2013 “early renewals” in the small employer group market and end of 2014 compliance and cost management strategies

March 3rd, 2014 § 0 comments § permalink

At the end of 2013 many companies and organizations with less than 50 employees did something called an “early renewal” with their group health insurance plans as a means of kicking the can down the road, many until December 1, 2014, to defer their compliance with Health Care Reform for up to 11 months.  The principal reason for doing such in most cases was to avoid a significant rate increase at the end of 2013 with the thought of “Let’s buy some time”.

QUESTION – If your company is one of these companies that bought some time by doing an early renewal, what is your strategy at the end of 2014 for reasonably managing costs of complying then?

Did you know that there are viable group health insurance financing options available in the market to help you avoid the Health Care Reform “cost conundrum” later this year when your company’s / organization’s group plan renews?   Self-insurance either with an insurance company or third party administrator (TPA) providing plan administration and purchasing catastrophic insurance coverage called “stop loss insurance” will, no doubt, be a solution for many small employers wrestling with this issue this year.

Self-insured medical plans are exempt from some of the more onerous provisions of Health Care Reform, such as the Health Insurance Tax (HIT) and Modified Community Rating.  Avoiding these two aspects of Health Care Reform alone can result in saving tens and even potentially hundreds of thousands of dollars of expense.

Benico, Ltd. provides private companies, public sector employers, and not-for-profit organizations of all sizes with strategic advice around the design, risk management, communication, and enrollment of their health and welfare plans and with compliance around the laws and regulations relating to the same.  To discuss your company’s situation, please contact Benico’s principal, John Garven, at 847-669-4800, ext. 202.

 

2014 health care reform update

March 3rd, 2014 § 0 comments § permalink

The purpose of this blog post is to provider our readers with some perspective about where things currently stand and where they are headed this year with regard to the timing and types of guidance around the Affordable Care Act (“ACA”, aka “ObamaCare”) that we should expect to receive from the federal agencies having jurisdiction (principally HHS, DOL, and the IRS).

First, we believe everyone will agree that February was a VERY BUSY MONTH with regard to ACA guidance.  To this point, the final regulations around the employer mandate were released on Monday, February 10th.  Following are our thoughts about this development:

1)    Generally speaking, we are sure the fact of the delay for compliance with the employer mandate until 2016 for businesses / organizations having less than 100 but more than 50 full-time equivalent employees (FTEs) will at least come as welcome news in the short term.

2)    Perhaps even as significant as the 1st point, though, is the transitional relief afforded businesses / organizations having 100 or more FTEs under Section 4980H(a) of the law.  Specifically, larger employers next year will NOT be subject the $2,000-per-employee “no coverage” penalty if they, in fact, offer compliant, “qualified” coverage to at least 70% of their full-time employees. This is a change from the proposed rule, under which employers would have had to offer coverage to at least 95% of their full-time employees right away.  

3)    It should be kept in mind that next year under the 70% standard and, in 2016 and thereafter under the 95% standard for all “applicable large employers” (businesses / organizations with 50 or more FTEs), employers may still be subject to an “affordability” penalty of $3,000 for any otherwise eligible employee who obtains government-subsidized coverage through the public exchange.

4)    It should also be kept in mind by businesses / organizations that the “no coverage” and “affordability” penalties are excise taxes, meaning that they’re NOT deductible business expenses for tax purposes.  

5)    There is some helpful guidance in the final regulations around seasonal employees who may be excluded entirely if they work less than 6 months as well as for educational employees.

Second, we anticipate that the rest of 1Q2014 will prove to be a very important period in terms of guidance and developments, including the final stretch before the end of the Marketplace open enrollment period on March 31st.  It was recently reported that there are 56 active items of ACA guidance currently in the works between the IRS, DOL, and HHS.  43 of the 56 items are expected to be released during 2014, and several of them are frankly needed very soon.  In addition, the continued Congressional negotiations on the debt ceiling and the federal budget could have ACA implications.

