ACA replacement proposal leaked: Some of the finer points for HR

Does the repeal of the ACA have you worried? Checkout this great article about some of the changes that will come with the repeal of the ACA by Jared Bilski.

A draft of the Republicans’ Affordable Care Act (ACA) replacement bill that was leaked to the public is likely to look a lot different when it’s finalized. Still, it gives employers a good indication of how Republicans will start to deliver on their promises to “repeal and replace” Obamacare. 

It should come as no surprise to employers that the GOP replacement bill, which was obtained by POLITICO, would scrap a cornerstone of the ACA — the individual mandate — as well as income-based subsidies and all of the laws current taxes (at least one replacement tax is included in the legislation).

According to the discussion draft of the replacement bill, it would offer tax credits for purchasing insurance; however, those credits would be based on age instead of income.

For example, a person under the age of 30 would receive a credit of $2,000. A person over the age of 60, on the other hand, would receive double that amount.

Some of the other highlights of the leaked legislation include:

End of ACA essential health benefits

Obamacare’s essential health benefits mandates require health plans to cover 10 categories of healthcare services, which include:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services
  6. Prescription medications
  7. Rehabilitative and habilitative services and devices
  8. Lab services
  9. Preventive and wellness services and chronic disease management, and
  10. Pediatric services, including oral and vision care.

Under the bill, individual states would make the decisions about what types of services plans must cover — beginning in 2020.

A Medicaid expansion overhaul

The Medicaid expansion under Obamacare that has covered millions of people will be phased out by 2020 under the GOP bill. The replacement proposal: States would receive a set dollar amount for each person.

There would also be variations in the funding amounts based on an individual’s health status. In other words, more money would be allocated for disabled individuals, which is a huge departure from the open-ended entitlement of the current Medicaid program.

Pre-existing conditions, older individuals

One of the most popular elements of the ACA would apparently remain untouched under the GOP bill: the Obamacare provision that prohibits health plans from discriminating against people with pre-existing conditions.

However, the legislation does take aim at older individuals. The GOP would allow insurers to charge older people up to five times more for healthcare than younger individuals. The current ACA limits that difference to three times as much.

The bill does aim to remedy this discrepancy by providing bigger tax credits for older people.

Taxes get axed

There is a slew of taxes built into the ACA — the manufacturer tax, and taxes on medical devices, health plans and even tanning beds — and the Republican bill would repeal those taxes.

But those taxes help cover the cost of the ACA. So to make up for the shortfall that would result in killing those taxes, the GOP is floating the idea of changing the tax treatment of employer-based health insurance. As employers are well aware, employer-sponsored health plan premiums currently aren’t taxed. Under the GOP proposal, this would be changed for some premiums over a certain threshold — although the specifics of such a change remain murky.

Such a move would surely be met by fierce opposition from the business community. In fact, major employer groups are already preparing to fight such a proposition.

See the original article Here.

Source:

Bilski J. (2017 March 01). ACA replacement proposal leaked: some of the finer points for HR [Web blog post]. Retrieved from address http://www.hrmorning.com/aca-replacement-proposal-leaked-some-of-the-finer-points-for-hr/


How are your retirement health care savings stacking up?

Are you properly investing in your health saving account? Take a look at the this article from Benefits Pro about the importance of saving money for your healthcare by Reese Feuerman.

For all ages, it’s imperative to balance near-term and long-term savings goals, but the makeup of those savings goals has changed dramatically over the past 10 years.

With the continued rise in health care costs, and increased cost sharing between employers and employees, more employees and employers have been migrating to consumer-driven health care (CDH) to provide lower-cost alternatives.

With the increased adoption in these plans for employee cost savings purposes, employers have likewise realized similar cost savings to their bottom line. But what role does CDH play in the long term?

Republicans trying to find a way to repeal the ACA are turning to health savings accounts — new ones, called…

The Greatest Generation was able to rely on their pensions, Social Security, Medicaid, and the like as a means to support them in retirement for both medical and living expenses. However, as the Baby Boomers continue their journey towards retirement, reliance upon future proof retirement funds are fading into the sunset for coming generations. According to a 2015 study from the Government Accountability Office (GAO), 29% of American’s 55 and older do not have money set aside in a pension plan or alternative retirement plan.

To make matters worse, some experts are forecasting Social Security funding will be depleted by 2034, leaving even more retirees potentially without a plan. As such, Generation X and beyond must look for more creatives measures for savings to make up the difference.

In 1978, 401(k) plans were introduced to provide the workforce with a secondary means for retirement savings while also providing significant tax benefits. However, even when actively funded, with rising health care costs and a depleted Social Security system—the solution this workforce has paid into for their entire career—will not be enough.

According to Healthview Services, the average retiree couple will spend $288,000 for just health care expenses during retirement. This sum could easily consume one-third of total retiree savings. This is a contributing factor to the rise and rapid adoption of tax-advantage health accounts to supplement retirement savings. Introduced to the market in 2003, Health Savings Accounts (HSA) have provided employees with an option to set aside pre-tax funds to either cover current year health care expenses, like the familiar Flexible Spending Account (FSA), or carry over the funds year-over-year to pay for medical expenses later or during retirement. The pretax money employees are able to set aside in these accounts to cover health care expenses, will over time, be on par with retirement savings contributions, such as a 401(k) and 403(b), because of increasing costs and triple-tax savings.

It is important for consumers to understand these retirement options and how they could be leveraged for greater financial wealth. As a result, the Health Care Stack, an analysis authored by ConnectYourCare, acts as a life savings model and illustrates the amount of pretax money consumers can contribute for both their lifestyle and health expenses in retirement.

For illustrative purposes, according to current IRS guidelines, the average American under the age of 50 could set aside up to $24,750 each year pre-tax for retirement to cover their health care and living expenses. In this example, if a worker in his or her 30s starts to set aside the maximum contributions (based on IRS guidelines) for HSA contributions, assuming a rate of return of 3%, they would have $330,000 saved in their HSA to cover health care expenses once they reach the retirement age of 65. This number could be even greater if President Trump’s administration passes any number of proposed bills to increase the HSA contribution limits to match the maximum out-of-pocket expenses included in high deductible health plans. This allocation would not only cover average medical expenses, but also provide a triple-tax advantage for consumers from now through retirement.

In addition to the long-term retirement goals, the yearly pre-tax savings may be even greater if notional accounts are factored in, with approved IRS limits of a $2,600 per year maximum for Flexible Spending Accounts, $5,000 per year maximum for Dependent Care FSA, and $6,120 per year maximum for commuter plans. This equals $38,470 (or $44,820 if HSA contributions increase) of pre-tax contributions that consumers could save by offsetting the tax burden and could invest towards retirement.

