BuildersOutlook2015issue7 by Ted Escobedo

Builders

utlook

www.elpasobuilders.com

2015: issue 7

Senate Panel Approves NAHB Priorities as Part of Tax Extenders Package $1.80 per square foot for commercial buildings, including multifamily buildings built under the commercial code, that exceed specific energy efficiency minimums.

The Senate Finance Committee today voted 23-3 to renew scores of temporary tax provisions

• Section 163 deduction for mortgage insurance. Allows taxpayers, subject to an income cap, to deduct premiums paid for private mortgage insurance and FHA/RHA/VA insurance premiums. The deduction for mortgage insurance is expected to save home owners more than $1.1 billion per year for tax years 2015 and 2016.

known as tax extenders that expired this year, including all those of interest to the housing community. In general, the

• Bonus depreciation. Extends the 50% bonus depreciation through 2016.

provisions are granted a two-year retroactive renewal through the

• Section 179 expensing. Increases the maximum expensing amount to $500,000 for qualified property on up to $2 million in property placed in service.

end of tax year 2016, dating back to the start of 2015.

From NAHB

Key provisions in the tax extenders package include: • Section 45L tax credit for energy efficient new homes. Provides builders a $2,000 tax credit for exceeding energy standards by 50%. The base energy code is the 2006 International Energy Conservation Code plus supplements. Section 45L is expected to save home builders approximately $380 million annually in taxes for 2015 and 2016 construction activity. • Fixed credit rate for 9% and a few 4% lowincome housing tax credit (LIHTC) projects. The bill will renew the 9% fixed rate for 2015 and 2016 allocations. In a step forward for multifamily developers, it also will now include a fixed 4% LIHTC rate when used to purchase and improve existing properties that are not federally subsidized or financed with tax-exempt bonds.

The 4% fixed rate also requires the property to be placed in service after the date of enactment for credit allocations made before Jan. 1, 2017. • Section 25C tax credit for qualified energy efficiency improvements. This is a 10% tax credit subject to a $500 lifetime cap, with lower caps for certain products like windows, for consumers to install qualified energy efficient upgrades. The extension of 25C will now make eligible all roofing materials meeting the Energy Star guideline and also updates standards for hot water heaters, biomass fuel stoves, oil hot water heaters and doors and windows. Remodelers often leverage 25C tax credits when working with clients. Section 25C is expected to save home owners who remodel almost $700 million annually in taxes for 2015 and 2016 improvements. • Section 179D energy efficient commercial buildings deduction. Provides a deduction up to

CFPB Announces New Lending Rules Set for Oct. 3 The Consumer Financial Protection Bureau (CFPB) announced today that it will be instituting new mortgage lending rules effective Oct. 3. The implementation date was originally scheduled for Aug. 1 and then pushed back to Oct. 1, before being delayed an additional 48 hours due to late paperwork filings. What does this mean for home buyers, home builders and lenders? On Oct. 3, the Good Faith Estimate, the Truth in Lending and HUD-1 Settlement Statements will be replaced by the CFPB’s new integrated disclosure forms, the “Loan Estimate” and the “Closing Disclosure.” The biggest change is that the Closing Disclosure must be provided to the consumer a

full three days prior to closing, and if there are certain changes during that 72-hour period, the closing could be delayed. NAHB, Others Seek Hold Harmless Period NAHB and other industry allies have urged CFPB Director Richard Cordray to provide a holdharmless period for the initial months of the new process so that good-faith efforts to comply with the new disclosure regime do not expose lenders, settlement service providers and others to regulatory penalties and litigation. The American Bankers Association reported

• Mortgage forgiveness tax relief. The provision would eliminate any taxes home owners mightface from banks when renegotiating the terms of a home loan and forgiving a portion of the outstanding mortgage. This would apply only to principal residences and through the 2016 calendar year. Also of note, the measure includes additional reporting requirements for mortgage interest that would allow the IRS to better enforce the existing rules for claiming the mortgage interest deduction. Currently, mortgage lenders report to the IRS the borrower’s mailing address, taxpayer identification number and mortgage interest paid. Under this provision, lenders would be required to include the physical address of the property as well as the mortgage balance. These new rules would allow the IRS to better enforce the $1 million acquisition debt limit, the $100,000 home equity loan limit and the second home rule. The House has not yet moved on renewal of the extenders. Final resolution of the extenders is not expected to occur until later this year.

