Category Archives: Healthcare

Fringe benefits: Long-term care insurance can pay off

The U.S. population is aging and, as it does, the need for long-term support and services will only grow. According to a 2017 fact sheet from the AARP Public Policy Institute, on average, 52% of people who turn 65 today will develop a severe disability that will require long-term care (LTC) at some point. For this reason, among others, employers should consider offering LTC insurance as a fringe benefit.

High cost of care

LTC insurance helps covered individuals pay for the care they need because of a severe cognitive impairment or if they need assistance with activities of daily living (ADLs), including bathing, dressing, toileting and eating. They might require assistance because of an accident, disability, chronic illness or aging.

The costs associated with such care have skyrocketed. AARP reports that the average annual cost of a private room in a nursing home in 2016 was about $92,000, with a shared room costing around $82,000 annually.

The average cost for a home health aide in 2016 was $20 per hour. With the average aide working about 30 hours per week, that came out to $31,000 per year. And, to the surprise of many, Medicare doesn’t pay anything for LTC, whether in-home or at a facility.

Purchase considerations

LTC insurance isn’t cheap. But by buying the insurance on a group basis, you may be able to obtain a discount from the individual policy rates.

You also might qualify for a guaranteed issue plan that provides coverage regardless of health status and need — meaning employees who might not be able to get coverage on their own would now have one less thing to worry about.

From a tax perspective, you can claim a deduction for the premiums you pay, and neither the premiums nor the benefits are taxable for the employee.

Employer benefits

The positive impact of offering LTC insurance can play out over the long term. First, a fringe benefit like this can draw better job candidates who are looking for more than just basic health care coverage. It might help you retain employees as well — especially those who are already looking toward retirement and beyond.

Think about extending LTC insurance to employees’ family members, too. As AARP notes, unpaid family and friends provide most LTC support, often incurring direct costs as well as lost wages and benefits. Employees providing caregiving could be forced to cut their work hours, take easier positions or quit work altogether.

By providing coverage for their family members, you could reduce the caregiving burden on your employees, relieving stress on them — and probably reaping productivity gains to boot.

A worthy consideration

Not every employer will have room in its benefits budget to buy LTC coverage. But if you’re looking to upgrade your fringe benefits, this is one perk that’s well worth considering. To discuss further, please contact us.

© 2018

Analyze your health plan’s electronic security to comply with HIPAA

If you’re an employer that sponsors a health care plan, you may worry about inadvertently violating the Health Insurance Portability and Accountability Act — commonly known as HIPAA. But you should also bear in mind that there is a formal requirement for ensuring electronic data security. Specifically, sponsors of most plans must do a risk analysis to comply with what’s called the HIPAA security rule.

Pertaining to PHI

The HIPAA security rule describes the required risk analysis as “an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of electronic protected health information.”

In this context, a “vulnerability” is a flaw or weakness in a security system that could be exploited (intentionally or accidentally) to breach security. “Risk” is determined by assessing both the likelihood that a vulnerability will be exploited and the extent of the resulting impact on the health plan.

In performing the risk analysis, it’s important to remember that the HIPAA security rule applies only to electronic protected health information (PHI). Employers with insured plans may limit their compliance obligations by minimizing the amount of electronic PHI they create, receive, maintain or transmit. For example, you might structure your plan so individually identifiable information, such as claims data, is maintained exclusively by your insurer.

Also, enrollment information created by the plan sponsor — for instance, when you administer open enrollment — doesn’t constitute PHI because that information isn’t collected on behalf of the plan. Thus, the risk analysis for a small insured plan can be much simpler than that for a large, self-insured plan where the sponsor performs administrative functions.

Surveying your systems

As a first step, identify all hardware, software, facilities, workstations and information systems used in storing, receiving, maintaining or transmitting electronic PHI. You may be surprised at the amount of electronic PHI you have. Next, identify and assess security measures currently in place to protect the electronic PHI, noting specific vulnerabilities and risks. Finally, determine what, if any, additional security measures are needed to respond to the identified vulnerabilities and risks.

It’s particularly important to document completely each step of the risk analysis, including how the health plan reached its conclusions regarding vulnerabilities, risk assessment and security measures. The security rule doesn’t require perfect security but, in the event of a security breach, a health plan must be able to explain why its security measures were appropriate.

Undertaking the process

Note that the HIPAA security rule doesn’t apply to a health plan that has fewer than 50 participants and is self-administered by the employer that established and maintains the plan.