For those consumers over the age of 50, the savings potential is even greater as they can contribute to a post retirement catch-up for their 401K plans equaling a total of $24,000, plus they may take advantage of the $6,750 HSA savings, as well as the additional $1,000 catch up. If certain proposed bills are passed, the increase could be $38,100 a year that they could set aside, in pre-tax assets, for retirement.

Not only will an individual’s expenses be covered, but there are other benefits brought forth by proper planning, including the potential to reach ones retirement savings goals early. Let’s say that after meeting with a licensed financial investor it was determined that an individual needed $1.8 million in order to retire, and according to national averages, close to $288,000 to cover health care costs.

Given the proper investment strategy around contributions to both retirement and  HSA plans, an individual could – theoretically -save enough to meet their retirement investment needs by the age of 60 for both lifestyle and health care expense coverage, if they started making careful investments in their 20s (assuming the worker is making $50,000 per year with a 3% annual increase).

In comparison, under current proposals, which include the increased HSA limits, retirement savings could be achieved even earlier with the coverage threshold being at 57 for the average worker. This is a tremendous opportunity to transform retirement investment programs for all American workers who would otherwise be left on their own. Talk about the American dream!

While there is not a one-size fits all strategy, it is important for everyone to understand their options and see how these pretax accounts outlined in the Health Care Stack play an important consideration in ones future retirement planning.

Taking the time now to fully understand tax-favored benefit accounts will provide him or her with the appropriate coverage to enjoy life well into their golden years. Retirement is just around the corner, are you ready?

See the original article Here.

Source:

Feuerman (2017 March 02). How are your retirement health care savings stacking up?[Web blog post]. Retrieved from address http://www.benefitspro.com/2017/03/02/how-are-your-retirement-health-care-savings-stacki?ref=hp-in-depth


Employers embrace new strategies to cut healthcare costs

Are you looking for a new solution for cutting your healthcare cost? Take a look at the great article from Employee Benefits Advisor about what other employers are doing to cut their cost healthcare cost by Phil Albinus.

As employers await a new health plan to replace the Affordable Care Act and consensus grows that high deductible health plans (HDHPs) are not the perfect vehicle for cutting healthcare costs, employers are incorporating innovative strategies to achieve greater savings.

Employers are offering HSAs, wellness incentives and price transparency tools at higher rates in an effort to cut the costs of their employee health plans. And when savings appear to plateau, they are implementing innovative reward plans to those who adopt these benefits, according to the 2017 Medical Plan Trends and Observation Report conducted by employee-engagement firm DirectPath and research firm CEB. They examined 975 employee benefit plans to analyze how they functioned in terms of plan design, cost savings measures and options for care.

The report found that 67% of firms offer HSAs while only 15% offer employee-funded Health Reimbursement Arrangements. As “use of high deductible plans seem to have (at least temporarily) plateaued under the current uncertainty around the future of the ACA, employer contributions to HSAs increased almost 10%,” according to the report.

Wellness programs continue to gain traction. Fifty-eight percent of 2017 plans offer some type of wellness incentive, which is up from 50% in 2016. When it comes to price transparency tools, 51% of employers offer them to help employees choose the best service, and 18% plan to add similar tools in the next three years. When these tools are used, price comparison requests saw an average employee savings of $173 per procedure and average employer savings of $409 per procedure, according to CEB research.

“What was interesting was the level of creativity within these incentives and surcharges. There were paycheck credits, gift cards, points that could be redeemed for rewards,” says Kim Buckey, vice president of client services at DirectPath. “One employer reduced the co-pays for office visits to $20 if you participated in the wellness program. We are seeing a level of creativity that we haven’t seen before.”

Surcharges on tobacco use has gone down while surcharges for non-employees such as spouses has risen. “While the percentage of organizations with spousal surcharges remained static (26% in 2017, as compared to 27% in 2016), average surcharge amounts increased dramatically to $152 per month, a more than 40% increase from 2016,” according to the report.

Tobacco surcharges going down “is reflective of employers putting incentives in, so they are taking a carrot approach instead of the stick,” says Buckey.

Telemedicine adoption appears to be mired in confusion among employees. More than 55% of employees with access to these programs were not aware of their availability, and almost 60% of employees who have telemedicine programs don’t feel they are easy to access, according to a separate CEB survey.

Employers seem to be introducing transparency and wellness programs because the savings from HDHPs appear to have plateaued, says Buckey. She also noted recent research that HSAs only deliver initial savings at the expense of the employee’s health.

“With high deductible plans and HSAs, there has been a lot of noise how they aren’t the silver bullet in controlling costs. Some researchers find that it has a three-year effect on costs because employees delay getting care and by the time they get it, it’s now an acute or chronic condition instead of something that could have been headed off early,” she says.

“And there is a tremendous lack of understanding on how these plans work for lower income employees, [it’s] hard to set aside money for those plans,” she says.

Educating employees to be smarter healthcare consumers is key. “What is becoming really obvious is that there is room to play in all these areas of cost shifting and high deductible plans and wellness but we can no longer put them in place and hope for the best,” she says. We have to focus on educating employees and their families,” she says. “If we are expecting them to act like consumers, we have to arm them with the tools. Most people don’t know where to start.”

She adds, “we know how to shop for a TV or car insurance but 99% of people don’t know where to start to figure out where to shop for prescription drugs or for the hospital where to have your knee surgery. Or if you get different prices from different hospitals, how do you even make the choice?”

When asked if the results of this year’s report surprised her – Buckey has worked on the past five – she said yes and no.

Given that the data is based on information from last summer for plans that would be in effect by 2017, she concedes that given the current political climate “a lot is up in the air.” Most employers were hesitant to make substantive changes to their plans due to the election, she says. We may see the same thing this year as changes are made to the ACA and the Cadillac Tax, she adds.

“What I was interested in were the incremental changes and some of the creativity being applied to longstanding issues of getting costs under control,” she says.

See the original article Here.

