Employer-provided benefit costs vary widely by industry

The cost of offering healthcare and retirement benefits varies widely by industry, with retirement benefits experiencing the greatest variation.

In new analysis, Willis Towers Watson finds that healthcare costs, as expected, are the largest cost across all industries, ranging from 10.4% of pay in the retail sector to 12.7% in the oil, gas and electric sector.

Total retirement benefits, which include defined benefit, defined contribution and post-retirement medical programs, range from 5.5% of pay in the healthcare, high tech, general services and retail industries to 12% of pay in the oil, gas and electric sector.

Marina Edwards, senior retirement consultant at Willis Towers Watson, says that the disparity across the industries for retirement benefits can be traced back to the closing down of company pension plans.

Funding still goes into those plans, but employers must also funnel dollars into their defined contribution plans, she says. All of that counts toward an employer’s total benefits package spending, which also includes healthcare premiums, some subsidized by the employer.

“Total employer spend can be quite high in some cases,” Edwards says.

As far as defined contribution plans go, employers in different industries must contend with the shortfall that employees are feeling in their paychecks because of increased medical costs. Many workers are feeling stressed at work and feeling the effects of tighter paychecks so employers have worked toward addressing that problem, Edwards says. That’s causing more companies to redesign their retirement plans and stretch the employer match to a higher percentage to encourage employees to put more money into the plan.

“This doesn’t solve the paycheck pinch, if you will, but it makes the employer’s dollars go further,” she says.

The oil and gas industry is unique in that it usually matches dollar for dollar, up to 15% of pay, any contributions made by employees into their employer-sponsored 401(k) plan. The catch is those funds are matched with company stock. There is no cash outlay, Edwards says.

“It is still a benefit to employees but it costs them less to do it,” she says.

That explains the large deviation between what the oil and gas industry puts toward retirement benefits and what other industries are contributing.

Because certain industries are more competitive, these types of benefits become more important in attracting and retaining top talent, she says, especially for skilled workers who are specific to that industry, such as nurses in healthcare and oil and gas engineers in the oil and gas industry.

“I think most employers know their healthcare costs are expensive, but there is less disparity on the healthcare side of things,” Edwards says. “The numbers and percentages are pretty tightly bundled. We see a bigger spread on the retirement side.”

According to Willis Towers Watson’s most recent Global Benefits Attitudes Survey, 62% of employees say they would be willing to pay a higher amount out of their paycheck each month to have a more generous retirement benefit, and 63% say they would pay a higher amount to have access to a guaranteed retirement benefit.

Employers need to understand that this disparity across industries exists, says Edwards, because many local employers compete for talent with employers in different industries than themselves. For instance, a software company in Madison, Wis., may compete for top tech talent with the local university hospital system, so it is up to both industries to know how much these other industries are willing to pay for the same job title.

“If you find your benefits fall short, you can use non-qualified plans as a way to entice individuals to join your firm or retain them,” she says. Companies should consider offering an enhanced compensation structure, beef up their bonus or pay higher wages to remain competitive.

“Focus on the total benefits value and communicating that total value: cash plus healthcare plus retirement,” she says. “Many companies don’t have retiree medical anymore but if they did it would be another level.”

Benefits information is included in the Department of Labor’s Form 5500. Many companies don’t realize that they can do a bit of sleuthing through the Form 5500 filings to see what their competition is offering for retirement benefits to their employees, she adds.

“It is surprising to us that companies don’t know who their competitors are,” she says. “They don’t have a formal list but if they do have a list, they don’t know what industries they are in and what that industry is paying.”

Published
  • September 27 2017, 6:17pm EDT
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How employers are preparing for the Cadillac tax

Although the Cadillac tax isn’t set to go into effect until 2020, employers are already adjusting their health plans in an effort to avoid the added expense.

The 40% excise tax on high-cost healthcare, which was created to help fund parts of the Affordable Care Act, has long been one of the most controversial aspects of the law for employers, because it could ultimately impose significant costs.

Lawmakers discussed delaying the tax to 2025 or 2026 as part of the healthcare debate in Congress over the summer, but for now, the tax remains slated to go into effect just over two years from now.

“The timeframe for plan changes at big companies is easily 18 months — and we’re not that far away,” says Jim Klein, president of the American Benefits Council.