Cordray stating that his agency would be sensitive to those who are “just trying to get it right” during his appearance before the Senate Banking Committee on July 15. “And so for the first period, which may last many months, the other agencies and ourselves as we work on this, if we see errors, we will point out what they are and how they should be corrected,” said Cordray. “We will not be looking to be punitive to people.” While NAHB appreciates the tone taken by Cordray, NAHB is urging Congress to pass House and Senate bills H.R. 2213 and S. 1711, which would provide a temporary safe harbor from enforcement of the new lending rules through the end of the year. To prepare those in the residential construction field for the impending rule changes, NAHB held a webinar June 24 to explain how to work proactively with lenders and settlement stakeholders to avoid unnecessary delays to home closings. A replay of this webinar will be posted on nahb.org.

Builders Outlook

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2015 issue 7

Builders Outlook

Presidentâ&#x20AC;&#x2122;s Message Edgar MontielPresident,El Paso Association of Builders

I hope that everyone is having a productive, successful, and fun summer so far. One thing is for sure, it has been a hot and humid one. As many of you already know, the association does not meet in July and now there are a lot of awesome events and opportunities coming our way to end the year. Our next Board and General Meetings will be on Wednesday, August 12, at noon. I challenge all of our board members to bring a guest. I will be bringing a guest. I invite you to participate in this yearâ&#x20AC;&#x2122;s EPAB Bowling event Wednesday, August 19th. A team of four costs $100.00 and this includes

Upcoming events make for a busy second half of 2015 lunch and bowling. This will be a great event for fun and networking! Our company signed up for three teams and is ready to take on any friendly challenges that may come our way. Please make sure that you have October 2015 and September 2016 marked on your calendars as this is when two industry changing events will take place. In October of this year anyone that closes on a new home will have to sign documents two times three business days apart in addition to a newly designed set of paperwork. If anything, changes and I mean ANYTHING, even the insurance quote being off by one cent, then the Buyer must sign a new disclosure and start

the three day waiting period all over. This is going to almost eliminate the last week of the month, but I am confident that our awesome title and mortgage companies will make it as smooth of a transition as possible. September of 2016 brings yet another set of challenges to our industry as this is when the new IRC and Energy Codes will be implemented in our city. Ray has been in contact with the city to setup meetings to review the upcoming changes that will affect us. If you are interested in participating in the review please let Ray or myself know. Our industry, from what I can gather, is doing slightly better as new home

closings are up year to year around six percent. Though the figure shows promise, it is still hit or miss depending on who you ask. One person (supplier, builder, or contractor) will tell you they are doing amazing and others will tell you they need more work. In closing, it is that time of year, children are now starting to return to school so please remind your contractors and employees to watch their speed as they drive through the city and new communities. I wish all of you continued success. Be safe and God bless you!

Your Online Showroom for New Homes

Builders Outlook

Perspective Ray Adauto, Executive Vice President EPAB

Welcome to our July edition, we call it issue 7. The association traditionally uses July as a month to relax and regroup, and this July is no different. So with that in mind you’ll notice we don’t have any meetings to report about or events. But that doesn’t mean your association is not busy for sure. We have scheduled a number of events for the upcoming months and I want to particularly thank our Presenting Partners in these. First is our upcoming EPAB Bowling Event (we used to call it a tournament but that would involve having to have some skills, so we now just use “event”, lol). Our partners are HUB International, HUNT, Foxworth Galbraith, StrucSure Home Warranty and Haskins Electric. All of these members jumped in with both feet quickly and without prodding. They all are always ready to help out and I want to thank them publically for doing so. Now it’s your turn, sign up your team of four or help us with letting us hang your banner inside Bowl El Paso. It will be fun as usual, competitive in some cases. We’ve got some very cool medals to hand out for best and worst scores. It’s fun and it’s inside. Great combination for the hot time in our desert southwest. Call the office to sign up.