If the rule does apply to you, keep in mind that it doesn’t specify how often employers should conduct a risk analysis. Undertaking the process annually or whenever there’s a major change to your health plan or IT systems is generally recommended. For further information, please contact us.

Update: NC Adult Care Home Cost Reports

The NC Department of Health and Human Services released a memo dated May 15, 2017 detailing the official instructions for Adult Care Home reporting requirements as well as the release of Agreed-Upon-Procedures (AUP) instructions. As of November 21, 2016, the Cost Report for Adult Care Homes was reinstated with the significant change being reporting is only every two years, beginning this year.

To comply with these requirements all facilities that receive State/County Special Assistance funds are required to file a cost report. Those facilities that have more than 7 beds are additionally expected to have Agreed-Upon-Procedures performed.  The cost reports will be completed using the latest completed fiscal year end. These cost reports are due – September 30, 2017!

As an advocate for providers we are flexible in the midst of inconvenient legislation and would be happy to serve your Organization as well. If you have questions, please contact pwilliams@langdoncpa.com or rowens@langdoncpa.com!

https://www2.ncdhhs.gov/control/acf/2016-17/aup/adult-care-mental-health-faciliites.pdf

 

 

 

 

Two NC Budgets Passed!

by Rachel Owens

It’s the beginning of summer in NC.  That means that the two chambers of our General Assembly are hard at work trying to agree on a state-wide budget.

The House of Representatives passed the Health and Human ServicesNC health news budget a few weeks ago.  The Senate just passed theirs.  As always there are similarities and differences in each department; each of which, have very “hot topics” that are addressed.  Thanks to NC Health News for a comparison chart to show the differences between the two.

If you have additional questions about the budget decisions and how they affect your organization, contact our office.  We’ll be happy to give you some insight on what these choices mean for you.

Rachel (rowens@langdoncpa.com) is a Senior in the Cost Report department at Langdon & Company LLP.  She works with various healthcare companies, several of which, from the audit all the way through their state reporting compliance.

Changes in NC Behavioral Healthcare

by Rachel Owens

Consolidation of the state-funded management organizations has been officially declared!

Currently, there are eight LME/MCOs across North Carolina.  The consolidation will reduce the number of LME/MCOs down to four, by combining the catchment areas into contiguous regions.  The LME/MCO’s that are merging are: Smoky Mountain + Partners, Cardinal + CenterPoint, Trillium + Eastpointe, and Alliance + Sandhills. LME_MCO_ConsolidationMap

No timeline has been established for the transition, but the hope is that it will not take more than two years to implement.  The first merger will be between CenterPoint and Cardinal Innovations – somewhere between May 1 and June 30. This change affects each county from “Murphy to Manteo.”  Read more about the consolidation in Rose Hoban’s recent article in NC Health News .

Langdon & Company LLP is committed to assisting the mental health provider population in any way we can.  Please contact our office if you have questions on how these changes will affect your organization.

 

NC Senate Bill 424 “Fostering Success,” an analysis of the current proposal and how it will affect the Foster Care Benefits Program in North Carolina

by Josh Bryant

Under current State law, foster children stop receiving benefits on their 18th birthday, unless they are a full-time student, up until the age of 21. However, North Carolina legislators have been working to extend the age limit for foster care benefits from 18 to 21 under a wider swath of requirements that will undoubtedly benefit thousands who are currently cared for in the Foster Care Program.

In order to receive foster care benefits until the age of 21, under the current law a child must be a full-time student. With the passage of NC Senate Bill 424, effective August 1, 2016, under Section 1 a foster child may fulfill one of following five requirements and remain eligible to receive benefits until 21:

  • completing high school or a GED,family
  • being enrolled in a college or a vocational program,
  • participating in an employment program,
  • being employed for at least 80 hours per month,
  • or, incapable of completing one of these requirements due to a medical condition or disability.

Additionally, “Fostering Success” also expands the ability of foster parents and children to succeed in life by allowing more “wiggle room” for decisions to be made on part of the child. For example, under the proposed law, a foster child who is a full-time student over age 18 may now be approved to live outside a foster care facility in a college dormitory or a partially-supervised residential agreement. Furthermore, the Bill will make it easier for foster children who are eligible for guardianship but are unlikely to find a permanent residence in the formation of the Guardianship Assistance Program or GAP.