[Image credit: Bloomberg]

[Image credit: Bloomberg]

A survey published last month by the National Business Group on Health found that uncertainty surrounding the surcharge is influencing efforts to control healthcare costs for about 8% of large employers surveyed, looking out over the coming year.

Still, while the majority of employers said they are maintaining their strategies to rein in costs regardless of the tax, Steve Wojcik, vice president of public policy for NBGH, says that the issue remains a “top priority” for many employers.

“Although our data show that the uncertainty about it isn’t having a huge influence on healthcare strategy, it’s definitely top of mind,” he says.

Kim Flett, compensation and benefits services managing director at accounting firm BDO, says that she advises clients to form internal committees of benefits experts to discuss employer options for tweaking healthcare offerings, in light of the upcoming tax, in addition to consulting with health insurance providers and accountants.

As part of that process, employers are considering certain tradeoffs across their benefits package — for example, whether cuts in retirement contributions might be required to maintain high-priced plans that could trigger the tax.

“Now that it’s looming, we’re seeing a lot more concern from employers,” she says.

Observers say there are a number of changes employers can make to their health plans to help reduce the cost of coverage and avert the tax, at least temporarily. Those include efforts to shift healthcare costs onto employees, through raising deductibles and increasing co-payments or co-insurance rates. Such changes face some statutory limits, however, as the ACA requires all out-of-pocket expenses to be capped at $7,150 for individuals and $14,300 for families in 2017.

More employers also are considering the move to high-deductible plans. The NBGH survey found that the vast majority (90%) of large employers are likely to offer consumer-driven healthcare plans by 2018, with 39% of employers offering only higher deductible plans by that time. Consumer-driven healthcare plans are most commonly designed as high-deductible plans paired with a tax exempt health savings account, and the plans have been shown to help reduce healthcare costs.

While many employers were already moving toward offering high-deductible plans, the threat of the tax has “really turbo-charged the growth” of the plans, says Christopher Beinecke, a Dallas-based lawyer at law firm Haynes and Boone, who specializes in employee benefits issues.

NBGH’s Wojcik says that employers also are exploring improvements to their healthcare offerings in an effort to reduce coverage costs. Some are looking to provide tele-health options and worksite or nearby clinics to manage primary and preventative care. Other employers are partnering with accountable care organizations, which are networks of doctors and hospitals that provide coordinated care to patients.

“You’re paying for better delivered care that costs less,” Wojcik says of the efforts.

Experts said that the pacing of any changes to reduce healthcare costs is likely to be spread out based on an employer’s specific needs. Some companies already began making plan adjustments in the years following passage of the ACA in 2010, because the tax was initially designed to go into effect in 2018. (It was delayed for two years in December 2015.)

Other employers are likely to make changes based on when their plans are expected become subject to the tax. The tax is projected to go into effect for plans in excess of $10,800 for individual coverage and $29,050 for family coverage in 2020. Those figures will adjust each year with inflation.

“Employers by and large, if they haven’t already, will probably begin to make their gradual changes two or three years out from hitting the excise tax,” Beinecke says.

NBGH found last year that 53% of large employers expected at least one of their health plans will exceed the tax threshold in 2020, while 56% estimated that their most popular health plan will hit the threshold by 2022. By 2030, 95% of employers estimated that their highest enrollment health plan will be subject to the tax.

That’s why many employers are starting to make changes gradually over time in advance of those dates.

“The fact of the matter is you cannot make drastic changes to benefits overnight without causing a fiasco,” says James Gelfand, senior vice president of health policy at the ERISA Industry Committee.

Published
  • September 20 2017, 11:07pm EDT

ACA compliance still important as lawmakers continue repeal push

Regardless of possible outcomes in Washington, employers still need to look at current operating strategies to make sure they’re compliant with looming ACA requirements that are still law of the land.

For example, the deadline for using the new summary of benefits and coverage template is fast approaching, Christine Pothm, a partner with the firm Vorys, Sater, Seymour and Pease, said Monday at EBN’s Benefits Forum & Expo in Boca Raton, Fla. Issued April of last year, the DOL shortened the SBC to five pages, and added important questions regarding deductibles, out-of- pocket limits and network providers.

“Make sure you’re making a quick comparison and you’re using the new one,” she advised. “There is a penalty associated with not using the correct template that is coming up.”

Pothm also noted changes brought about by the 2016 21st Century Cures Act that’s important for employers. First, it allows for what’s called a qualified small employers health reimbursement rearrangement. The IRS and DOL came out and said stand-alone HRAs are no longer permissible because they violated provisions in the ACA.