2015 issue 7

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Ahh Summertime! get ready for cool events at EPAB Some other news is that we’ve firmed up our StrucSure presents Pro Am Golf Tour featuring the club pros from around the west Texas, New Mexico clubs. The tournament is November 9 at Coronado Country Club. That’s the good news. We can only accommodate 18 teams and those are gone according to pro Mark Gonzalez since most of the pros bring their own teams with them. So how do you get in? Time to talk with your local pro so that you get a slot. The good news is that we can use your marketing dollars for this one. The usual opportunities will present themselves and the decorum will be a little more “restricted”, but how nice is it to be able to play at one of the city’s best, Coronado Country Club. It’s challenging and it’s classy and it requires good golf skills. My thanks to Bobby Bowling IV for making it happen, and also to Mark Gonzalez, the new pro at Coronado who was hired away from Painted Dunes. The gods of golf were kind to us and we hope to grow this event to some prominence inside the city links circle. Finally a word about membership. We have published a fact sheet on “Why Membership Matters”. We have some dollar figures attached to that sheet and

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clearly it shows that members really do get a good return for their membership fee. We think that this flier is a good way to quantify your membership and a way to show prospective members why they should join. Right now we have El Paso builders who won’t join for one reason or another and so this flier may show them that without the association they’d be paying a whole lot more to build. Yes they benefit and yes they know it and they read this publication. So why aren’t they members? That’s a question YOU need to ask each and every one of them. I don’t take the position that everyone likes me or maybe some of you, but putting that aside shouldn’t every builder and every supplier be a member? Look at what

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we’ve done and imagine being able to do more with more members. I’m amazed that some of the most prolific builders are not members, and frankly I think you should ask them why then invite them to join. Numbers matter more than personalities. Our city is in a weird place right now with housing starts moving along but the economy in a flux. With the governments bearing down on adding taxes and fees it’s time for all the players to come together for the future of new home construction in El Paso. Copies of the flier will be handed out at the meetings or you can download a copy off our website, www.elpasobuilders.com

2015 issue 7

Builders Outlook

assistance is clear and allows HFAs the discretion necessary to fund these programs appropriately. HUD is taking active steps to completely resolve the issues raised in the audit and to provide proper clarity and guidance to the market.”

Remodelers Remain Confident According to the most recent NAHB Remodeling Market Index (RMI) stats, remodeler confidence improved to 59 in the second quarter of 2015. “The confidence in the remodeling industry has been in positive territory for nine quarters in a row as the entire housing industry’s situation continues to improve,” said NAHB Remodelers Chair Robert Criner, GMR, GMB, CAPS, a remodeler from Newport News, Va. “With an increase in existing home sales, remodelers received more signed contracts and calls for pricing.” An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The RMI was 59 in the Northeast, 61 in the Midwest, 57 in the South and 61 in the West. Major additions gained steam in the second quarter of 2015, rising to 57 from 54. Rising from 56 in the previous quarter to 61, smaller remodeling jobs continued to show strength. The RMI’s future market conditions index rose to 58 from 55 in the previous quarter. Two of its sub-

components — calls for bids and appointments for proposals — gained five or more points from the previous quarter’s reading, while the amount of work committed for the next three months and the backlog of jobs remained steady. “The rebound in remodeler confidence tracks the overall arc of the housing industry as it gains strength through new and existing home sales,” said NAHB Chief Economist David Crowe. “Gains in the RMI are tempered by ongoing labor shortages for work on remodeling projects.”

New Home Sales Fall 6.8% Sales of newly built, single-family homes dropped 6.8% to a seasonally adjusted annual rate of 482,000 units in June, according to newly released data from HUD and the U.S. Census Bureau. “Despite this month’s drop, we continue to hear from our builders that there is solid traffic in sales offices and a lot of consumer interest in new homes, which should bode well for sales moving forward,” said NAHB Chairman Tom Woods. “We knew that there would be ups and downs on the road back to a normal housing market,” said NAHB Senior Economist Robert Denk. “As

BUILDING

the economy and job growth strengthens, we expect to see gradual, continued momentum in the coming months.” Regionally, home sales rose by 28% in the Northeast. The Midwest, South and West posted respective declines of 11.1%, 4.1%, and 17%. The inventory of new homes for sale was 215,000 units in June. This is a 5.4-month supply at the current sales pace.