Source:

Albinus P. (2017 March 05). Employers embrace new strategies to cut healthcare costs [Web blog post]. Retrieved from address http://www.employeebenefitadviser.com/news/employers-embrace-new-strategies-to-cut-healthcare-costs?brief=00000152-1443-d1cc-a5fa-7cfba3c60000


Keeping Pace with the Protecting Affordable Coverage for Employees Act

Great article from our partner, United Benefit Advisors (UBA) abut the change coming to the ACA thanks to PACE by Vicki Randall

Last fall, President Barack Obama signed the Protecting Affordable Coverage for Employees Act (PACE), which preserved the historical definition of small employer to mean an employer that employs 1 to 50 employees. Prior to this newly signed legislation, the Patient Protection and Affordable Care Act (ACA) was set to expand the definition of a small employer to include companies with 51 to 100 employees (mid-size segment) beginning January 1, 2016.

If not for PACE, the mid-size segment would have become subject to the ACA provisions that impact small employers. Included in these provisions is a mandate that requires coverage for essential health benefits (not to be confused with minimum essential coverage, which the ACA requires of applicable large employers) and a requirement that small group plans provide coverage levels that equate to specific actuarial values. The original intent of expanding the definition of small group plans was to lower premium costs and to increase mandated benefits to a larger portion of the population.

The lower cost theory was based on the premise that broadening the risk pool of covered individuals within the small group market would spread the costs over a larger population, thereby reducing premiums to all. However, after further scrutiny and comments, there was concern that the expanded definition would actually increase premium costs to the mid-size segment because they would now be subject to community rating insurance standards. This shift to small group plans might also encourage mid-size groups to leave the fully-insured market by self-insuring – a move that could actually negate the intended benefits of the expanded definition.

Another issue with the ACA’s expanded definition of small group plans was that it would have resulted in a double standard for the mid-size segment. Not only would they be subject to the small group coverage requirements, but they would also be subject to the large employer mandate because they would meet the ACA’s definition of an applicable large employer.

See the original article Here.

Source:

Randall V. (2017 February 16). Keeping pace with the protecting affordable coverage for employees act [Web blog post]. Retrieved from address http://blog.ubabenefits.com/keeping-pace-with-the-protecting-affordable-coverage-for-employers-act


HSA expansion could change broker-employer role

The employer and broker roles could be on the verge of changing due to HSA expansion. Take a look at this article from Employee Benefits Advisor about some changes that could take place by Phil Albinus.

As Congress moves to repeal and replace the Affordable Care Act, details of the new plan are still coming together. Meanwhile, one element appears to have the support of several architects of the various alternative plans that are being proposed by Congress: An expanded use of health savings accounts.

Republicans are pushing for HSA expansion to include greater portability between insurance plans, an increased role for spouses and a raise in the amount that plan participants are allowed to invest. These elements appear in proposals put forth by Speaker Paul Ryan (R-Wis.), HHS Sec. Tom Price’s plan when he was a member of Congress last year, and in a new plan proposed by the Freedom Caucus — led by Sen. Paul Rand (R-Ky.) and Rep. Mark Sanford (R-S.C.).

With the role of HSAs becoming increasingly important in benefit plans, advisers must prepare for how they will handle expanding participation and how they interact with and educate employees on HSAs.

“The Republicans’ plan is more of an expansion of the HSAs. Creating greater rules around those HSAs allows greater portability, more participation with spouses and more protection from bankruptcy. It puts more focus on the participants and less on the employer. It’s not so much a new role as more an expanded and just wider adoption,” says Harrison Stone, general counsel at healthcare solutions provider ConnectYourCare, which is based in Baltimore.

By boosting HSAs under the upcoming Republican plan, the end user will have more control over healthcare spending. “The theory is that all of these consumer-owned and directed accounts are empowering. They fit with overall transparency and should force the market to change as providers are forced to more directly compete,” says Dennis Fiszer, first vice president and chief compliance officer for HUB International.

This could downplay the role of employers as employees have a greater say in the way their funds for medical expenses are spent.

“The HSA portion of the account really belongs to the individual. And so, apart from generalized information, the plan sponsor’s role is more hands off … similar to operation of 401(k) programs. The plan sponsor role is focused on operating and maintaining compliance for the accompanying high-deductible health plan. The employer absorbs all the traditional ERISA, COBRA, HIPAA-borne obligations through sponsorship of the HDHP,” says Fiszer.

HSAs by the numbers
More than 20 million Americans participated in an HSA in 2016, according to America’s Health Insurance Plans. And those numbers are set to climb.

Over the last decade, AHIP found that HSA participation has grown from 3.2 million in 2006 to 20.2 million in 2016. On average, plans surveyed in 2015 and 2016 enrolled an additional 648,000 consumers, which is an average net increase in HSA participants of 3.4%.

HSA adoption is set to take off, says John Young, senior vice president of consumerism and strategy of Alegeus.

“HSAs are at a tipping point for market adoption and have become a foundational pillar for the future success of healthcare, much like 401(k)s are for retirement spending and saving. HSAs are not the panacea to fix all ACA criticisms, but they are a key component of every GOP healthcare proposal,” says Young.

“Simple fixes to HSA accessibility, such as expanded availability to those receiving care under the VA/TRICARE and Indian Health Services, will enable more Americans to have the option of an HSA. Expanding HSA operability, such as increasing contribution limits up to the annual maximum out-of-pocket limit, and allowing spouses to make catch-up contributions to the same account, make HSAs easier to use and understand,” says Young.

Building a smarter healthcare consumer
Ultimately, Republican politicians hope that an expanded HSA will drive down costs as employees search for better bargains in their healthcare. Rand and Sanford’s plan, for example, would sever health insurance from a person’s employer and offer a $5,000 tax credit to fund HSAs.

“What if 30% of the public had health savings accounts?” Paul told The Washington Post. “What do you do when you use your own money? You call up doctors and ask the price… if you create a real marketplace, you drive prices down.”

This supposed HSA benefit will require greater data transparency among healthcare providers and advisers, as well as more interaction with plan participants, the employees.

“For this to work the way I think Congress would like it to work is we need greater transparency and [to] know what certain elements of healthcare costs. This country is kind of edging in that direction,” says Edward Fensholt of Lockton Company’s Lockton Benefit Group.

If an employee has a high deductible plan that is supplemented by an HSA, the theory is they would shop for the cheapest medical test or procedure, such as an MRI. In order to accomplish this, the plan participant will need more data from brokers and healthcare providers.

“That data is hard to come by,” says Fensholt. He adds that this proving this information to the plan sponsor is the role of the broker today — and that arrangement will likely have to change.

“Brokers are the ones helping employers drive the market toward that transparency and brokers are developing tools for this. There are some vendors out there that survey the market and sell their data to brokers or to employers as a positive add-on. I think this is all part of a larger theme as in, ‘Let’s put employees into more control and more responsibility to manage their healthcare.’”

