Spring 2025 Insight Employer Newsletter

How New York State’s MCO Tax impacts commercially insured plans

New York State recently received federal approval for the New York Managed Care Organization provider tax, or MCO tax. The MCO tax was authorized by the 2024-2025 State Budget to secure additional federal monies for New York State.

Here is an overview of the new MCO tax and its implications for Independent Health’s commercially insured plans:

What is the MCO Tax?
The MCO tax is a state-imposed levy on managed care organizations that provide health insurance, designed to generate revenue to support the State's healthcare programs. The annual tax amount is based on member months of enrollment and applies on a calendar year basis beginning January 1, 2025, to commercially insured products.

Impact of the MCO Tax on Commercially Insured Premiums
The impact of this latest tax from the State on commercially insured plans will be an increase in premiums. 

Independent Health’s collection of the MCO Tax
The tax amount charged will be $3.60 per contract per month, which Independent Health will apply to large experience-rated groups, beginning June 1, 2025. We will not apply it retroactively back to January 1, 2025. Each group’s tax liability will be calculated according to the number of contracts covered in the previous month. 

As for large group community-rated, small group and individual plans, New York State will not allow changes to our previously approved 2025 rates; therefore, we will incorporate the tax amount into our 2026 premiums. 

If you have any questions about the MCO Tax and what it means to your group, please contact your Independent Health account manager.

Offering a Health Savings Account (HSA) can benefit your employees in various ways

Article courtesy of HealthEquity

An important part of any business is the ability to attract and retain highly-skilled workers. Most employers provide benefits ranging from paid vacation time and tuition reimbursement to bonuses and raises. And then there are health benefits, which can be one of the more expensive benefits you offer employees.

Offering a high-deductible health plan with a Health Savings Account (HSA) is a great way to provide health benefits. Plus, it can be considered an employee retention strategy. That’s because, among other things, HSAs empower employees to take control of their finances, health and retirement. Here’s how:

• Finances
  With ever-increasing medical costs looming, HSAs provide a vehicle for employees to save for those expenses.
  
  
  • HSAs provide three tax advantages: Employees can contribute, grow and spend HSA funds on qualified medical expenses, all tax free.*
    
    
  • Since HSAs are paired with high-deductible health plans, employees spend less on premiums. Contributing those savings to their HSAs can lead to even more tax savings. 
    
    
  • Another approach is for employees to pay for qualified medical expenses out-of-pocket while their HSA funds earn interest. Later, employees can use saved receipts to reimburse themselves from their HSAs. There is no expiration date for reimbursing out-of-pocket spending.

• Health
  HSAs help transition your employees into a more consumer-driven healthcare mindset. Consumer-driven healthcare means employees take more of an active role in their healthcare decisions, including shopping around for the best, lowest-cost care and prescriptions. This approach, coupled with proper education and engagement, can help employees make wise healthcare decisions and ultimately save money.
  
  
• Retirement
  Milliman’s 2024 Retiree Health Cost Index projects that a healthy 65-year-old couple can expect to spend upwards of $395,000 on healthcare costs in retirement. One advantage of an HSA is that funds carry over every year. This means HSAs can be used as part of a retirement strategy to cover medical care costs during retirement. HSA funds can also be invested for additional tax-free growth. And, if the employee also has a 401(k), they can grow both accounts together and potentially set themselves up for a more comfortable retirement.

We make managing an HSA easy!
Independent Health is proud to partner with HealthEquity, the leading administrator of HSAs in the nation. Through this collaboration, Independent Health is the only health plan in Western New York that offers an integrated HSA product with complete automated enrollment and claims payment solutions as well as no monthly maintenance fees. Visit our website to learn more. 

*HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Independent Health and HealthEquity do not provide legal, tax, financial or medical advice. Therefore, please consult a tax advisor regarding your state’s specific rules.

Providing additional support to expectant mothers and their babies

When it comes to meeting maternity quality standards, the Western New York region is struggling due in part to high C-section rates and low healthy delivery benchmarks. As a way to help ensure the healthiest births for moms and their babies, Independent Health provides extra support to expectant mothers through our First Step Maternal Child Program. The program is free for commercial and Medicaid members.

Our maternity management team is made up of five First Step maternity case managers who utilize informatics and claims data to verify information before outreaching to expectant mothers. Members are engaged by their pregnancy risk level:

• Low-risk members receive a letter with information and an option to enroll in the program.
  
  
• Medium-risk and high-risk members receive a phone call offering support through the program and, when indicated, can also be offered in-home support through community partnership programs with Catholic Health.

Members can opt-in to the program at any time. Once enrolled, they are contacted every four to eight weeks, or more frequently if needed, to ensure a healthy pregnancy and on-time delivery. Our maternity management team can assist members both during and after their pregnancy by:

• Helping them understand prenatal testing and post-partum care and support
  
  
• Reviewing medications they are taking and reinforcing provider recommended treatment plans.
  
  
• Coordinating their care with their OB-GYN and primary care physician
  
  
• Assessing their Social Determinants of Health and linking them with appropriate community resources and services
  
  
• Screening them for depression or other mood disorders and providing behavioral health support if needed
  
  
• Educating them about newborn care, breastfeeding, immunizations and early intervention services.

Partnerships with organizations like Catholic Health help us reach high-risk members and their babies through home visits. This is to ensure they receive comprehensive care to mitigate complications pre- and post-partum based on their individual needs. 

In 2024, 456 high-risk members enrolled in our First Step Maternal Child Program. Here are some of the results we had working with these members:

• Nearly 9 out of 10 pregnancies carried to full term
  
  
• 88.7% avoided neonatal intensive care unit (NICU) care
  
  
• 100% assessed for depression risk during and post pregnancy
  
  
• Improvement in breastfeeding rates and follow-up with physician post delivery

Members can learn more about the First Step Maternal Child Program by calling our Case Management Department at (716) 635-7822, Monday through Friday from 8 a.m. to 5 p.m.