FHA Reaffirms Support for Downpayment Assistance Ed Golding, principal deputy assistant secretary for housing and head of the FHA, yesterday issued a statement reaffirming FHA’s support of downpayment assistance programs, such as those run by state housing finance agencies. The announcement comes following the recent release of a HUD audit that found irregularities by a financial institution that used FHA-insured loans with downpayment assistance gifts. “These programs help creditworthy families buy their first homes in communities across the country – responsibly expanding access to credit,” Golding said. “The intent of our rules regarding downpayment

El Paso

OSHA Helps Builders Beat the Heat As the intense heat of the summer months continues, NAHB wants to ensure that everyone on your jobsite knows the dangers of working in the sun, and what to do to stay safe. About a third of all heat-related worker deaths occur in the construction industry. The Occupational Safety and Health Administration (OSHA) is running its fourth annual summer campaign to educate workers and employers about the hazards and risks associated with working in hot weather, and is providing resources and guidance to address them. The campaign covers three main areas: what heat illness is, who it affects and how it can be prevented. Download customizable fact sheets, newsletter articles and art, public service announcements, online training, and educational toolkits here. OSHA has also developed an app for iPhones and Androids that provides general heat-safety information, tells you the heat index for your specific jobsite, and displays the risk level for individual workers. All of the resources, including the app, are available in English and Spanish.

SINCE 1950

A LOOK BACK... 2015 - SO FAR The EPAB has had a good start to the year and as we begin the second half of 2015 things are still interesting. For the most part things have gone as planned, with the year starting off with IBS in Las Vegas and a very excellent June general meeting. In between weâ&#x20AC;&#x2122;ve had some challenges including those with the City of El Paso and new rules from the Consumer Protection Bureau, a newly formed federal agency with unlimited resources (money) and rule making ability. Every aspect of building new homes in El Paso has been affected and despite that many of our builders are doing very well. The market is ranked 42nd in home construction across the country, while we rank 17th in population. That in itself is a little unsettling, considering the need for housing we obviously have. But it points out a strong market for multifamily units and we see a good portion of those recently constructed. So looking back at the first half letâ&#x20AC;&#x2122;s revisit some of our highlights and reflect on what we might get out of the rest of the year. As always we are optimistic for the future, hopeful that the stars line up and that we find some creative ways to finish strong. With your help and support the association will continue to breathe life into equation and work hard to keep new home construction viable.

Builders Outlook Issue 7 â&#x20AC;˘ 2015

Builders Outlook

2015 issue 7

IN BUSINESS

Home Depot to Buy Construction Pro Supplier Interline Brands

By Lou Whiteman

www.thestreet.com Home Depot said it would acquire privately held Interline Brands for $1.625 billion, strengthening its offerings that cater to professional contractors. Jacksonville, Fla.-based Interline is a distributor and vendor of maintenance and repair supplies, boasting a portfolio of more than 160,000 products including janitorial and sanitation, plumbing, HVAC, security and remodeling gear. The company is owned by Goldman Sachs Capital Partners, P2 Capital Partners and management. For Atlanta-based Home Depot, the

deal offers a chance to broaden its exposure to construction and maintenance pros. Interline generated nearly $2 billion in annual sales via an outside sales force and a distribution network of more than 90 locations across the U.S., Canada and Puerto Rico. Though Home Depot is best known as a retailer to do-it-yourselfers via its network of 2,270 North American stores, the company has been trying to build its sales to contractors. Home Depot has about $83.2 billion in annual sales. "Addressing the needs of our pro customers is a top priority," Home Depot CEO Craig Menear said in a statement. "Interline is a well-run company that has achieved impressive financial results over the last few years." Home Depot also said that Bill Lennie, president of its Canada operations, will take over a newly created post overseeing Interline and the company's other professional, maintenance and installation units. Lennie is a 20-year Home Depot veteran. Shares of Home Depot were up less than 1% near the close of trading Wednesday. Interline was taken private by the PE arm of Goldman (GS) and P2 Capital in 2012 in a deal that valued the company

at $1.1 billion, including about $300 million in debt. At the time, Interline had about $1.3 billion in annual sales. GS Capital and P2 contributed about $375.6 million in equity, according to regulatory filings, with the company issuing $928 million in credit facilities related to the deal. The company had at least $630 million in debt as of December.