Although HSAs came into existence in 2004 during the tax reforms of President George W. Bush, there is still confusion among employees as to how HSAs work and what the exact tax benefits are.

There is risk of HSAs overshadowing other important forms of CDH accounts like FSAs and HRAs, says Young. He adds that “while HSAs are a powerful tool, they are not the end-all-be-all and should not be positioned as such. FSAs and HRAs continue to have an important place in the market.”

As HSAs expand, Young believes that the industry needs to “laser-focus” on consumer education around healthcare consumerism in general and how to maximize the value of all health benefit account offerings. “Without such consumer education, these plans won’t achieve the optimal objective, to lower healthcare costs and improve health,” he says.

See the original article Here.

Source:

Albinus P. (2017 February 21). HSA expansion could change broker-employer role [Web blog post]. Retrieved from address http://www.employeebenefitadviser.com/news/hsa-expansion-could-change-broker-employer-role?brief=00000152-1443-d1cc-a5fa-7cfba3c60000


SBC Template, and Required Addendums for Covered Entities under ACA Section 1557

Make sure to stay updated with all the recent rules and regulation regarding the ACA, thanks to our partners at United Benefits Advisor (UBA).

A Summary of Benefits and Coverage (SBC) is four page (double-sided) communication required by the federal government. It must contain specific information, in a specific order, and with a minimum size type, about a group health benefit’s coverage and limitations. If an employer providing an SBC is a covered entity under the ACA’s Section 1557, additional requirements apply.

On April 6, 2016, the Centers for Medicare and Medicaid Services (CMS), the Department of Labor (DOL), and the Department of the Treasury issued the final 2017 summary of benefits and coverage (SBC) template, group and individual market SBC instructions, uniform glossary of coverage and medical terms, a coverage example calculator, and calculator instructions.

The SBC is to be used by all health plans, including individual, small group, and large group; insured and self-insured; grandfathered, transitional, and ACA compliant. The new SBC must be used for plan years with open enrollment periods beginning after April 1, 2017. It will not be used for marketplace plans for the 2017 coverage year.

For fully insured plans, the insurer is responsible for providing the SBC to the plan administrator (usually this is the employer). The plan administrator and the insurer are both responsible for providing the SBC to participants, although only one of them actually has to do this.

For self-funded plans, the plan administrator is responsible for providing the SBC to participants. Assistance may be available from the plan administrator’s TPA, advisor, etc., but the plan administrator is ultimately responsible. (The plan administrator is generally the employer, not the claims administrator.)

Changes

The template includes a new “important question” that asks “Are there services covered before you meet your deductible?” and requires family plans to disclose whether or not the plan has embedded deductibles or out-of-pocket limits. This is reported in the “Why This Matters” column in relation to the question “what is the overall deductible?” and plans must list “If you have other family members on the policy, they have to meet their own individual deductible until the overall family deductible has been met” or alternatively, “If you have other family members on the policy, the overall family deductible must be met before the plan begins to pay.”

Tiered networks must be disclosed and the question “Will you pay less if you use a network provider?” is now included. The SBC also includes language that warns participants that they could receive out-ofnetwork providers while they are in an in-network facility. The SBC also indicates that a consumer could receive a “balance bill” from an out-of-network provider.

The “explanatory coverage page” was dropped from the template.

The coverage examples provided clarify the “having a baby” example and the “managing type 2 diabetes” example, in addition to providing a third example of “dealing with a simple fracture.” The coverage example must be calculated assuming that a participant does not earn wellness credits or participate in an employer’s wellness program. If the employer has a wellness program that could reduce the employee’s costs, the employer must include the following language: “These numbers assume the patient does not participate in the plan’s wellness program. If you participate in the plan’s wellness program, you may be able to reduce your costs. For more information about the wellness program, please contact: [insert].”

The column for “Limitations, Exceptions, & Other Important Information” must contain core limitations, which include:

  • When a service category or a substantial portion of a service category is excluded from coverage (that is, the column should indicate “brand name drugs excluded” in health benefit plans that only cover generic drugs);
  • When cost sharing for covered in-network services does not count toward the out-of-pocket limit;
  • Limits on the number of visits or on specific dollar amounts payable under the health benefit plan; and  When prior authorization is required for services.
  • When prior authorization is required for services.

The template and instructions indicate that qualified health plans (those certified and sold on the Marketplace) that cover excepted abortions (such as those in cases of rape or incest, or when a mother’s life is at stake) and plans that cover non-excepted abortion services must list “abortion” in the covered services box. Plans that exclude abortion must list it in the “excluded services” box, and plans that cover only excepted abortions must list in the “excluded services” box as “abortion (except in cases of rape, incest, or when the life of the mother is endangered).” Health plans that are not qualified health plans are not required to disclose abortion coverage, but they may do so if they wish

Impact of Section 1557 of the ACA – Addendum Required for Covered Entities

On May 13, 2016, the Department of Health and Human Services (HHS) issued a final rule implementing Section 1557 of the Patient Protection and Affordable Care Act (ACA), which took effect on July 18, 2016. Under these regulations, covered entities must provide notices stating they do not discriminate on certain grounds in “significant public-facing publications.” HHS has gone on to confirm that an SBC is a significant public-facing publication.

ACA Section 1557 provides that individuals shall not be excluded from participation, denied the benefits of, or be subjected to discrimination under any health program or activity which receives federal financial assistance from HHS on the basis of race, color, national origin, sex, age, or disability. The rule applies to any program administered by HHS or any health program or activity administered by an entity established under Title I of the ACA. These applicable entities are “covered entities” and include a broad array of providers, employers, and facilities. State-based Marketplaces are also covered entities, as are FederallyFacilitated Marketplaces.

The final regulations are aimed primarily at preventing discrimination by health care providers and insurers, as well as employee benefits programs of an employer that is principally or primarily engaged in providing or administering health services or health insurance coverage, or employers who receive federal financial assistance to fund their employee health benefit program or health services. Employee benefits programs include fully insured and self-funded plans, employer-provided or sponsored wellness programs, employer provided health clinics, and longer-term care coverage provided or administered by an employer, group health plan, third party administrator, or health insurer

Practically speaking, employers with fully insured group health plans will be subject to the regulations (because the carrier is a covered entity and is prohibited from selling discriminatory plans), and many self funded employers will be considered a covered entity based on their business model or financial details. Furthermore, most third party administrators (TPAs) will be considered a covered entity. The Office of Civil Rights (OCR) will investigate a TPA when there is alleged discrimination in the administration of the plan. However, if the alleged discrimination is in benefit plan design (that is, the choice of the employer), the OCR will process the complaint against the employer or plan sponsor. If the OCR lacks jurisdiction over the employer, it will refer the matter to the Equal Employment Opportunity Commission (EEOC). This means that employers who are not covered entities, but have a self-funded group health plan that utilizes a TPA that is a covered entity, could become the subject of an EEOC investigation for discriminatory business practices.