[Image: Bloomberg]

[Image: Bloomberg]

 

The second change was it provided additional marching orders to the IRS, DOL and HHS regarding mental health parity. The result of that regulation is “a lot of guidance issued from the tri-agencies,” she noted, adding that on the DOL’s site, under mental health parity, there are a number of 1-4 page summaries.

“I would encourage employers, if you haven’t seen the info, they’re great short little documents to see whether your plan is compliant,” Pothm added. “This is one of their top areas they’re looking at for enforcement.”

Employers also need to be aware of the DOL’s audits of group health plans, she said.

“They are cross training all agents to handle both retirement and group health plans,” she warned. “Typically if a retirement plan is pulled for audit, most likely they’ll add your group health plans to what they’re looking at.”

“Regardless of what Congress does, we still have a very active administration,” added John Hickman, partner at the international law firm Alston and Bird.

The current hot-ticket item is the Graham-Cassidy bill, a proposal crafted by Sens. Bill Cassidy (R-La.), Lindsey O. Graham (R-S.C.) and Dean Heller (R-Nev.) that essentially turns control of the healthcare markets over to the states.
Although the sticking points aren’t in the employer benefits arena, the bill does nix the employer mandate and includes HSA expansions, Hickman noted.

Reporting issues still wouldn’t be taken away in this bill, he warned, and employers will still have to comply with the ACA’s reporting requirements this year.

But, assuming the bill fails, there are still a number of potential stand-alone fixes, Hickman said.

For example, there is the bipartisan support of repealing the excise tax that we may see come down the line. “It’ll be an interesting time going forward,” he noted.

Published
  • September 18 2017, 11:08pm EDT

How to help employees better understand Health Savings Accounts

Thirteen years into this HSA experiment, health savings accounts are still wildly misunderstood. Are they employer-sponsored health plans, spending accounts, checking accounts, savings accounts, investment accounts, or is it now most appropriate to refer to them as a retirement savings vehicle?

Here’s what HSAs are not: employer-sponsored health plans, despite the fact that many employers assist in establishing them for employees and contribute to the accounts. HSAs are best thought of as individually owned tax-exempt trust or custodial accounts available to individuals covered by what the IRS considers to be an HSA-eligible health plan. That’s pretty cut and dry, however it’s easy to see why there is still so much confusion. After all, an HSA shares many of the characteristics of the accounts listed above, and it’s up to the individual to decide how best to use the account.

 

Most consumers so far have yet to fully understand the opportunities and securities presented by an HSA — often misusing it as a checking account — but technology is helping to change that, engaging them on platforms that allow them to see the value of saving rather than spending. These emerging technologies also are helping employers and individuals pick and choose between the many HSA offerings.

Think of the HSA as having two components all under one tax-sheltered umbrella: A cash component for spend and an investment component for long term savings. If the cash component of an HSA is merely a spending account, what’s the benefit to having consumer engagement tools embedded into what otherwise looks like a checking account? The answer is it’s an opportunity to change behavior in how employees are using their HSA.

In an effort to demystify the HSA, let’s segment HSA owners into three buckets: The Spenders, The Savers and The In-Betweens. The Spenders are those HSA owners who use employee and employer contributions to pay for all qualified medical expenses as they roll in. The In-Betweens use employee and employer contributions to pay for some, but not all, medical expenses and are able to roll over a balance in the HSA from year to year. The Savers are a minority subset of the HSA market in that these folks are able to fully fund the HSA each year and pay for all qualified medical expenses through other means.

All three segments of HSA owners receive the triple tax advantage: Contributions to an HSA are not taxed, interest paid and earnings on investments are not taxed, and distributions for qualified medical expenses taken today — or at any point in the future — are not taxed. Since all three segments are afforded the same tax benefits, one of the most important things for employers and individuals to consider when evaluating an HSA offering are the consumer engagement tools and functionality embedded into the cash component of an HSA.

To select a holistic HSA offering that empowers consumers in this way, look for an HSA offering that has the ability to link healthcare claims and receipts to payment capabilities, as well as dashboards with interactive charts that help individuals better understand healthcare spending and savings trends. Access to these types of enhanced functionalities will be key to shifting consumers’ mindset on how to use their HSA, enabling them to make better decisions when managing their money in these accounts.