The company, prior to the go-private, was a consolidator, spending $95 million in 2011 for Northern Colorado Paper Inc. and in 2010 buying CleanSource of San Jose, Calif., for $54.6 million. The deal is expected to close before Nov. 1, and Home Depot said it expects the transaction to contribute to fiscal 2015 results.

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2015 ISSUE 7

Builders Outlook

OSHA Slams Builders with Hefty Fines, Jail Time for Noncompliance NAHB If you’re in the construction business, you may want to ensure that your worksite is free from serious safety risks and hazards. The Occupational Health and Safety Administration (OSHA) recently issued several hefty fines, and even jail time, to a number of construction companies that had repeated and serious safety violations. In May, nine contractors working at a newly constructed luxury housing complex got slapped with more than $150,000 in fines after OSHA inspectors visited the work site last fall. Inspectors cited the contractors for exposing employees to a number of safety hazards and risks, including 35-foot falls, exposed rebar, head and eye injuries and other hazards that could lead to death or serious injury. This incident is notable because OSHA cited nearly all of the contractors on site, including the developer, project manager, a roofing company, window outfitters, and carpentry, masonry and drywall trade subs. Of the nine companies cited, OSHA had previously inspected four of them for serious violations. One month later, a president and vice president of a local roofing company were arrested for failing to comply with a civil contempt order that came as a result of nonpayment of fines for multiple OSHA infractions. In 2011 and 2012,

Osha Confined Spaces Rule

OSHA conducted several inspections of the company’s work sites and found multiple fall protection, eye and face protection and ladder safety violations, among others. When the company failed to pay penalties of more than $195,000 plus interest and fees, and continued to violate OSHA standards, the courts issued the arrest. After spending more than a week in jail, the owners were released on bond and given 30 days to either pay off the outstanding penalties, or demonstrate an inability to pay and certify that they have worked to resolve the OSHA violations cited in prior inspections. Their final hearing is scheduled for Aug. 26. More recently, two sister companies were cited with willful and repeat safety violations, including fall hazards for workers installing wood framing more than 10 feet off the ground. The citations resulted in proposed penalties of $153,090. According to the agency, the parent company has a history of OSHA violations and was shut down earlier this year. Its former owner restarted the company as two new ones in February, but continues to ignore OSHA regulations.

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TAB Confined spaces, such as manholes, tanks, or sewers, are work areas that are not designed for continuous occupancy and may be difficult to exit in the event of an emergency. On May 4, 2015, OSHA issued a final rule to increase protection for construction workers in confined spaces. What is a confined space? As defined by OSHA, a confined space has: • Limited means of entry and/or exit • Is large enough for a worker to enter it • Is not intended for regular/continuous occupancy What are examples of locations where confined spaces may occur during home construction? Examples of locations in home building confined spaces may include, but are not limited to: manholes, sewer systems, stormwater drains, water mains, crawl spaces, attics, heating, ventilation and air-conditioning (HVAC) ducts, and pits. What is a permit required confined space? A permit required confined space is a space that may have a hazardous atmosphere, engulfment hazard, or other serious hazard, such as exposed wiring, that can interfere with a worker's ability to leave the space without assistance. Only workers assigned and trained to work in a permit required confined space may do so. A permit specifying safety measures and names of those permitted in the space must be written before any work can take place. Employers are also required to develop a written confined space program if workers will enter

permit required confined spaces. How does the new final rule differ from the rules that previously applied to construction work performed in confined spaces? The rule requires employers to determine what kinds of confined spaces their workers are in, what hazards could be there, how those hazards should be made safe, what training workers should receive, and how to rescue those workers if anything goes wrong. If I am a general contractor and hire a subcontractor to do work in a confined space. Do I have any responsibilities? Yes, home builders, or controlling contractors as OSHA labels them, must discuss permit required confined spaces on the site and their hazards with subcontractors/employers whose employees will enter permit required spaces. The rule makes the controlling contractor the primary point of contact for information about permit spaces at the work site. The controlling contractor passes information it has about permit confined spaces at the work site on to the employers whose employees will enter the spaces (entry employers). Likewise, entry employers must give the controlling contractor information about their entry program and hazards they encounter in the space, and the controlling contractor passes that information on to other entry employers. The controlling contractor is also responsible for making sure employers outside a space know not to create hazards in the space, and that entry employers working in a space at the same time do not create hazards for one another's workers.