Employers with self-funded group health plans should seek legal counsel to determine if they are a covered entity, and to obtain legal advice on the applicability of these regulations to their individual situation.

Covered entities must take steps to notify beneficiaries, enrollees, applicants, or members of the public of their nondiscrimination obligations with respect to their health programs and activities. Covered entities are required to post notices stating that they do not discriminate on the grounds prohibited by Section 1557, and that they will provide free (and timely) aids and services to individuals with limited English proficiency and disabilities. These notices must be posted in conspicuous physical locations where the entity interacts with the public, in its significant public-facing publications, and on its website home page. In addition, covered entities that employ 15 or more persons must designate a responsible employee to coordinate the entity’s compliance with the rule and adopt a grievance procedure. Employers who are covered entities should seek advice of counsel on the ways these requirements apply to them and their group health plan, and employers who are not covered entities but have a fully insured group health plan should discuss how the insurance carrier will meet these requirements.

The OCR has provided a model notice and model statement of nondiscrimination, and taglines for employers to use. The OCR has also created an FAQ and table relating to the top 15 languages spoken in each state.

HHS has stated that an SBC is a publication that is “significant” under the Section 1557 regulations. As a result, CMS requires the use of an addendum to the SBC to accommodate applicable language access standards. Accordingly, covered entities required to provide an SBC must include the nondiscrimination notice and taglines in its addendum along with other applicable language access standards. This addendum must contain only the Section 1557 nondiscrimination notice and taglines and other applicable language access information.

To download the full compliance alert click Here.


Health Law’s 10 Essential Benefits: A Look At What’s At Risk In GOP Overhaul

Great article from Kaiser Health News about all the changes that could be coming with the ACA overhaul by Michelle Andrews

As Republicans look at ways to replace or repair the health law, many suggest shrinking the list of services insurers are required to offer in individual and small group plans would reduce costs and increase flexibility. That option came to the forefront last week when Seema Verma, who is slated to run the Centers for Medicare & Medicaid Services in the Trump administration, noted at her confirmation hearing that coverage for maternity services should be optional in those health plans.

Maternity coverage is a popular target and one often mentioned by health law critics, but other items also could be watered down or eliminated.

There are some big hurdles, however. The health law requires that insurers who sell policies for individuals and small businesses cover at a minimum 10 “essential health benefits,” including hospitalization, prescription drugs and emergency care, in addition to maternity services. The law also requires that the scope of the services offered be equal to those typically provided in employer coverage.

“It has to look like a typical employer plan, and those are still pretty generous,” said Timothy Jost, an emeritus professor at Washington and Lee University Law School in Virginia who is an expert on the health law.

Since the 10 required benefits are spelled out in the Affordable Care Act, it would require a change in the law to eliminate entire categories or to water them down to such an extent that they’re less generous than typical employer coverage. And since Republicans likely cannot garner 60 votes in the Senate, they will be limited in changes that they can make to the ACA. Still, policy experts say there’s room to “skinny up” the requirements in some areas by changing the regulations that federal officials wrote to implement the law.

Habilitative Services

The law requires that plans cover “rehabilitative and habilitative services and devices.” Many employer plans don’t include habilitative services, which help people with developmental disabilities such as cerebral palsy or autism maintain, learn or improve their functional skills. Federal officials issued a regulation that defined habilitative services and directed plans to set separate limits for the number of covered visits for rehabilitative and habilitative services.

Those rules could be changed. “There is real room for weakening the requirements” for habilitative services, said Dania Palanker, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms who has reviewed the essential health benefits coverage requirements.

Oral And Vision Care For Kids

Pediatric oral and vision care requirements, another essential health benefit that’s not particularly common in employer plans, could also be weakened, said Caroline Pearson, a senior vice president at Avalere Health, a consulting firm.

Mental Health And Substance Use Disorder Services

The health law requires all individual and small group plans cover mental health and substance use disorder services. In the regulations the administration said that means those services have to be provided at “parity” with medical and surgical services, meaning plans can’t be more restrictive with one type of coverage than the other regarding cost sharing, treatment and care management.

“They could back off of parity,” Palanker said.

Prescription Drugs

Prescription drug coverage could be tinkered with as well. The rules currently require that plans cover at least one drug in every drug class, a standard that isn’t particularly robust to start with, said Katie Keith, a health policy consultant and adjunct professor at Georgetown Law School. That standard could be relaxed further, she said, and the list of required covered drugs could shrink.

Preventive And Wellness Services And Chronic Disease Management

Republicans have discussed trimming or eliminating some of the preventive services that are required to be offered without cost sharing. Among those requirements is providing birth control without charging women anything out of pocket. But, Palanker said, “if they just wanted to omit them, I expect that would end up in court.”

Pregnancy, Maternity And Newborn Care

Before the health law passed, just 12 percent of health policies available to a 30-year-old woman on the individual market offered maternity benefits, according to research by the National Women’s Law Center. Those that did often charged extra for the coverage and required a waiting period of a year or more. The essential health benefits package plugged that hole very cleanly, said Adam Sonfield, a senior policy manager at the Guttmacher Institute, a reproductive health research and advocacy organization.

“Having it in the law makes it more difficult to either exclude it entirely or charge an arm and a leg for it,” Sonfield said.

Maternity coverage is often offered as an example of a benefit that should be optional, as Verma advocated. If you’re a man or too old to get pregnant, why should you have to pay for that coverage?

That a la carte approach is not the way insurance should work, some experts argue. Women don’t need prostate cancer screening, they counter, but they pay for the coverage anyway.

“We buy insurance for uncertainty, and to spread the costs of care across a broad population so that when something comes up that person has adequate coverage to meet their needs,” said Linda Blumberg, a senior fellow at the Health Policy Center at the Urban Institute.

See the original article Here.

Source:

Andrews M. (2017 February 21). Health law’s 10 essential benefits: a look at what’s at risk in GOP overhaul [Web blog post]. Retrieved from address http://khn.org/news/health-laws-10-essential-benefits-a-look-at-whats-at-risk-in-gop-overhaul/


Health Savings Accounts: What You Need to Know

Updated March 2017 by our partners at United Benefits Advisors:  Stay in the know of how Health Savings Accounts (HSAs) work and how you can use them properly.