Finally, just a note that our firm offers the following “on-demand” Health Care Reform (HCR) resources:

  • Inform on Reform© is an HCR compliance resource provided exclusively by the Smart Partner® member firms of the Benefit Advisors Network and its Compliance Director, Peter Marathas, a Partner in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center of Proskauer Rose, LLP. You may access this particular resource by logging in at www.benefitadvisorsoffice.com/HCReform.
  • Visit http://benico.com/health-care-reform-updates/ for the latest HCR updates.  This particular feed is constantly being updated through a professional outsourced service that Benico contracts with.

 

If you are not a client yet but would like access to Inform on Reform© please email a note requesting such to info@benico.com.  If you make such a request, we will also email you our 2014 Health Care Reform Compliance Checklist which provides the reader with virtually everything that the he / she needs to know with regard to important dates and actionable steps needing to be taken during 2014.

In closing, our continued challenge is education.  Most Americans (62% according to a recent Kaiser Health News poll) do not realize that most significant ACA provisions have taken effect.  2013 was in many ways a year of survival.  2014 will be a year of strategy.  To this end, our firm stands ready to engage with our clients to deliver real-world and practicable solutions that fit their strategy around compliance and cost management.

HHS Releases 2014 Federal Poverty Level Guidelines

January 23rd, 2014 § 0 comments § permalink

HHS has released 2014 federal poverty guidelines. Updated annually for inflation, the 2014 guidelines will set the income thresholds for subsidy eligibility on exchanges for 2015. The threshold (in the 48 contiguous states and DC) for one person will be $11,670, an $180 increase over the 2013 level. An employee’s receipt of exchange subsidies could trigger an employer shared responsibility penalty starting in 2015. IRS proposed rules include an employer affordability safe harbor based on the federal poverty level.

2014 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATES AND THE DISTRICT OF COLUMBIA

Persons in family/household   Poverty guideline

1 ………………………………………………… $11,670

2 ………………………………………………….. 15,730

3 ………………………………………………….. 19,790

4 ………………………………………………….. 23,850

5 ………………………………………………….. 27,910

6 ………………………………………………….. 31,970

7 ………………………………………………….. 36,030

8 ………………………………………………….. 40,090

For families/households with more than 8 persons, add $4,060 for each additional person.

2014 POVERTY GUIDELINES FOR ALASKA

Persons in family/household           Poverty guideline

1 …………………………………………………. $14,580

2 …………………………………………………… 19,660

3 …………………………………………………… 24,740

4 …………………………………………………… 29,820

5 …………………………………………………… 34,900

6 …………………………………………………… 39,980

7 …………………………………………………… 45,060

8 …………………………………………………… 50,140

For families/households with more than 8 persons, add $5,080 for each additional person.

2014 POVERTY GUIDELINES FOR HAWAII

Persons in family/household     Poverty guideline

1 …………………………………………………. $13,420

2 …………………………………………………… 18,090

3 …………………………………………………… 22,760

4 …………………………………………………… 27,430

5 …………………………………………………… 32,100

6 …………………………………………………… 36,770

7 …………………………………………………… 41,440

8 …………………………………………………… 46,110

For families/households with more than 8 persons, add $4,670 for each additional person

Clink on the link to the federal register:

http://www.gpo.gov/fdsys/pkg/FR-2014-01-22/pdf/2014-01303.pdf

Five things you need to know about individual medical plans in 2014

January 22nd, 2014 § 0 comments § permalink

  1. The open enrollment period is expected to end on March 31, 2014.  Anyone can sign up for an individual medical plan during this time period. There is speculation that the open enrollment period will be extended because of the problems with the initial roll-out of the exchanges, but for now it is still scheduled to end on March 31, 2014.
  2. Applications and premium payments for coverage, whether purchased on the exchange or off, must be received by the 15th of the month to receive an effective date of the 1st of the following month.  For example, an application must be submitted and the initial premium must be paid by January 15th to receive a February 1st effective date.  The application submission dates and premium due dates may be different for off-exchange health plans.
  3. After the open enrollment period ends on March 31st, individuals must experience a qualifying event to be eligible to enroll in a medical plan or make a plan change mid-year. Individuals will have 60 days from the date of the qualifying event to sign up for coverage or make a plan change.  See the list of qualifying events below.
  4. As long as an individual submits an application by March 31st they will be exempt from the health care law’s individual mandate penalties provided they maintain coverage throughout the rest of the year.  This statement holds true even if the individual receives an effective date that would cause them to be without coverage for more than 3 consecutive months.  Individuals that are without coverage for 3 or more consecutive months out of the year for other reasons will be subject to the Individual Mandate penalties unless they qualify for an exemption.
  5. The next open enrollment period will occur from Nov. 15, 2014 to Jan. 15, 2015.  It was originally scheduled to occur between Oct. 15, 2014 and Dec. 7, 2014, but has since changed.  During this time period anyone may sign up for coverage or make a plan change without a qualifying event.

 

List of Qualifying Events – Special Enrollment Periods for Individual Medical Plans

 If an individual experiences a qualifying event he/she will have 60 days from the date of the qualifying event to apply for an individual medical plan or make a change to their existing coverage. The following list outlines the qualifying events that have been identified by the Affordable Care Act (ACA).

  1.  Involuntary loss of minimum essential coverage, for example, because of a job loss (voluntarily terminating coverage or policies that are canceled for non-premium payment are not qualifying events);
  2. Change of family structure (i.e. marriage, divorce, death, newborn);
  3. Gaining citizenship or permanent resident status;
  4. Becoming newly eligible for a premium or cost sharing subsidy (generally results from mid-year income changes);
  5. Becoming ineligible for a premium or cost sharing subsidy (generally results from mid-year income changes);
  6. Change of residential address that results in new medical plan options available;
  7. Did not enroll during the open enrollment period because of a mistake, misrepresentation or inaction of an officer, employee or agent of the Health Insurance Marketplace;
  8. The insurance company substantially violated a material provision of its health insurance contract;
  9. The individual is a member of an American Indian Tribe (can enroll or make a plan change one time per month); or
  10. The individual can demonstrate to the Health Insurance Marketplace that he/she has other extenuating circumstances that qualify him/her for special enrollment.

Departments Release New FAQ Guidance on ACA and MHPAEA Implementation Issues

January 20th, 2014 § 0 comments § permalink

On January 9, 2014, the Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) published the eighteenth installment of a series of answers toFrequently Asked Questions (FAQ) regarding implementation of the Affordable Care Act (ACA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

The FAQ provides guidance on a number of issues, including new recommendations made by the U.S. Preventive Services Task Force and how they affect the ACA’s preventive care requirement, limits on participant cost-sharing (i.e., out-of-pocket limits), expatriate health plans, wellness programs, fixed-indemnity insurance, and guidance on the ACA’s impact on the MHPAEA.

The FAQ generally confirms previous Department guidance on the issues addressed and does not significantly change the application of these rules and mandates to employer-sponsored group health plans.

Am I able to contribute to an HSA if I am over age 65 but not entitled or enrolled in Medicare?

January 14th, 2014 § 0 comments § permalink

“Am I able to contribute to an HSA if I am over age 65 but not entitled or enrolled in Medicare?”.  A little known fact is that the answer to this question is a qualified “yes”.

Elaborating further, if you do a Google search using the following as the search terms – “May I have an HSA when I am 65 years old?” you will see on the first page of the search results the following – http://bit.ly/1bmaf9E, and the first Google link – “Medicare and HSA Tip Sheet – SelectAccount” – presents as its very last question the following – “Can I contribute to my HSA if over Age 65 but not entitled or enrolled in Medicare?”.  The answer is as follows:  

“Yes, so long as he or she is not entitled or enrolled in Medicare Part A, B, C, or D, or any other Medicare benefits. Consider this example: Jean is age 66, and will retire at age 68. She has decided to delay receiving Social Security benefits until she retires. Because Jean is over age 65, she could apply for Medicare Part A. But she will not be entitled to Medicare unless she applies for it. She will be eligible for HSA contributions until she applies for Medicare or begins receiving Social Security benefits, so long as she meets the other requirements for being an HSA eligible individual (e.g., she has HDHP coverage and no other impermissible coverage, and she cannot be claimed as anyone else’s tax dependent).”