Better HSA cash management leads to more savings, and more savings leads to greater healthcare purchasing power, not only for today, but in retirement as well. It goes without saying that employees need more savings for retirement. According to Fidelity, a couple retiring in 2017 will need an estimated $275,000 to cover healthcare costs in retirement. Paying for those qualified medical expenses with HSA dollars, instead of from other retirement accounts, increases healthcare purchasing power because HSA distributions for qualified medical expenses today and in the future are not included as income and thus never taxed.

While it may be somewhat ignorant to assume all employees have the ability to save $275,000 in an HSA for retirement, it’s equally as ignorant to assume employees in only the highest tax brackets have the ability to save long term for future medical expenses. With that said, the vast majority of today’s HSA assets are held in cash and the majority of employees are considered Spenders or In-Betweens. The best way to change behaviors from a spending mentality to a saving mentality is by meeting employees where they are interacting in their HSA with easy-to-use and engaging technology. Employees that don’t have these added benefits will continue to use the HSA as a checking account and will spend down balances just as fast as contributions roll in.

Jason Cook

Jason Cook is vice president of healthcare emerging market sales at WEX Health.

Single payer ‘dream’ would be a nightmare for Americans

Image result for emergency room

The Affordable Care Act’s exchanges are collapsing. In 40 percent of counties, consumers will have access to just one insurer on the exchange next year. In 47 counties, there will be no insurers on the exchange at all.

 

More insurers may pull out in the coming weeks. The ones that don’t may hike premiums by 40 percent or more.

 

Americans are frustrated with the exchanges’ high costs and limited options. That frustration is manifesting itself in growing support for a government-run, single-payer healthcare system. Forty-four percent of Americans now favor this approach, according to a recent Morning Consult poll.

Supporters of single-payer claim that it would eliminate wasteful spending and improve the quality of care. The reality is far different. Single-payer systems ration health care, slow the development of life-saving drugs and medical devices, and hamstring economic growth.

 

Single-payer systems control costs primarily by limiting access to health care.

 

In the United Kingdom’s National Health Service, 5 million patients will languish on waiting lists for non-emergency surgeries, such as hip replacements, by 2019.  In Canada, patients wait more than nine weeks between referral from a general practitioner and consultation with a specialist.

 

By comparison, American patients wait less than four weeks, on average.

 

In many cases, single-payer systems force patients to wait indefinitely for lifesaving medicines. For instance, Britain’s NHS only permits 10,000 people per year to receive highly advanced drugs that cure hepatitis C, a deadly infectious disease that afflicts 215,000 Britons. As of late 2015, the NHS covered just 38 percent of cancer medicines approved for sale in 2014 and 2015.

 

Those medicines that are available are subject to government price controls. Patients may feel like they’re getting a good deal. But such controls discourage investment in medical research — and thus slow the pace of medical innovation.

 

In the 1970s, four European countries developed more than half of the world’s medicines. But since they imposed price controls, those countries now invent only one-third of medicines.

 

The United States, by contrast, developed nearly 60 percent of the world’s new drugs between 2001 and 2010.

 

Single-payer systems don’t just cap spending on drugs. They also insist upon artificially low reimbursement rates for hospitals and doctors. In many cases, these payments don’t even cover the cost of providing certain treatments and procedures.

Despite these rigid limits on spending, single-payer systems are still enormously expensive. Lawmakers in New York and California are considering bills that would abolish private insurance and enroll all state residents in a single-payer system. Those systems would cost $226 billion and $400 billion, respectively. That’s more than double both states’ budgets.

 

To fund such systems, governments would need to impose crippling taxes. The tax hikes needed to pay for a nationwide “Medicare for All” system would eliminate more than 11 million jobs, according to a recent study.

 

In 2014, Vermont dropped its plans for a statewide single-payer system after calculating that it would have required a new payroll tax of 11.5 percent. And in 2016, voters in Colorado overwhelmingly voted against Amendment 69, a single-payer referendum that would have required a 10 percent payroll tax.

 

Disenchanted with the ACA marketplaces, tens of millions of Americans now dream of government-funded single-payer healthcare. If politicians actually grant their wish, patients and taxpayers would experience nightmares of rationed care, reduced innovation, and economic devastation.

 

Dave Mordo is the Legislative Council Chair of the National Association of Health Underwriters.

How benefits can help employees suffering in Irma’s wake

As employees seriously impacted by hurricanes Harvey and Irma begin to come to grips with the devastation, they might be wise to take advantage of several existing benefits, industry experts say. In addition, HR and benefits managers may need to create some new ones immediately to help employees get back on their feet.