A health savings account (HSA) is a tax-exempt trust or custodial account set up with a qualified HSA trustee (such as a bank or insurance company) that is used to pay or reimburse certain medical expenses.

HSAs were first available as of January 1, 2004, and have grown greatly in popularity. An eligible individual (with or without employer involvement) can establish an HSA. Eligible participating individuals can make contributions, up to statutory limits, and get a tax deduction. Investment earnings on HSA accounts are tax free, and HSA funds used to pay qualified medical expenses are completely tax free. Employers contributing to their eligible employees’ HSAs, or that offer HSAs through a cafeteria plan also receive federal tax deductions for the contributions.

As a result of these benefits, HSAs are highly regulated; by Internal Revenue Code Section 223, as well as numerous IRS notices and guidance documents. IRS Publication 969 provides a basic overview of HSA regulations for employers and employees.

Eligibility

To be an eligible individual and qualify for an HSA, you must meet the following requirements:

  • You must be covered under a high deductible health plan (HDHP) on the first day of the month.
  • You have no other disqualifying health coverage except what is permitted.
  • You are not enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else’s tax return for the year.

High Deductible Health Plan

In order to participate in an HSA, an individual must be covered under an HDHP on the first day of the month. In 2016, that means the individual must have an annual deductible of at least $1,300 for self-only coverage, and the deductible and out-of-pocket expense cannot exceed $6,550. These dollar figures change annually. For an individual enrolled in family coverage (or, other than self-only), the deductible must be at least $2,600 in 2016, and the deductible and out-of-pocket expenses cannot exceed $13,100. 2 ©2017 United Benefit Advisors, LLC. All rights reserved. The HDHP must provide “significant benefits;” for example it could not exclude in-patient care or hospitalizations, be a fixed indemnity benefit, or only cover certain specified diseases such as cancer.

Other Disqualifying Coverage

See full download for corresponding data.

Disqualifying coverage problems can be difficult for employees to understand, and care should be taken to educate them on what disqualifying coverage is.

  • Example: Adam and Susan are married; Adam is a full-time employee at The Auto Dealer and enrolls in its HDHP. Susan is a full-time employee at The Dry Cleaner and enrolls in its HMO plan with an FSA. Both Adam and Susan enroll in single-only coverage. Because Susan now has an FSA, which the IRS allows her to spend on Adam even if she has single-only coverage, Adam is no longer HSA eligible because he is now covered by disqualifying coverage (even if Susan does not spend any of the FSA on Adam’s qualifying expenses). If Susan chose to enroll in The Dry Cleaner’s limited purpose FSA instead of the general purpose FSA, Adam could maintain his HSA eligibility.

Interplay Between Health FSAs and HSAs

Special issues can arise when an employer offers multiple benefit plans, including a traditional health plan with an FSA account, and an HDHP with an HSA account. These same issues arise when an employer looks to change the benefit plan it offers from a traditional plan with an FSA and an HDHP with an HSA.

When an individual has an FSA, they have coverage that disqualifies them from being HSA eligible. The question becomes, when are they considered to have “dropped” the FSA in order to gain HSA eligibility? The answer is different depending on the FSA’s plan design and whether the individual has a remaining balance at the end of the plan year.

Health FSA with a Grace Period

See full download for corresponding data.

Health FSA with Carryovers

See full download for corresponding data.

Medicare

Being entitled to Medicare makes an individual ineligible for an HSA, even if the individual is enrolled in a qualifying HDHP.

Internal Revenue Code (IRC) Section 223 reads: “Medicare eligible individuals. The [contribution limit] under this subsection for any month with respect to an individual shall be zero for the first month such individual is entitled to benefits under title XVIII of the Social Security Act and for each month thereafter.”

Being eligible for and being entitled to Medicare are not the same. Individuals become entitled to Medicare through their age, through disability, or due to end stage renal disease (ESRD).

Individuals are entitled to Medicare once they are 65 years old and they either have applied for and are receiving benefits from the Social Security or Railroad Retirement Board, or, are eligible for monthly retirement benefits from Social Security or the Railroad Retirement Board (but have not applied for them) but have filed an application for Medicare Part A.

For an individual who is working and aged 65 or over to maintain HSA eligibility he or she must:

  • Not apply for or waive Medicare Part A, and
  • Not apply for Medicare Part B, and
  • Waive or delay Social Security benefits.

When employment-related coverage ends, the individual has eight months to enroll in Medicare Part A, which, once effective, will be effective for six months retroactively, but no earlier than the first day of eligibility.

Retroactive Medicare Coverage

Medicare Part A coverage begins the month an individual turns age 65, provided the individual files an application for Medicare Part A (or for Social Security or Railroad Retirement Board benefits) within six months of the month in which the individual turns age 65. If the individual files an application more than six months after turning age 65, Medicare Part A coverage will be retroactive for six months.

Individuals who delayed applying for Medicare and were later covered by Medicare retroactively to the month they turned 65 (or six months, if later) cannot make contributions to the HSA for the period of retroactive coverage. There are no exceptions to this rule.

However, if they contributed to an HSA during the months that were retroactively covered by Medicare and, as a result, had contributions in excess of the annual limitation, they may withdraw the excess contributions (and any net income attributable to the excess contribution) from the HSA.

They can make the withdrawal without penalty if they do so by the due date for the return (with extensions). Further, an individual generally may withdraw amounts from an HSA after reaching Medicare eligibility age without penalty. (However, the individual must include both types of withdrawals in income for federal tax purposes to the extent the amounts were previously excluded from taxable income.)

If an excess contribution is not withdrawn by the due date of the federal tax return for the taxable year, it is subject to an excise tax under the Internal Revenue Code. This tax is intended to recapture the benefits of any tax-free earning on the excess contribution.

Dependent Status

Individuals who can be claimed as a dependent on someone else’s tax return are not HSA eligible.

  • Example: Anna is 15 years old and is claimed as a dependent on her parent’s taxes. Her mom, Caroline, has enrolled in family HDHP coverage through her employer and has established an HSA to which she can contribute up to the full family amount. Anna does not have any other disqualifying coverage, but she cannot establish an HSA because she is claimed as a dependent on her parent’s taxes.

Another complicated wrinkle in dependent status and HSAs involves whose expenses can be reimbursed from the HSA. HSAs can only reimburse the expenses of the employee, spouse, and tax dependents as defined by IRS Code Section 223(d)(2)(A) (even if the person is not eligible to set up his or her own HSA) if the expense was incurred after the HSA is established.