I recently spoke about this particular subject with a representative for a major national HSA custodian, and the representative acknowledged the fact that anyone who’s 65 or older may continue making HSA contributions provided they’re not yet enrolled in Medicare.  And, in the case of this particular custodian, there isn’t any kind of affidavit or document required for anyone who’s 65 or older who wishes to continue making HSA contributions.  Their eligibility for making contributions is really between them and the IRS.

Individual Major Medical Policies Generally Cannot Be Offered On A Pre-Tax Basis As Of January 1, 2014

January 14th, 2014 § 0 comments § permalink

In the past, some small employers chose to allow employees to pay for individual medical policies under a cafeteria plan.  Such plans would reimburse the employee for the cost of coverage after the employee would prove to the employer that he or she paid an individual premium.  In some instances, the employer would accept and pay direct premium bills from the insurance carriers on behalf of individual employees.  Some even opined that employers would be able to reimburse, on a pretax basis, employee premiums incurred as a result of purchasing an individual health policy offered in the Exchange.  As of January 1, 2014, all of these practices are prohibited and could subject the employer to excise taxes or other penalties under the Affordable Care Act (“ACA” or “Health Care Reform”).

ACA regulations explicitly state that individual policies, marketed through an Exchange, cannot be offered as a qualified benefit under a cafeteria plan. Additional guidance further indicates that, beginning in 2014, cafeteria plans generally may not be used to pay premiums for individual health insurance policies that provide major medical coverage.  This includes pre-tax reimbursement arrangements under cafeteria plans as well as other arrangements funded through HRAs or direct employer payments.

The reasoning behind this guidance is that these types of arrangements are considered group health plans in and of themselves.  By their very nature, they impose dollar limits up to the cost of the individual coverage purchased through them and they cannot be integrated with individual health insurance coverage.  As a result, these arrangements violate the ACA’s prohibition against annual dollar limits, as well as the requirement to provide first-dollar coverage for preventive services.

It is important to note that these regulations only apply to the pre-tax reimbursement of individual medical policies.  Cafeteria plans can still be used to reimburse individual coverage that is limited to excepted benefits such as limited scope dental or vision coverage, or if the arrangement is offered only to retirees, or if the benefits are funded on an after-tax basis.  Of course, such arrangements can also still be used to reimburse employee’s other qualified medical expenses so long as such an arrangement is integrated with an underlying medical plan.  If your group employs such an arrangement, it still must be aware that other laws such as ERISA, COBRA, etc. may be applicable. 

The Affordable Care Act and Rising Health Insurance Premiums

December 9th, 2013 § 0 comments § permalink

Benefit Advisors Network (BAN) Compliance Director, Peter Marathas, discusses the Affordable Care Act and rising health insurance premiums. BAN Smart Partner, Benico, Ltd., can help companies address the concerns mentioned in this short, informative video.

Office Tip: Metal Credit Cards

November 19th, 2013 § 0 comments § permalink

A discovery was made by an office member diligently destroying unwanted credit cards, after closing the related accounts. Abruptly and definitively the workhorse shredder, which had weathered more than three years of incessant demands, was toast and gave up the ghost.

The Discovery

It soon became apparent that, buried in the stack of plastic, there was plastic that wasn’t plastic at all. Some of the higher-end credit cards, you may already know, are actually made of metal. Hard metal. Unrelenting metal. Metal that does not mate well with a typical, even industrial, shredder.

Many minutes, confused looks and calls to “shredder support” later, it was time to move on and replace the $350 piece of equipment.

Your shredder manufacturer likely does not take these types of cards into account when claiming to easily destroy your cards, and the cards themselves make no mention of the danger.