In summary, “Fostering Success” lends a hand to individuals who are otherwise deemed an adult the necessary assistance they need to supplement their life without having to endure additional hardship in order to receive such help.

Funding for the bill has been set aside for implementation in the coming year and will be fully implemented August 1, 2016.

Josh (jbryant@langdoncpa.com) is a staff Auditor with Langdon & Company, LLP.  He works on a variety of clients in the non-profit sector.  Please contact our office if we can help your organization better understand the latest legislation and how it affects your constituents.

Adult Care Home News

by Rachel Owensdhhs

We now have some clarity when it comes to DHHS compliance for Adult Care Homes (ACH).  Last year, the North Carolina General Assembly passed General Statute 131 D-4.1-4.3. It was under this statute, that the Adult Care Cost Report requirement returned.  These cost reports are mandatory for facilities receiving State/County Special Assistance Program funds. Types of facilities subject to this requirement include nursing home combination facilities with adult care beds, mental health supervised living facilities, and all other  adult care homes (Licensed under general Statute Chapters 131E, 122C, and 131D, respectively).

In addition to these cost reports, any of these facilities that are licensed for 7 or more beds, are to be audited.  This audit is of the cost report information in the form of Agreed-Upon-Procedures (AUPs), that must be done by a certified public accountant (CPA)/independent accountant.

The requirements for the combination facilities are slightly different since they are based on the Medicare’s requirements of Skilled Nursing facilities.  Combined nursing facilities should submit a cost report and related AUPs based on their last completed Medicare cost report, which in most cases covers October 2013 through September 2014.

Important Dates:  For the mental health facilities, the reporting period is July 1, 2014 through June 30, 2015.  The reporting period for adult care home facilities is October 1, 2014 through September 30, 2015.

The due date is December 31, 2015 for all facilities.

All facilities that do not receive any funds through the State/County Special Assistance Program are considered exempt and an exemption form must be completed.  This form can be found on the DHHS Office of the Controller’s website at www.ncdhhs.gov/control.

Nursing-homeThe ACH cost report software is also available online, here.  All questions related to the AUPs can be addressed to AUP.Questions@dhhs.nc.gov.  If you have questions about cost report and AUP preparation, please contact our office.

NC Adult Care Home Update

by Rachel Owens

The NC Department of Health and Human Services sent out a memo dated July 15, 2015 with the latest information regarding General Statute 131D-4.2 – the Adult Care Home providers and their reporting requirements.  To comply with these requirements ALL facilities that receive State/County Special Assistance funds are required to file a cost report.  Those facilities that have 7 beds or more are additionally expected to have Agreed-Upon-Procedures performed.  dhhs

For facilities licensed under Chapter 122C (mental health supervised living facilities) the reporting period is July 1, 2014 – June 30, 2015.  All other facilities are required to use the year end September 30, 2015 regardless of their fiscal year end.  These cost reports are due December 31, 2015.

More information is forthcoming about AUP instructions, and software.  Please continue to check our website and blog for additional information.

Langdon & Company LLP has extensive history working with the long-term healthcare industry. We offer a high degree of expertise and experience with the needs of Adult Care Home providers and would be happy to assist you in the timely filing of the Cost Report.  If you have questions, we will be happy to help you.  Contact pwilliams@langdoncpa.com or rowens@langdoncpa.com!

ABLE (Achieving a Better Life Experience) Act – A new way to save for children with disabilities

by Meagan Bulloch

The ABLE Act amends Section 529 of the IRS Code of 1986 to create tax-advantage savings accounts for individuals with disabilities.  The ABLE Act will provide individuals with disabilities the same types of flexible savings tools that all other American have through college savings accounts, health savings accounts and individual retirement accounts.  Most importantly this Act will prevent money saved through 529-ABLE accounts from counting against an individual’s eligibility for federal benefits programs.