  • Example: Samuel is 24 years old and is not claimed as a dependent on his parent’s taxes. His mom, Caroline, has enrolled in family HDHP coverage through her employer (which covers Samuel) and has established an HSA into which she can contribute up to the full family amount. Samuel does not have any other disqualifying coverage, and he can establish his own HSA (although his employer is unlikely to allow him to put pre-tax dollars into it). Caroline cannot spend her HSA dollars on Samuel’s medical expenses, despite the fact that he is covered under the family HDHP. That is because Samuel is not a tax dependent of his parent.

Determining Eligibility; Changes in Eligibility

An individual’s eligibility is determined on a monthly basis, on the first day of the month.

If an individual is enrolled in single HDHP coverage on the first day of September (and has no disqualifying coverage), the individual is eligible to contribute up to the full single contribution limit for the month (1/12 of the annual limit) of September, as well as October, November, and December. If an individual enrolls on the 15th of September in single HDHP coverage (and has no disqualifying coverage), the individual can begin contributing up to the full single contribution limit for the months of October, November, and December, but not the month of September. That is because the individual was not HSA eligible on the first day of September. If an individual changes from family to single coverage, or vice versa, the limit for that month is based on the individual’s coverage as of the first day of the month.

Contribution

The amount you or any other person can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. For 2016, if you have self-only HDHP coverage, you can contribute up to $3,350. If you have family HDHP coverage, you can contribute up to $6,750.

The “last-month” rule also provides that individuals who are eligible for an HSA on December 1 (the last month of the year), are considered eligible for the entire year. The individual is considered to have the HDHP coverage on December 1 for the entire year.

If an individual changes from family to single coverage during the year, the individual’s maximum contribution amount is calculated as (X/12 x $6,750) + (Y/12 x $3,350) = $____. The dollar figures used in the formula will change annually based on the IRS contribution limits.

X represents the number of months the individual was eligible under family coverage; Y represents the months the individual was eligible for single coverage.

Individuals who reach age 55 by the end of the taxable year have their contribution limit increased by $1,000, regardless of the tier of coverage they are enrolled in. This is called a “catch-up” contribution. A married couple, both age 55 or older, can make two catch-up contributions, but there must be a separate HSA for each spouse. Because HSAs are individual trusts, spouses cannot have a joint HSA (but each spouse can spend his or her individual HSA dollars on the spouse’s medical expenses).

The IRS has a “special rule” for married individuals that allows a couple to divide the maximum HSA contribution between spouses so long as one of them has family HDHP coverage, and neither has disqualifying coverage. The IRS provides the following example:

  • For 2015, Mr. Auburn and his wife are both eligible individuals. They each have family coverage under separate HDHPs. Mr. Auburn is 58 years old and Mrs. Auburn is 53. Mr. and Mrs. Auburn can split the family contribution limit ($6,650) equally or they can agree on a different division. If they split it equally, Mr. Auburn can contribute $4,325 to an HSA (one-half the maximum contribution for family coverage ($3,325) + $1,000 additional contribution) and Mrs. Auburn can contribute $3,325 to an HSA.

Beginning the first month an individual is enrolled in Medicare (or entitled to Medicare) the contribution limit is zero.

  • Example: Marie turned age 65 in July 2016 and enrolled in Medicare. She had an HDHP with selfonly coverage and is eligible for an additional contribution of $1,000. Her contribution limit is $2,175 ($4,350 × 6 ÷ 12).

If an individual makes contributions in excess of the IRS annual limits, he or she must pay a 6 percent excise tax on the excess contributions, and the excise tax will apply to each year the excess contribution remains in the individual’s account. The excise tax is paid with IRS Form 5329.

Employer Contributions

Employers may contribute to an employee’s HSA, but their contributions count toward the individual’s total contribution limit for the year.

One of two sets of nondiscrimination rules applies to HSA contributions from employers. If the employer makes contributions through a Section 125/cafeteria plan, the contributions are included in the plan’s cafeteria plan nondiscrimination testing. These rules generally prohibit employers from favoring highly compensated or key employees.

Comparable contributions. If the employer does not include the HSA in its Section 125/cafeteria plan, it is subject to the comparable contributions rule.

In this case, if an employer makes contributions, it must make comparable contributions to all comparable participating employees’ HSAs. Contributions are comparable if they are either:

  • The same amount, or
  • The same percentage of the annual deductible limit under the HDHP covering the employees.

This rule prohibits employers from implementing HSA “matching” programs, or using HSA contributions as a wellness incentive.

Comparable participating employees:

  • Are covered by their HDHP and are eligible to establish an HSA,
  • Have the same category of coverage (either self-only or family coverage), and
  • Have the same category of employment (part-time, full-time, or former employees).

Distributions

Individuals may receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses incurred after the establishment of the HSA. If an individual loses HSA eligibility at any point, he or she can continue to spend remaining HSA dollars on qualified medical expenses.

HSA-qualified expenses are all medical expenses allowed by IRC Section 213, except insurance premiums (unless for COBRA, long-term care insurance or Medicare supplemental, which may be reimbursed). If you use HSA funds to pay premiums for COBRA, long-term care insurance, or Medicare supplement coverage, you cannot claim the health coverage tax credit for those premiums.

Qualified medical expense incurred overseas may be paid with an HSA. Care should be taken to ensure the expense is documented and meets the requirements under IRC Section 213.

Non-prescription or over-the-counter (OTC) medications other than insulin are not considered a qualified medical expense, unless you have a prescription for it. For example, if your physician wrote you a prescription for aspirin or pre-natal vitamins, you could purchase them over-the-counter with your HSA funds.

Qualified medical expenses are those incurred by the following persons.

  1. You and your spouse
  2. All dependents you claim on your tax return
  3. Any person you could have claimed as a dependent on your return except if:
    • The person filed a joint return,
    • The person had gross income of $4,000 or more, or
    • You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s return.

A child of parents who are divorced (or separated, or living apart for the last six months of a calendar year) are treated as the dependents of both parents, regardless of whether the custodial parent releases the claim to the child’s exemption.

HSAs also have prohibited transactions, including the lending of money between the individual and the HSA. This means that, if an individual overdraws the HSA account (which is considered lending money), the individual loses HSA eligibility for the entire year, and will be subjected to an additional 20 percent excise tax. Federal law will require the bank operating the HSA to close it, and the individual cannot reopen the account at that bank, or any other bank, for the entire year.