8.19.15

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Builders Outlook

2015 issue 7

THE ECONOMY

Home Prices Are Rising About 17 Times as Fast as Wages By Jerry Kronenberg, The Street.com

Home prices are rising 13 times as fast as Americans' wages — bad news for renters who aim to own their own places and sellers who want property values to keep going up. "Homeownership is getting further out of reach for the average wage earner in America," says Daren Blomquist of RealtyTrac, which recently analyzed median wage and home-price growth between 2012 and 2014. The firm found that while the typical worker's earnings inched up just 0.3% during the period, median home prices shot up 17%. Blomquist says that's particularly bad news for renters who hope to switch eventually to homeownership. "If buying a home is out of reach, that takes away one of the most tried-and-true wealth-building mechanisms that Americans have," he says. RealtyTrac attributes the problem to wages that haven't snapped back from the Great Recession nearly as much as home prices have. Blomquist says that when property values bottomed out around 2012, investors and well-heeled consumers looking for homes to live in rushed in with either all-cash offers or big down payments. Neither type of buyer had to worry about earning enough money to cover mortgage bills, so they pushed home prices up faster than local wages grew. "This recovery has been driven not by the hoi polloi, but by cash-rich buyers and investors who haven't been constrained by income," Blomquist says. RealtyTrac measured earnings changes by looking at U.S. Bureau of Labor Statistics average weekly wage data for 2012 and 2014's second quarters, the latest periods with figures available at the time the firm conducted its study. For home-price changes, RealtyTrac compared public property records from across America for residences sold in December 2012 and December 2014. (Researchers deliberately analyzed prices from a period six months later than the BLS data because changes in earnings typically take that long to affect the housing market.) Blomquist says the disconnect between home-price and wage changes doesn't affect every part of America, but has affected 140 of the 184 metro areas RealtyTrac studied. That's 76% of the total. The firm uncovered the biggest divergence in the Central California community of Merced, a metro area some 130 miles southeast of San Francisco. Merced faced plummeting home prices and tons of foreclosures during the housing bust, but median home prices rebounded a sharp 42.2% between 2012 and 2014. Unfortunately, the typical local wage grew only 0.3% — meaning property values increased an astounding 140.6 times faster than earnings. Phillip May, president of the Merced

County Association of Realtors and a real estate agent with London Properties, says local home prices "dropped too far when the foreclosures hit, and now they've overcorrected back upward." At the same time, workers in the metro area's key local-government sector have had few if any raises for years because the housing bust decimated the region's property tax base, he says. "I know lots of police, firefighters, teachers and other people with city and county jobs who are just getting their first increases in quite a while," May says. Other markets that RealtyTrac found have a big dichotomy between homeprice and wage increases include Memphis, Tenn., (a 98.7-to-1 ratio) and Santa Cruz, Calif. (a 93.6-to-1 rate). On the flip side, the firm found 44 markets where median wages actually grew more than local home prices. Some of the best performers include Hagerstown, Md., (no price gains vs.

2.5% higher wages) and Wichita, Kan. (no price appreciation, but 2% medianwage gains). Despite such bright spots, Blomquist says housing "is at a critical moment. A lot of markets are still affordable, but are about to tip over into unaffordability if this pattern continues."

He expects the mismatch between wages and prices to drive future property value increases way, way down. "I think the likely scenario in most markets will be that over the next couple of years, home-price appreciation will either flatten out or become very slow," the expert says.

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2015 Issue 7

Builders Outlook

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Builders Outlook

2015 issue 7

Associates Council

Sam Shallenberger

Hello everyone I hope your summer is going good for everyone. This is my favorite time of the year because there is so much to do like vacation, fishing, camping, swimming, BOWLING. Yes, Bowling! The EPAB will be having its annual Bowling outing Wednesday August 12th starting at 12 NOON. This year’s event will be held at Bowl El

Paso 11144 Pellicano in east El Paso cost of a four person team is $100.00 which includes lunch. We will bowl for at least two hours and have a blast with our fellow members. Next on our list is the ever so popular Speed Networking. This event has become so popular that we sell it out in less than two weeks. For those

of you that have not participated I highly recommend it. There will be twenty builders that have five minutes to visit with twenty vendors. This event will be in held in September and for sign up information please call Margret at the association office 778-5387. Have a safe and fun summer!

