Option for Some to Renew Policies That Do Not Fully Meet ACA Standards

Updated March 2017 by our partners at United Benefits Advisors.

In the fall of 2013, the Department of Health and Human Services (HHS) announced a transitional relief program that allowed state insurance departments to permit early renewal at the end of 2013 of individual and small group policies that do not meet the “market reform” requirements of the Patient Protection and Affordable Care Act (ACA) and for the policies to remain in force until their new renewal date in late 2014.

On March 5, 2014, HHS released a Bulletin that extended transitional relief to permit renewals as late as October 1, 2016, allowing plans to remain in force until as late as September 30, 2017. On February 29, 2016, HHS released another Bulletin to permit renewals until October 1, 2017, with a termination date no later than December 31, 2017. On February 23, 2017, HHS released its Insurance Standards Bulletin Series, in which it re-extended its transitional policy. States may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2018; however, any policies renewed under this transitional policy must not extend past December 31, 2018.

The primary market reforms are the requirements that policies include the 10 essential health benefits, be valued at the “metal levels” (platinum 90%, gold 80%, silver 70%, or bronze 60%), and be community rated (which means that rates may only be based on age with a 3:1 limit, smoking status with a 1.5:1 limit, rating area and whether dependents are covered). Under the ACA, all non-grandfathered group health plans must ensure that annual out-of-pocket cost sharing (for example, deductibles, coinsurance and copayments) for in-network essential health benefits does not exceed certain limits; in February 2015, HHS clarified that the out-of-pocket limits apply to each individual, even those enrolled in family coverage

Not all existing policies automatically may or will be renewed. In addition to permission from the federal government, both the state insurance department and the insurance company must agree to renew these non-compliant policies. A list of state decisions as of March 2016 is available at healthinsurance.org.

States and insurers have the option to include some of the market reform requirements that the federal government says may be disregarded. States had the option to allow renewals of individual policies only, small group policies only, or both types of policies, and to allow this for 2015 only or for both 2015 and 2016. In 2016, these market reforms apply to mid-size employers (those with 50 to 100 employees) and states may extend the option to renew existing policies to those employers as well.

Requirements that Apply to Plans Renewed Under This Exception

See full download for corresponding data.

All newly-issued policies must meet all of the ACA requirements.

Insurers that choose to renew existing policies must send a notice to all individuals and small businesses each year that explains:

  • Any changes in the options that are available to them
  • Which of the market reforms would not be included in the renewed policy
  • The person’s potential right to enroll in a qualified health plan offered through a health insurance Marketplace and possibly qualify for financial assistance
  • How to access coverage through a Marketplace
  • The person’s right to enroll in health insurance coverage outside of a Marketplace that complies with the market reforms

Renewed policies will satisfy the individual’s requirement to have “minimum essential” coverage. It appears that each renewed policy will need to be evaluated to determine whether it meets minimum value (60%). Access to affordable, minimum value coverage through an employer will make the individual ineligible for a premium tax credit/subsidy. Rate increases will need to be reported, and in some cases reviewed.

3/10/17

Download the full UBA ACA Advisor 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


How Obama’s last healthcare legislation is further hurting the ACA’s chances of survival

Due to the most recent changes President Obama made to the ACA before leaving office, ACA repeal is looking more and more like a possibility. Take a look at this great article from Employee Benefits Advisors to see how the changes will affect the ACA repeal process by Craig Hasday

President Trump is delivering on what many had viewed as an unrealistic campaign promise: The repeal of Obamacare is right on track. In finalizing the budget, the GOP can now line out any ACA items with a fiscal impact, thanks to an executive order issued by Trump on his first day in office. By lining out the individual and employer penalty and eliminating some of the ACA taxes – voila – the ACA is gone.

The market reforms will stay, however (no pre-existing conditions, guaranteed issue coverage and dependents covered to age 26). But there is an enormous “if.” If the insurance carriers stay in the market.

One of the reasons the ACA is not working is the adverse selection issue. Insurance carriers must take all comers, and since the individual penalty for not obtaining coverage is full of loopholes, and not large enough to dissuade the young and healthy from rolling the dice, the risk pool has performed horrifically. That should be no surprise – I have been writing about it for years; a few examples here, here, here and here.

But if the individual penalty is repealed, it is going to get even worse. The healthy are going to leave and the risk pools will be left with a lot of expensive sick people who love the idea of guaranteed coverage, premiums and unlimited maximums.

The problem with QSEHRAs
The prior Congress and former President Obama didn’t help matters with the passage of the 21st Century Cures Act, which was signed into law in December 2016. This law allows small employers who don’t offer a group health plan to create a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). Employers can provide money to employees on a tax-free basis to pay for individual health insurance policies and to reimburse employees for certain medical expenses. This is going to make the small group pools worse and, my guess is, increase adverse selection even more.

Given the losses incurred to date and the additional selection being imposed on the healthcare system, the big question is will the health insurance carriers stay in the marketplace? If mainstream carriers refuse to offer policies – BOOM – the system implodes.

To quote the best show on Broadway, “Hamilton,” I would love “to be in the room where it happens.” This is going to be interesting to watch.

See the original article Here.