HSA holders are obligated to keep sufficient records to show that any distributions from their HSA were used exclusively to pay or reimburse qualified medical expenses, that the expense was not paid previously or from another source, and that the individual did not take the expense as an itemized deduction in any year.

3/10/17

See full download for corresponding data.


Important News Regarding the Employer-Tax Exclusion for Health Insurance

Thanks to our partners at United Benefits Advisors, an important opportunity has been brought to our attention that could be crucial for your business.

The U.S. Congress is currently considering health care reform proposals that would eliminate or place a cap on the employer-tax exclusion for health insurance. Eliminating the exclusion would eliminate most of the advantages of employer-sponsored insurance, while capping it would degrade the benefit and serve as a tax increase for middle-class Americans.

As an employer, you would be most directly affected by the elimination or cap of the employer tax exclusion. Did you know that more than 175 million Americans, including those covered by unions, currently receive their coverage through this system, largely due to the tax-exclusion where employers provide contributions for an employee’s health insurance which are excluded from that employee’s compensation for income and payroll tax purposes?

How Can I Learn More About This Issue?

The National Association of Health Underwriters (NAHU) has created easy-to-understand infographics about the employer-tax exclusion and the insurance risk pool that can help. You can also read details about the employer-tax exclusion.

What Can You Do?

You can take action today by sharing with your senators and representatives why the exclusion must be preserved in any health care reform legislative proposals. NAHU provides an online form so you don’t have to track down how to reach your state’s legislators.

If You Don’t Want to Send an Email

You can also reach your legislators by phone. The U.S. Capitol Switchboard can be reached at 202-224- 3121. You are welcome to use the prepared text as talking points when calling your legislators, or to expand on the prepared message to share your personal story on how this issue will impact you.

3/10/17

Download the UBA Notification here.


Cafeteria Plans: Qualifying Events and Changing Employee Elections

Have any questions about cafeteria plans and how they work? Check out this great article from our partner, United Benefit Advisors (UBA) about which events qualify and what changes can happen to any employee’s cafeteria plan by Danielle Capilla

Cafeteria plans, or plans governed by IRS Code Section 125, allow employers to help employees pay for expenses such as health insurance with pre-tax dollars. Employees are given a choice between a taxable benefit (cash) and two or more specified pre-tax qualified benefits, for example, health insurance. Employees are given the opportunity to select the benefits they want, just like an individual standing in the cafeteria line at lunch.

Only certain benefits can be offered through a cafeteria plan:

  • Coverage under an accident or health plan (which can include traditional health insurance, health maintenance organizations (HMOs), self-insured medical reimbursement plans, dental, vision, and more);
  • Dependent care assistance benefits or DCAPs
  • Group term life insurance
  • Paid time off, which allows employees the opportunity to buy or sell paid time off days
  • 401(k) contributions
  • Adoption assistance benefits
  • Health savings accounts or HSAs under IRS Code Section 223

Some employers want to offer other benefits through a cafeteria plan, but this is prohibited. Benefits that you cannot offer through a cafeteria plan include scholarships, group term life insurance for non-employees, transportation and other fringe benefits, long-term care, and health reimbursement arrangements (unless very specific rules are met by providing one in conjunction with a high deductible health plan). Benefits that defer compensation are also prohibited under cafeteria plan rules.

Cafeteria plans as a whole are not subject to ERISA, but all or some of the underlying benefits or components under the plan can be. The Patient Protection and Affordable Care Act (ACA) has also affected aspects of cafeteria plan administration.

Employees are allowed to choose the benefits they want by making elections. Only the employee can make elections, but they can make choices that cover other individuals such as spouses or dependents. Employees must be considered eligible by the plan to make elections. Elections, with an exception for new hires, must be prospective. Cafeteria plan selections are considered irrevocable and cannot be changed during the plan year, unless a permitted change in status occurs. There is an exception for mandatory two-year elections relating to dental or vision plans that meet certain requirements.

Plans may allow participants to change elections based on the following changes in status:

  • Change in marital status
  • Change in the number of dependents
  • Change in employment status
  • A dependent satisfying or ceasing to satisfy dependent eligibility requirements
  • Change in residence
  • Commencement or termination of adoption proceedings

Plans may also allow participants to change elections based on the following changes that are not a change in status but nonetheless can trigger an election change:

  • Significant cost changes
  • Significant curtailment (or reduction) of coverage
  • Addition or improvement of benefit package option
  • Change in coverage of spouse or dependent under another employer plan
  • Loss of certain other health coverage (such as government provided coverage, such as Medicaid)
  • Changes in 401(k) contributions (employees are free to change their 401(k) contributions whenever they wish, in accordance with the administrator’s change process)
  • HIPAA special enrollment rights (contains requirements for HIPAA subject plans)
  • COBRA qualifying event
  • Judgment, decrees, or orders
  • Entitlement to Medicare or Medicaid
  • Family Medical Leave Act (FMLA) leave
  • Pre-tax health savings account (HSA) contributions (employees are free to change their HSA contributions whenever they wish, in accordance with the their payroll/accounting department process)
  • Reduction of hours (new under the ACA)
  • Exchange/Marketplace enrollment (new under the ACA)

Together, the change in status events and other recognized changes are considered “permitted election change events.”

Common changes that do not constitute a permitted election change event are: a provider leaving a network (unless, based on very narrow circumstances, it resulted in a significant reduction of coverage), a legal separation (unless the separation leads to a loss of eligibility under the plan), commencement of a domestic partner relationship, or a change in financial condition.

There are some events not in the regulations that could allow an individual to make a mid-year election change, such as a mistake by the employer or employee, or needing to change elections in order to pass nondiscrimination tests. To make a change due to a mistake, there must be clear and convincing evidence that the mistake has been made. For instance, an individual might accidentally sign up for family coverage when they are single with no children, or an employer might withhold $100 dollars per pay period for a flexible spending arrangement (FSA) when the individual elected to withhold $50.

Plans are permitted to make automatic payroll election increases or decreases for insignificant amounts in the middle of the plan year, so long as automatic election language is in the plan documents. An “insignificant” amount is considered one percent or less.

Plans should consider which change in status events to allow, how to track change in status requests, and the time limit to impose on employees who wish to make an election.

See the original article Here.

Source:

Capilla D. (2017 February 07). Cafeteria plans: qualifying events and changing employee elections  [Web blog post]. http://blog.ubabenefits.com/cafeteria-plans-qualifying-events-and-changing-employee-elections