Our Advice

If you can’t easily cut your credit card with a cheap pair of off-brand scissors, it may not be worth the risk of attempting to feed those cards into your shredder. It may cost you.

Some credit card companies will offer to send you an envelope to return the cards to them for safe disposal. However you choose to dispose of them. be sure you are aware of the risks.

shredder

The underside of an unfortunate shredder.

DOL Says No Penalties for Failing to Provide Marketplace (Exchange) Notice

September 14th, 2013 § 0 comments § permalink

PPACA (aka “ObamaCare”) requires employers to provide employees with a written notice about the new health insurance marketplaces (exchanges) in which enrollment is set to commence October 1st.

On September 11th the Department of Labor (DOL) issued an “FAQ on Notice of Coverage Options”, clarifying there is no fine or penalty under the law for failing to provide the notice. However, that does not mean that noncompliance is a good option, or that the noncompliant employer may not be subject to other penalties or civil damages. To this point, employees in plans subject to ERISA will likely be granted the right in the future to recover damages sustained as a result of the employer failing to provide information as directed under the law’s notice requirement. ERISA also provides for recovery of legal fees and other related damages. Furthermore, in the future compliance with notice requirements could become a focus of routine DOL audits.

Aside from possible ERISA-related concerns, there are several other reasons why employers may still want to provide the notice. The notice can help employers answer employee questions about:

  • What the Marketplace is;
  • Whether the employer will still provide a plan once the Marketplace is operational;
  • How Marketplace plans are different from the employer’s plan; and
  • Whether the employer’s plan is intended to be affordable and provide minimum value.

In many cases, employer-sponsored coverage may be a better option for employees than Marketplace coverage. For example, premium contributions for employer-sponsored coverage through payroll will often be less expensive for the employee than the premiums for Marketplace coverage because of the employer’s level of subsidy. Additionally, the employee portion of the premium for employer-sponsored coverage is typically excluded from taxable income and is therefore tax-free. This is not the case at all with Marketplace plans.

Despite the lack of penalty, in the FAQ posting the DOL indicated that employers should provide the marketplace notices to employees and reiterated the content that should be included. The FAQ also provides links to the model notices issued by the DOL earlier in the year.

More Information

Please visit the DOL website or contact Benico, Ltd. at 847-669-4800 for more information on the Marketplace Notice requirement.

More about the September 11, 2013 DOL guidance around the Marketplace Notices

September 13th, 2013 § 0 comments § permalink

On September 11th in its online FAQ, the Department of Labor confirmed the fact that currently there will be no penalties for employers surrounding a failure to issue Marketplace Notices (also known as “Notice of Exchange Coverage”) to employees.  Some may have interpreted the new FAQ statement as being new guidance.  In fact, the absence of penalties under the ACA surrounding the Exchange Notices, is not news, and has been a known under Fair Labor Standards Act (FLSA) §18b.

Employers subject to FLSA are still required to distribute a Marketplace Notice to all current employees by October 1, 2013, and new hires going forward.

As precautionary and to be completely clear: despite the fact that there is no statutory penalty, there could be ERISA fiduciary issues under case law related to the failure to communicate to participants in the absence of the employer communication.  In general, employers that sponsor ERISA plans have a duty to be straightforward with participants.  Therefore, we recommend that you comply with this requirement and we would not advise that an employer could safely disregard this obligation.

Below are some additional questions and answers surrounding the Exchange Notice requirement.  If you have any additional questions on this, or any compliance issue, please contact us at your earliest convenience.

Question:  If there is no penalty, if the notice is not sent out, and there is no “proof” of delivery requirement, what would the employer face if they did not send out the Exchange Notice and saved all that cost?

Answer:  If the exchange has the employer’s contact information, it may establish a dialogue with an employer whose employee is applying for a subsidy, which at least notifies the employer that its employee may be getting a subsidy.  Failure to provide the notice could also potentially be viewed as interfering with an employee’s ability to get a subsidy, which is generally prohibited under ACA.