symptoms and that meet accepted standards of medicine. Minimum Essential Coverage (MEC): The type of coverage an individual needs to have to meet the individual responsibility requirement under the Affordable Care Act. This includes individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage. Open Enrollment Period: The period of time during which qualified individuals can enroll in a plan in the Marketplace. For coverage starting in 2016, the open enrollment period is November 1, 2015–January 31, 2016. Individuals may also qualify for special enrollment periods if they experience certain life events. Out-of-Pocket Costs: Medical care expenses that your insurance does not reimburse. Out-of-pocket costs include deductibles, coinsurance and copayments for covered services plus all costs for uncovered services. Pre-Existing Condition Exclusion Period: The Affordable Care Act prohibits plans from turning you down or charging you more for a pre-existing medical

condition. The prohibition on pre-existing coverage exclusions does not apply to grandfathered health plans. A grandfathered plan could limit coverage for pre-existing conditions or not pay for care related to your pre-existing condition for a certain time period. Rider: A rider is an amendment to an insurance policy. Some riders will add coverage (for example, if you buy a maternity rider to add coverage for pregnancy to your policy). UCR (Usual, Customary, and Reasonable): The amount providers in a geographic area usually charge for the same or similar medical services. Insurers sometimes use the UCR amount to determine the allowed amount. Whether you have group or individual coverage, we can help you read your policy to see what it covers. Many employer plans are covering less than they used to. If your plan has significant coverage gaps, we can suggest supplemental coverages.

Morrison Supply

Expert Advice

Joe Bernal Employees Benefits of El Paso

The ABCs of Insurance Insurance Understanding what certain insurancerelated terms mean will help you become a better insurance consumer. Annual Limit: A cap on the benefits your insurance will pay in a year. Under the Affordable Care Act, health plans can no longer place annual maximums on benefits. They can limit certain nonessential covered services or the number of visits they will cover for a particular service. After you reach the limit, you must pay all associated costs for the rest of the year. Balance Billing: When a healthcare provider bills you for the difference between the provider’s charge and the allowed amount, or the amount your policy will pay. For example, if your doctor bills $200 and the policy allows $125, it may bill you for the remaining $75. Preferred providers cannot balance bill you for covered services. Benefits: The healthcare items or services your health insurance covers. Your policy’s coverage documents will list the benefits it will pay for. Coinsurance: Your share of the costs of a covered service, calculated as a percent (for example, 20 percent) of the allowed amount for the service. You pay coinsurance plus any deductibles you owe whenever you access a covered health service. Your policy pays the rest of the allowed amount. Coordination of Benefits: A way to figure out who pays first when two or more health insurance plans are responsible for paying the same medical claim. Copayment: A fixed amount you pay for a covered health service, usually when you get the service. It can vary by the type of covered service. For example, you might pay $15 for an office visit to your primary care physician, but a higher copayment for visiting a specialist. Cost Sharing: The share of costs covered by your insurance that you pay out of your own pocket. This generally includes deductibles, coinsurance and copayments, but it doesn’t include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. Creditable Coverage: Having creditable coverage will reduce the length of a pre-existing condition exclusion period under new job-based coverage. Creditable coverage includes

any of the following: a group health plan; individual health insurance; student health insurance; Medicare; Medicaid; CHAMPUS and TRICARE; the Federal Employees Health Benefits Program; Indian Health Service; the Peace Corps; Public Health Plan (any plan established or maintained by a state, the U.S. government, a foreign country); Children’s Health Insurance Program (CHIP); or a state health insurance high risk pool. Deductible: The amount you owe for covered services before your health coverage begins to pay. For example, if you have a $1,000 deductible, your policy won’t pay anything until you’ve paid that amount for covered health services. The deductible may not apply to all services, such as preventive care. Essential Health Benefits: The Affordable Care Act requires health plans offered in the individual and small group markets to cover essential health benefits, a comprehensive package of items and services within the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. No standardized list of EHBs exists; check your plan documents to see what it covers. Grandfathered Health Plan: The Affordable Care Act exempts “grandfathered” health plans from certain provisions. A grandfathered plan is a group health plan created or an individual health insurance policy purchased on or before March 23, 2010. If your plan is grandfathered, your plan materials will include a statement saying it considers itself to be a grandfathered plan. High-Deductible Health Plan (HDHP): A plan that features higher deductibles than traditional insurance plans. Highdeductible health plans (HDHPs) can be combined with a health savings account or a health reimbursement arrangement to allow you to pay for qualified out-ofpocket medical expenses on a pre-tax basis. Health Savings Account (HSA): A medical savings account available to taxpayers who are enrolled in a highdeductible health plan. Funds you contribute aren’t subject to income tax at the time of deposit, and you receive any growth in your funds tax-free if you use them to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), you can roll unspent funds over year to year. Medically Necessary: Most plans will cover only “medically necessary” healthcare services or supplies. These are needed to prevent, diagnose or treat an illness, injury, condition, disease or its