Here is an overview of some benefits that can be used to help employees.

Supplemental PTO

“Some employees will need extra time, possibly several days, to deal with the aftermath of a natural disaster,” says Zack Pace, senior vice president of the benefits consulting unit of insurance firm CBIZ. “Documented programs could prove useful in catastrophic storm-related situations,” he adds. The can include unpaid as well as paid leave programs.

It is not unreasonable to require employees to exhaust accrued PTO before granting them extra paid days off. A careful balancing act will be needed, however. It’s important to avoid, in effect, favoring employees who had already exhausted their PTO before the storm, against those employees that had not yet tapped theirs.

That might be accomplished by granting extra emergency PTO after a specified numbers of days away from work have been taken. That way, employees who had already used up vacation days would not appear to enjoy a windfall relative to employees who had not yet done so.

Telecommuting

Another important benefit under these circumstances is telecommuting, notes Pace.

“If you don’t currently allow it, now might be a good time to start one, and if you already allow telecommuting on a restrictive basis, you might want to liberalize it,” he says.

Bloomberg

 

Employees with school-aged children whose schools have been closed might be scrambling to make emergency child-care arrangements. A temporary liberalization of telecommuting benefits may be required to accommodate such employees, as well as employees who need to stay home (assuming their homes are habitable) to supervise contractors making repairs.

Employees whose homes were severely damaged might have had to take up residence with relatives beyond commuting distance to the workplace could also benefit from a liberalized telecommuting policy.

Financial counseling

Even well-insured storm damage victims will take a big financial hit with home repairs and replacing destroyed property. Homeowner insurance deductibles can be high. In addition, many employees may discover their insurance policies don’t provide the protection that thought they did.

Often this can lead to employees’ seeking a hardship distribution from their 401(k). Although the IRS has indicated that a major hurricane like Harvey or Irma do satisfy permissible hardship withdrawal criteria, that isn’t always the best course of action for employee. “If an employee requests a hardship withdrawal, in my mind that’s an immediate referral to the EAP for financial counseling,” says Robert Lawton of Lawton Retirement Plan Consultants.

“Employees need to understand the implications, such as the fact that after all the taxes they’ll have to pay, between the penalties, state and federal income taxes, they’ll probably only wind up being able to keep about half of what they take out,” he says. “And that money can never go back into the plan.”

A plan loan might be a better option for the employee — or not. “It’s a slippery slope toward giving advice when employers try to explain these decisions to employees, and that’s not the employer’s role,” Lawton warns. “That’s why it’s important for the employee to be referred to a financial counselor.”

Emotional health support services

Experiencing a severe natural disaster — even when direct personal loss is limited — can take an emotional toll on employees. That can range from very mild symptoms to those akin to post-traumatic stress disorder (PTSD). It behooves employers to promote their employee assistance plan benefits to encourage those who might benefit from counseling to take advantage of the opportunity, experts say.

“It is to both the employees’ and employer’s benefit to help workers manage the impact of natural disasters and critical incidents,” says Ann Clark, founder and CEO of benefits firm ACI Specialty Benefits. “Research indicates that when employees are exposed to a critical incident that is dealt with inappropriately, these employees are more likely to experience an increase in personal and health-related problems, and are at greater risk of using more sick days, having lower productivity or leaving their employment following the critical incident.”

Group legal and disability insurance

Employees that have taken advantage of group legal benefits might be able to tap that resource to learn about their legal rights if they run into issues with their insurance company, or landlord if they are being required to pay rent for a home that’s uninhabitable due to storm damage.

Finally, employees who sustained personal injuries in the storm severe enough to keep them from being able to work for an extended period might be able to take advantage of disability income benefits.

Published
  • September 12 2017, 7:42pm EDT

5 common COBRA compliance pitfalls to avoid

Staying on top of health insurance regulations may feel like an uphill battle for brokers and their small business clients, but the costs and penalties for being out of compliance can be disastrous.

So what are some of the everyday compliance pitfalls to watch out for? This is the first in a series of articles that will explore common compliance challenges and how to avoid them.

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Let’s begin with one of the more commonplace issues: Federal COBRA administration.