Question:  Regarding the model Notice of Exchanges that is required to be customized by employers, the notice itself does not include any required information in regards to payroll contribution for 2014 – there is a section on the second page that addresses this and it is marked as optional.

However, the data form on employer coverage (link to the Marketplace Application Checklist document is below) does provide a block where information must be provided on the payroll contributions for the plan.

The question is, what if the employer has not set their 2014 payroll contributions by October 1? If this has not been determined, how should an employer answer this item?  Is there any employer penalty (or other ramifications) for not establishing the 2014 payroll contribution by October 1?

Marketplace Application checklist link – http://marketplace.cms.gov/getofficialresources/publications-and-articles/marketplace-application-checklist.pdf

Answer:  There could be ramifications under ERISA.

An employer that is presented with a copy of the Employer Coverage Tool by an employee who is applying for Exchange coverage should complete it to the best of their ability.

The form notes that with respect to the question you reference about premiums (#16), an employer would only complete that section if the plan year is about to end and the employer knows the premium and other information for the upcoming year.

Question: We know the Exchange Notices need to be delivered by 10/1/13 to all current employees, and starting 10/1/13 on an ongoing basis to all new employees, but what is the frequency that this notice needs to be distributed going forward?  Must an employer distribute it each year at their company’s renewal, each year  prior to a set date or only when there is a change to the notice?

Answer:  It is not an annual requirement based on current guidance.

Question:  Does the notice need to be distributed only to those employees who work more than 30 hours per week? Or can an employer deliver one notice to those who work more than 30 hours and another notice to those who work less?

Answer: The notice should go to all employees regardless of hours or other status.

Question:  Page 2 of the Notice outlines the eligibility requirements for the plan – can the employer provide a different notice to Seasonal, Variable Hour and Regular Employees since there are different eligibility requirements for each class?

Answer:  The notice should go to all employees regardless of hours or other status.  The notice is designed to be able to be provided to all employees without tailoring it to specific classes; however, it should generally be permissible for an employer to do so.

Question:  If an employer is meant to use only one notice for all employees, how does an employer determine whether to check the box for whether the coverage meets the affordability requirements, IF the coverage provided is expected to be affordable for some employees, but not all (which may be the case, especially if the notice must be provided to those working less than 30 hours who are still eligible for benefits, Minimum Value coverage may still be offered to Part Time 20 hour/week employees, but for those employees that coverage may not be affordable)

Answer:  An employer should consider the relevant facts and circumstances when deciding whether to check the box regarding affordability.

Question:  If an employer’s plan is affordable and adequate, can they write a cover letter when sending out the exchange notice to notify their employees that they wouldn’t qualify for subsidies?

Answer:  Yes, that would be fine.  Note that the first page of the exchange notice also states that employees who are eligible for affordable, minimum value employer coverage will not be eligible for a subsidy.

RESOURCES:

 

IRS Announces Recognition of All Legal Same-Sex Marriages for Federal Tax Purposes

August 30th, 2013 § 0 comments § permalink

On Aug. 29, 2013, the U.S. Dept. of the Treasury and the Internal Revenue Service announced in Revenue Ruling 2013-17 that same-sex couples who are legally married in jurisdictions that recognize their marriages will be treated as married for federal tax purposes. This decision implements the U.S. Supreme Court’s ruling on the Defense of Marriage Act (DOMA), which held that same-sex couples who are legally married under state law are entitled to equal treatment under federal law with regard to income taxes and federal benefits.

The IRS’ new ruling covers any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country, and applies to all federal tax provisions where marriage is a factor. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

The Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on Sept. 16, 2013. However, the ruling can apply retroactively in some cases.

Affordable Care Act Webinars

August 27th, 2013 § 0 comments § permalink

Free Series to Help Small Business Owners Runs Through September

The U.S. Small Business Administration and the Small Business Majority (a national nonprofit advocacy organization) have announced the next set of Affordable Care Act 101 Weekly Webinar dates:

  • Thursday, August 22 at 2:00 PM ET;
  • Thursday, September 5 at 2:00 PM ET;
  • Thursday, September 12 at 2:00 PM ET;
  • Thursday, September 19 at 2:00 PM ET; and
  • Thursday, September 26 at 2:00 PM ET.

