R-Lima), S.B. 227 will provide a solution to a problem that OIA members have brought to our attention over the last several years.

By allowing risk advisors and employers access to claims data, Ohio employers can make better decisions regarding properly assessing health care options to potentially reduce their health care costs.

While this claims data is typically available to employers with 100-plus employees, it is not available to those that fall below this threshold. The lack of this data hinders the ability of risk advisers and employers to pursue additional funding arrangements that have become available in the last several years.

Ultimately, S.B. 227 would empower risk advisors and employers with the ability to better design a health insurance program that balances the level of risk and reward.

Notably, both Louisiana and Texas have similar laws in place to require health insurers to release claims data.

Several others testified in support of S.B. 227 in addition to OIA and OAHU. Opponents of the bill include the association that represents the health insurance companies and the National Multiple Sclerosis Society, who cited concerns that employers could identify employees with serious health conditions and discriminate against them.

To date, S.B. 227 has received three hearings in the Senate Insurance & Financial Institutions Committee.

OIA is working with the OAHU to push for an amendment to the bill so that it will apply to employers with more than 50 employees to alleviate some privacy concerns. OIA will keep members informed as discussions on this legislation continue.


Federal Tax Reform: What IAs Need to Know

Tax reform stamp US Capital building

On Dec. 22, 2017, President Donald Trump signed into law sweeping changes to the U.S. tax code.
 

Impact on IAs

The centerpiece of this law is a reduction of the corporate tax rate from 35 to 21 percent. This is a significant tax reform that will have a positive impact on many independent agencies.

The law also changes tax rates for individuals and creates a special deduction for small businesses (including insurance agencies).

While OIA focuses on state issues pertinent to Ohio’s independent agents and consumers, your national associations advocate before Congress and the Trump administration. The Independent Insurance Agents & Brokers of America (Big “I”) focuses on national issues such as changes to the federal tax code.

The Big “I” has developed a white paper outlining the most salient provisions of the new tax law that could impact independent agents.

Keep in mind that the tax changes will impact you differently depending on whether you’re organized as a C corporation or a business entity such as a subchapter S corporation, partnership or sole proprietorship.
 

The Times, They Are A-Changin’

This law is the biggest tax overhaul in 30 years (since former President Ronald Reagan’s Tax Reform Act of 1986). How the law is being implemented, including how the Internal Revenue Service (IRS) will interpret certain provisions, remains to be seen.

In 2018 and beyond, the IRS will issue detailed regulations and guidance that will impact tax planning for independent agents moving forward.

For more information and exclusive resources about the new tax changes, visit the Big “I” member page.

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