As of December 19, 2014 this was signed into law by President Barack Obama. o-SAVINGS-ACCOUNT-facebook

What you should know (Adapted from NDSS):

  1. 529-ABLE accounts are “tax-advantage” savings accounts for individuals with disabilities and their families.  Income earned by these accounts will not be taxed.  Also the money will not be considered an asset when determining eligibility for government supported benefits.
  2. Who is eligible – Any individual with significant disabilities with an age of onset before 26 years of age is eligible.  Eligible individuals can be over the age of 26, but must have documentation of disability that indicates age of onset before the age of 26.  
  3. How much money can be saved – Under current tax law, an individual can contribute a maximum of $14,000 into an ABLE account and not be subject to gift taxes.  The total limit over time that can be made into an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts.  The first $100,000 in ABLE accounts will be exempt from the SSI $2,000 individual resource limit.  If the ABLE account exceeds $100,000, the beneficiary would be suspended from eligibility for SSI benefits, but would continue to be eligible for Medicaid.    
  4. What expenses qualify – A “qualified disability expense” is considered an expense incurred as a result of the beneficiary living with their disability.  These would include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses which will be developed in 2015 by the Treasury Department.   
  5. Can I have more than one ABLE account – No, the Act limits the opportunity to one ABLE account per eligible individual. 
  6. How is an ABLE account different from other options – ABLE accounts allow more choice and control for the beneficiary and their families.  The cost of opening an account will be considerably less than setting up either a Special Needs Trust or Pooled Income Trust.  The ABLE account will also be less complicated to set up and owners will have the ability to control their funds.  This new approach also offers individuals living with a disability the ability to work and contribute to their own support and save for their own future with fear of losing necessary support and services.

Meagan Bulloch (mbulloch@langdoncpa.com) is an audit manager at Langdon & Company LLP focused primarily on non-profit clients.

 

The Why, Who, What and How of an effective audit committee for nonprofit organizations

by Meagan Bullochhands

The establishing and maintaining an audit committee is considered a best practice for nonprofit organizations.  An audit committee can greatly help the governing board perform their fiduciary and oversight roles over financial reporting, reducing risk and maintaining donor confidence.  Some organizations may utilize their finance committee as an audit committee.  What is important is not the form of the committee but the substance.

Q: Why should a nonprofit consider forming an audit committee?

A: In addition to Sarbanes Oxley and state requirements imposed for organization’s soliciting funds within certain states, the Form 990 asks if an organization has an audit committee.  Although, such a committee is not a requirement, the establishment of one is considered a best practice by the IRS.  As the Form 990 is a public document, answering “no” to this question may lead to funders questioning why the organization is not following a suggested best practice.  The American Institute of Certified Public Accountants’ (AICPA) Audit Committee Toolkit: Not-for-Profit Organizations, 2nd Edition (available at AICPA Store) lists numerous reasons as to why a nonprofit organization should consider forming an audit committee, including providing better: financial results, decision-making in terms of accuracy and quality of financial reporting; ability to build stronger relationships with stakeholders; as well as facilitating transitions in leadership.

Q:  Who makes the best audit committee members?

A:  Audit committee’s typically consist of 3-6 members with diverse backgrounds and experience all of which are considered “financially literate.”  To be financially literate, members should be able to read and understand fundamental financial statements and recognize when the numbers along with associated disclosures to not make business sense.  Additionally, the best audit committee members are fully involved and engaged with the organization and ensure that two-way constructive dialogue occurs at all times between all parties involved.  Members should also be independent in both fact and appearance.  To be truly effective, the committee must be able to resist any attempt by management to compromise financial reporting.  The following relationships are considered to impair independence:

  1.  An audit committee member who is or has been an officer or employee of the organization during the past 3 years
  2. A member who is an immediate family member of an officer or someone in management
  3. A member who has a direct business relationship with the organization in the past three years; such as a consultant

Q:  Who can serve as a financial expert on the audit committee?

A:  The inclusion of at least one financial expert is a highly recommended best practice.  The following attributed are deemed essential components of a financial expert:

  1.  An understanding of generally accepted accounting principles (GAAP) and nonprofit financial statements
  2.   The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves
  3. Experience preparing, auditing, analyzing or evaluating financial statements that are comparable to those of the organization
  4. An understanding of internal controls and procedures for financial reporting
  5. An understanding of the audit committee function
  6. A general understanding of nonprofit financial issues and specific knowledge of the nonprofit industry in which the organization operates

It is worth noting that an audit committee financial expert has no greater obligations or liability than any other members of the audit committee and board of directors who are not designated as financial experts.

Q:  What should be the mission of an effective audit committee?

A:  Simply put, the mission should be oversight.  Specifically, the following areas should be their main focus:

  1.  Financial reporting
  2. Risk Management

Audit function – oversight of and communication with independent auditors, both internal and external

Langdon & Company LLP will be happy to assist with your audit needs.  Please contact our office!

Meagan Bulloch (mbulloch@langdoncpa.com) is an audit manager at Langdon & Company LLP focused primarily on non-profit clients.