2015 Issue 7

Builders Outlook

Builders

utlook www.elpasobuilders.com www.epbuilders.org

6046 Surety Dr. El Paso, TX 79905 915-778-5387 • Fax: 915-772-3038 ■ execuTive oFFicerS edgar montiel, President Palo Verde Homes carlos villalobos, vice President Pointe Homes Don rassette, Secretary/Treasurer Rassette Homes Sam Shallenberger, Associates chair Morrison Supply

■ TAB STATe DirecTorS Randy Bowling Greg Bowling Sam Shallenberger

For All Your Electrical Needs Residential Specialists Tract Homes • Custom Homes

■ NATioNAL DirecTorS Bobby Bowling IV. Demetrio Jimenez NATioNAL ASSociATioN oF Home BuiLDerS (800) 368-5242

Frank Torres, immediate Past President GMf Homes

Total Customer Satisfaction

TexAS ASSociATioN oF ray Adauto, executive vice President Executive Vice President Jay Kerr -Attorney of record Firth, Johnston, Bunn & Kerr ■ couNciL/commiTTee cHAirS Associates council Sam Shallenberger Build Pac Randy Bowling Land use council Linda Troncoso Young Designer Award John Chaney remodelers council Rudy Guel membership retentiion Patrick Tuttle Finance committee Kathy Carrillo Henry Tinajero

■ ADviSorY To THe BoArD Jay Kerr, Firth, Johnston, Bunn & Kerr James Martinez, Law Office of James Martinez

915-208-9313 602-708-7560

BuiLDerS (800)252-3625

2014 Builder member of The Year Frank Torres GMf Homes 2014 Pat cox Award Bret Thompson foxworth Galbraith Lumber 2014 Associated of The Year Joe Bernal Employee Benefits Of El Paso 2014 John Shatzman Award Cindy Bilbe, Stewart Title Honorary Life members Mark Dyer Wayne Grinnell Don Henderson Chester Lovelady Cliff C. Anthes Anna Gill Brad Roe Rudy Guel E H Baeza

Give your customers the ‘option of the sun’ Now more than ever, El Paso home buyers are planning for the future.

Past Presidents committed to Serve Greg Bowling Bobby Bowling, IV Kelly Sorenson Rudy Guel Mark Dyer Anna Gil Mike Santamaria Bradley Roe John Cullers Bob Bowling, III Randy Bowling Edmundo Dena Doug Schwartz Hershel Stringfield Robert Baeza Pat Woods

■ BoArD oF DirecTorS

Border Solar can help you oﬀer your customers solar power as a sensible alternative.

Antonio Cervantes, BIC Homes Bret Thompson, foxworth Galbraith Lumber Bud foster, Southwest Land Development Servises Dan Ruth, Millienium Homes Henry Tinajero, West Star Bank Joe Bernal, Employee Benefits Of El Paso John Chaney, Passage Supply John Dorney, Dorney Security

ePAB mission Statement: The El Paso Association of Builders is a federated professional organization representing the home building industry, committed to enhancing the quality of life in our community by providing affordable homes of excellence and value. The El Paso Association of Builders is a 501C(6) trade organization.

Kathy Carrillo, Pioneer Bank Kathy Parry, Hunt Companies Leti Navarette, Custom Dream Homes Linda Troncoso, TRE & Associates Robert Najera, Joseph Homes Walter Lujan, Dawco Builders

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