As many agents know, COBRA mandates that employers offering insurance must extend coverage to former employees and dependents following the loss of that coverage for up to 18 months. But COBRA requirements can be difficult to follow, and compliance mistakes can cost a broker and their client big money in statutory fines, excise tax penalties, civil lawsuits, regulatory audits and more.

Top errors
Unfortunately, when it comes to COBRA, it is very simple to misstep. Here are the five most common pitfalls to watch for:

1) Miscalculating employee counts: This may seem deceptively easy, but too often companies incorrectly count their employees. For example, COBRA rules count part-time as a “fraction of an employee” equal to the number of hours that employee works divided by full-time hours. An example would be two part-time employees working 20 hours getting counted as one full-time employee. Accurate counts are important especially for businesses in farming, construction, real estate, retail and other industries that often rely on part-time and seasonal workers. Brokers must help ensure counts are accurate, which includes making clients aware of the requirement and working closely with trusted tax advisers and/or compliance experts to assure alignment with mandates.

2) Types of plans subject to COBRA: The mindset that COBRA only applies to medical, dental and vision can be an expensive one, so change it. The regulation covers any plan maintained by an employer to provide healthcare benefits to employees. This means that certain wellness programs, flexible spending accounts, health retirement accounts, executive reimbursement plans and more also fall within COBRA. So make sure to review and address the full spectrum of the proffered benefits plans to assure compliance.

3) Failure to notify of qualifying events: The fines for notification failure are steep, and the potential exposure to costly legal claims from former employees even steeper. Liability can even exist if an individual is not harmed. Qualifying events, such as an employee termination, require specific notices with mandated content and specific time frames. Agents who are unsure about details are wise to turn to COBRA experts to guide them through the notification process. This will protect them and their clients.

4) Employer notification requirements: Non-compliance with general notices is the No. 1 most frequent civil penalty with COBRA. For instance, a group health plan must provide a general notice describing COBRA rights to an employee and adult dependents covered under the plan within the first 90 days of coverage. It must be sent at the appropriate time — new employee becomes covered under a plan, employee adds dependents to plan upon marriage or open enrollment, etc. — and clearly spell out basic information about COBRA, as well as employer and employee/dependent responsibilities, rights and obligations. Additionally, general notices such as this must be archived. Not following procedures could put a plan out of compliance, result in significant penalties and might expose a business (and its consultants) to legal liabilities. Make certain to follow procedures, and then document, document, document.

5) Rate determination period: COBRA requires plan premiums to be set and then fixed for a 12-month period. This provides qualified beneficiaries with some assurance not only of the COBRA premium amount but also that it will not be subject to frequent fluctuations. However, this period can cause hardship for employers that have mid-year plans and/or a premium change occurs. If the premium goes up outside of the determination period, then the employer is on the hook to cover the increase. These costs can add up significantly, so make sure to be aware of them.

Remember to be vigilant and focused when it comes to COBRA directives and obligations, and turn to trusted compliance advisers and experts when needed. Because even an unintentional error can cost an employer a bundle, and a broker their client.

Next time, the focus will be on pitfalls to avoid around ERISA plan documentation. Stay tuned.

Marc McGinnis

McGinnis is vice president of national sales for The Word & Brown General Agency.

Deadline Looms for Insurers to File Rate Proposals

Regulators grapple with uncertainty in the health-care system as they embark on the review process

Anthem Inc. has said it wouldn’t offer exchange plans in Maine next year if the federal government stops cost-sharing reduction subsidies.
Anthem Inc. has said it wouldn’t offer exchange plans in Maine next year if the federal government stops cost-sharing reduction subsidies. PHOTO: ASSOCIATED PRESS

wsj.com

A deadline for insurers to file 2018 prices for health insurance sold through Affordable Care Act exchanges arrives Tuesday, but state regulators are still struggling to make decisions about pricing and coverage amid uncertainty in federal health policy.

The upshot is confusion in what is typically an orderly, regimented regulatory process for reviewing insurance offerings that will go on sale to consumers on Nov. 1.

States are taking different approaches, based on their best guesses about what Congress and President Donald Trump’s administration might do regarding the health-law marketplaces, though several state regulators said in interviews that they are leaning toward approving hefty rate increases.

According to actuarial firm Milliman Inc., at least 32 states have requested that insurers prepare alternative premiums for different scenarios, Most of those states are still holding off on a final decision on which rates to choose.

“The uncertainty makes it very difficult to navigate, and it’s not going away,” said Eric A. Cioppa, superintendent of the Maine Bureau of Insurance.