The first series of webinars began in July and will cover the same content; a second round of webinars featuring new content will be held in October to prepare for the opening of the Health Insurance Exchanges (Marketplaces).

During the hour-long presentation, business owners learn key pieces of the law, including what they should know about tax credits, the new small employer health insurance marketplace (SHOP), and more. A brief question and answer period follows each webinar.

Click here to register for the presentations. After registering, you will receive a confirmation email with all of the information needed to access the webinar by telephone.

More details concerning the requisite FLSA marketplace (public exchange) notices

July 26th, 2013 § 0 comments § permalink

On May 10th we posted the following on our blog – Department of Labor Releases Model Exchange Notice for Employers.

Here are some more details.

As was shared in our prior post, the U.S. Department of Labor released, on May 9, 2013 Technical Release 2013-02 on the “Notice of Exchange” employer disclosure responsibility under the Affordable Care Act, together with an updated initial notice of COBRA coverage that includes information on health coverage alternatives offered through the exchanges, now formally referred to as the “Health Insurance Marketplace.” Together with the guidance, the DOL also published two model notices of coverage on the “Marketplace,” one for employers that offer group health coverage, and one for employers that do not.

Publication of the model notices in early May comes a good bit earlier than the “late summer or fall of 2013,” which the DOL announced in January when it postponed the original March 1, 2013 employer disclosure deadline.  This is the result of numerous employer requests that that the Notice be made available earlier in the year, to provide more time for them to inform employees of upcoming coverage options through the Marketplace.  Therefore employers may use the model Notices and rely on the Technical Guidance earlier than the proposed distribution date of October 1, 2013, although only employers with self-funded group health plans will be likely to do so, given that 2014 premium rates for insured plans are not yet known. The Guidance will remain in effect until regulations on the Notice requirements are published.

Technically, the notice requirement, which is set forth in Section 18B of the Fair Labor Standards Act (FLSA), applies only to employers subject to the FLSA.  However that is a very broad category, including employers involved in interstate commerce with an annual dollar volume of business of at least $500,000.  Other categories of employer, including schools, hospitals, institutions of higher learning, nursing homes, and federal, state, and local government agencies, are automatically covered under the FLSA.  The guidance provides a link to an internet compliance tool that employers can use to determine whether or not they are subject to the FLSA, and hence the disclosure requirement.

Employers must provide the Notice of Marketplace Coverage to current full-time and part-time employees – regardless of their enrollment status under existing group plans – no later than October 1, 2013, which is also the date on which open enrollment in the Health Insurance Marketplace will begin.  Thereafter employers must provide the Notice to each new employee upon hire, which the Guidance defines as within 14 days of an employee’s start date.  Employers wanting to provide the Notice to current employees and new hires in advance of the October 1, 2013 deadline may use the Model Notices and rely on the terms of the Technical Release in doing so.

There is no requirement to provide a Notice to dependents or other individuals or are or may become eligible for coverage under the plan but who are not employees.

As outlined in my earlier post, the Notice must do all of the following:

  • Inform employees of the existence of the Marketplace, describe the services they provide, and the manner in      which the employee may contact the Marketplace to request assistance (i.e., at http://www.HealthCare.gov);
  • Inform employees that they may be eligible for a premium tax credit or for cost-sharing reductions if the      employer’s plan provides less than 60% actuarial value and they purchase coverage through the Marketplace; and
  • Inform employees that, if they purchase coverage through the Marketplace, they may lose the employer      contribution (if any) to any health plan sponsored by the employer, and that unlike exchange coverage, which is purchased with after-tax dollars, all or a portion of the employer contribution towards coverage under its own plan, if received, would be excludable from the employee’s income for Federal income tax purposes.