Insurer Anthem Inc. has said it would stop offering exchange plans under Obamacare, as the law is known, in Maine next year if the federal government stops payments known as cost-sharing reduction subsidies.

Those payments, which Mr. Trump, a Republican, has threatened to halt, reimburse insurers for money they advance to reduce health-care costs for low-income ACA enrollees.

A White House spokesman said the president “is working with his staff and his cabinet to consider the issues raised by” these payments. Anthem, which has already announced retreats from several exchanges, declined to comment.

After federal officials pushed back an earlier deadline, insurers are supposed to submit their rate filings for 2018 exchange plans to state and federal regulators by Tuesday. Regulators then have until Sept. 20 to complete their reviews and approve rates. Insurers are due to sign final federal contracts to offer plans by Sept. 27.

Some insurers said they are moving forward with plans to participate in the 2018 marketplaces but holding off on final decisions until the late-September cutoff.

“We’re keeping our options open,” said David Holmberg, chief executive of Highmark Health, which sells exchange coverage in Pennsylvania, West Virginia and Delaware. “There has to be a clear set of rules for 2018 for us to participate.”

Other big insurers, including Molina Healthcare Inc., have said they are still considering leaving more exchanges. Health Care Service Corp., a major exchange insurer, said in a statement it has filed proposed rates in all of the states it is serving that account for the uncertainty around the cost-sharing payments, but it “will make final decisions in late September” about the scope of its offerings.

A Senate committee is set to begin hearings Wednesday on legislation intended to stabilize the exchanges created under the 2010 law, which will be tough to pass in time to affect the 2018 marketplaces. Any bill is likely to include funding for cost-sharing payments.

The Congressional Budget Office estimates that if the payments end, insurers would decline to offer exchange plans in regions representing around 5% of the U.S. population next year and would raise premiums on average about 20% on the middle-tier “silver” plans. The cost-sharing subsidies are tied to silver plans.

Maryland’s insurance commissioner, Al Redmer, Jr., recently approved steep rate increases. But the rates didn’t include an extra bump for the potential loss of the federal cost-sharing payments, Mr. Redmer said. “The law is the law, and we have to assume it won’t change,” he said.

That could leave insurers in a squeeze, said Chet Burrell, chief executive of the state’s largest exchange insurer, CareFirst BlueCross BlueShield. If the payments stop when insurers haven’t accounted for the extra expense in their rates, he said, “the losses become very, very serious” and “that then threatens the viability of the market.”

Mike Kreidler, Washington state’s insurance commissioner, said he hasn’t made a final decision on rates, but he anticipates the cost-sharing payments will continue.

“I feel like I’m being a pessimist if I go in there and assume they’re going to yank the rug out from under us,” said Mr. Kreidler, a Democrat, who is slated to testify in Wednesday’s Senate hearing. “I can’t believe anyone would do anything so incredibly dumb.”

But several state regulators said they were reluctantly moving toward allowing insurers to raise rates by an extra margin to make up for the potential loss of the cost-sharing payments, if the payments weren’t guaranteed by Congress in the next few weeks.

“I would be afraid if I didn’t [approve an extra rate margin], the insurers would decide not to participate in the market,” said Julie Mix McPeak, Tennessee’s insurance commissioner, who is also testifying in the Senate hearing.

In Mississippi, insurance commissioner Mike Chaney, a Republican, said he too was leaning toward approving the extra increases if the federal payments remained up in the air. If the state’s lone remaining exchange insurer were trapped with the extra costs, without an offsetting increase in rates, he said, he fears that “next year I would not have a carrier at all who would market in the state.”

One key question is whether states and insurers will be able to alter rates if circumstances change.

Maryland’s Mr. Redmer said he would consider allowing an extra rate increase if the cost-sharing payments stopped. Mississippi’s Mr. Chaney said if he allowed rate increases because of the risk of losing cost-sharing payments, he believed he should be able to approve a rate cut in his state if the federal money does come through.

But other state officials said they didn’t believe the ACA allowed for rates to change once coverage has taken effect in January.

Asked about the potential for rate changes in the fall or next year, a spokeswoman for the Centers for Medicare and Medicaid Services, a federal agency, said insurers can’t change their rates after the Sept. 5 submission unless a state, through its rate-review process, requires a revised filing.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

Appeared in the September 5, 2017, print edition as ‘Insurers Face Deadline on Rates.’