All of these disclosures are set forth in “Part A” of the Model Notices.  The Model Notice for employers with group health coverage also requires that the employer add a name and contact information for someone with more information about employer-sponsored coverage, which may include a human resources personnel or even a broker or third party administrator contact.

“Part B” of the Model Notices contains information on the employer and on employer-sponsored coverage, if any, in sections that are numbered to correspond to line items the employees must complete when enrolling for coverage and/or financial aid on the Marketplace.  Employers are not required to complete this section of the Model Notice unless and until an employee requests the information from them as needed to enroll on the Marketplace.  Supplying the information up front in the standardized format is a good idea, however, as it will allow employees to enroll in the Marketplace without seeking individualized assistance from the employer.  The additional information sought from employers that do not provide group health coverage is as follows:

  • Employer name
  • Employer Identification Number (EIN)
  • Employer address
  • Employer phone number
  • City
  • State
  • Zip code
  • Contact information for employer representative
  • Phone number of contact person, if different from employer general number
  • Email address for contact person.

The additional information sought from employers that do provide group health coverage is identical except they must identify a contact person with information about employer sponsored coverage.  There are also entries for the employer to describe plan eligibility rules, whether or not dependent coverage is offered, and whether the plan meets minimum value (60% actuarial value) and affordability standards.  It notifies employees that, even if the employer plan provides minimum value and is affordable, they may qualify for financial aid on the Marketplace based on their household income.  (Note that this likely would happen only if certain deductions such as alimony or payment of student loan interest reduced someone’s household income to a point lower than the income the individual received from employment.  In such an instance the employer would not be subject to an IRC Section 4980H penalty tax so long as their plan met “affordability” for that individual, based on the safe harbor definition of compensation they selected and use.)

The Model Notice for employers that do provide coverage also contains a section corresponding to the “Marketplace Employer Coverage Tool” that employers voluntarily may complete and provide to employees.  The questions it covers are as follows:

  • Whether the employee currently is eligible for employer-sponsored coverage or will be eligible in the next 3 months
  • Whether the employer offers a health plan that meets the minimum value standard
  • Premium amounts (on a weekly, bi-weekly, semi-monthly, monthly, quarterly, or annual basis) for the lowest-cost plan offered by the employer that meets minimum value standards, factoring in any discount offered for tobacco cessation programs (but not any other wellness incentives).  (This is consistent with the proposed regulations on Minimum Value and other premium tax credit eligibility issues that were published on May 3, 2013).
  •  For employers whose plan year will end soon (at the time they prepare the Notice) and who know that the health plans they offer will change, a description of the changes to be made, including that the employer will not offer coverage, or will begin offering affordable, minimum value coverage, in which case premiums (on a weekly, bi-weekly, semi-monthly, monthly, quarterly, or yearly basis) must be estimated, along with the date on which the changes will occur.

Employers are free to prepare their own versions of the Notice of Marketplace Coverage provided that it covers all the required disclosures and provides the information that employees will need to enroll for coverage, and financial aid, on the Marketplace.  In addition, the Guidance states that the Notice must be provided in writing in “a manner calculated to be understood by the average employee,” a standard which presumably is met by the Model Notices.   Employers may deliver it by first-class mail, in person at the workplace, or electronically if DOL safe harbor requirements  - set forth at 29 CFR § 2520.104b-1(c) – are met.

Health Savings Account (HSA) limits announced

June 3rd, 2013 § 0 comments § permalink

The Internal Revenue Service has released the 2014 dollar limits for health savings account (“HSA”) contributions, and the minimum deductible amounts and maximum out-of-pocket expenses for high deductible health plans (“HDHPs”). By law, these limits are indexed annually to adjust for inflation.

The 2014 limit on contributions to HSAs is $3,300 for a self-only HSA and $6,550 for a family HSA.

To qualify as a HDHP in 2014, a plan must have a minimum deductible of $1,250 for self-only coverage, and $2,500 for family coverage. The maximum out of pocket expenses permitted for a HDHP (including deductibles, co-payments and other amounts, but not premiums) is $6,350 for self-only coverage and $12,700 for a family.

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