Source:

Hasday C. (2017 February 06). How Obama’s last healthcare legislation is further hurting the ACA’s chances of survival [Web blog post]. Retrieved from address http://www.employeebenefitadviser.com/opinion/how-obamas-last-healthcare-legislation-is-further-hurting-the-acas-chances-of-survival


Health Insurance Marketplace Notice and OMB Expiration Date

Stay in the know with the most recent ACA rules and regulations thanks to our partners at United Benefits Advisors (UBA),

Under the Patient Protection and Affordable Care Act (ACA), an applicable employer must provide a written notice about the Health Insurance Marketplace to each employee. The Department of Labor (DOL) provides a model notice for employers that offer a health plan and a model notice for employers that do not offer a health plan.

Can I continue to use the model notice if the OMB approval number has expired?

At the top right of each model notice, there is a Form Approved area that indicates the form’s OMB approval number and expiration date. Often, as the expiration date approaches, employers will ask whether they can continue to use the model notice after the OMB approval number expires and whether the DOL has indicated when it will update its form.

Employers can continue to use the model notice if the OMB approval number has expired. The DOL doesn’t usually give advanced notice when it will update its forms.

What is the OMB expiration date?

As clarification, the OMB expiration date applies to the OMB approval, not the form. This means that the expiration date does not apply to the form itself, just the Office of Management and Budget (OMB) approval of the form for data collection purposes. A form can still be used if the OMB approval number has expired; however, under the Privacy Act, the expiration of the OMB approval number can limit the information the government can require an individual to provide if the form is intended to collect information.

Also, sometimes an agency has secured an updated OMB approval, but simply hasn’t revised a form to reflect the updated OMB approval.

Even if an OMB approval number has expired, the failure of a form to display a currently valid OMB number does not invalidate the underlying regulation or law

Practically speaking, even if the DOL Model Notice’s OMB form approval date expires, the ACA still requires employers covered by the Fair Labor Standards Act to inform their employees of the following aspects of the Health Insurance Marketplace:

  • Information about the Health Insurance Marketplace.
  • That, depending on their income and what coverage may be offered by the employer, employees may be able to get lower cost private insurance in the Marketplace.
  • That, if they buy insurance through the Marketplace, employees may lose the employer contribution (if any) to their health benefits.

To download the full compliance alert click Here.


Qualifying Small Employer Health Reimbursement Arrangements FAQ

Stay up-to-date with the most recent ACA rules and regulations thanks to our partners at United Benefits Advisors (UBA),

On December 13, 2016, President Obama signed the 21st Century Cures Act (Cures Act) into law. The Cures Act provides a method for certain small employers to reimburse individual health coverage premiums up to a dollar limit through HRAs called “Qualified Small Employer Health Reimbursement Arrangements” (QSE HRAs). This provision will go into effect on January 1, 2017.

Unless an employer meets all the requirements for offering a QSE HRA, previous IRS guidance prohibiting the reimbursement of individual premiums directly or indirectly, after- or pre-tax, through an HRA, a Section 125 plan, a Section 105 plan, or any other mechanism, remains in full effect. Reimbursing individual premiums in a non-compliant manner will subject an employer to a Patient Protection and Affordable Care Act (ACA) penalty of $100 a day per individual it reimburses, with the potential for other penalties based on the mechanism of the non-compliant reimbursement.

Which employers may offer a QSE HRA?

  • Employers with fewer than 50 full-time and full-time equivalent employees (under ACA counting rules) that do not offer a group health plan.

Which employers may not offer a QSE HRA?

  • Employers with 50 or more full-time and full-time equivalent employees (under ACA counting rules).
  • Employers of any size that offer a group health plan

Which employees may participate?

  • Employers must offer the QSE HRA to all similarly situated employees.
  • It is acceptable to provide different reimbursement amounts to different employees within the reimbursement limits, as long as the variance is due to variant prices in the insurance policies in which the individual employees are enrolled.
  • It is not acceptable to provide different reimbursement amounts to employees based on employee classifications, seniority, job performance, wellness program incentives, or any other type of incentive/reward program.

What, if any, nondiscrimination rules apply?

  • Internal Revenue Code (IRC) Section 105 nondiscrimination rules apply, so employers must ensure that a QSE HRA does not discriminate in favor of highly compensated or key employees. This test must be satisfied every plan year.
  • It is best practice to run the test prior to the beginning of the plan year, several months before the end of the plan year, and at the close of the plan year.

What benefits can a QSE HRA pay for or reimburse?

  • Any documented healthcare expenses as defined by Section 213(d) of the IRC. Unlike traditional HRAs, a QSE HRA may reimburse individual premiums.

A QSE HRA can reimburse employees for premium costs for individual plans. Can a QSE HRA reimburse employees for premium costs for enrollment in a spouse’s or parent’s group health plan?

  • That is unclear at this time. Employers considering this should consult with their attorney. Risk averse employers should prohibit this.

A QSE HRA can reimburse employees for premium costs for individual plans. Are there requirements on where the policy is purchased?

  • No. Employees can be reimbursed for individual coverage that they purchase from a broker, or for coverage that they purchase in the Marketplace or on the Exchange.

How are expenses reimbursed?

  • The employee submits substantiated expenses to the claims administrator.

Are there limits on reimbursable expenses?

  • Yes. In 2017, the reimbursement may not exceed $4,950 annually for single coverage, and $10,000 annually for family coverage.
  • The amount is prorated by month for individuals who are not covered by the arrangement for the entire year.
  • The 2017 monthly limit for single coverage reimbursement is $412.
  • The 2017 monthly limit for family coverage reimbursement is $833.
  • The limits will be updated annually.

Will a QSE HRA impact an employee’s subsidy eligibility in the Marketplace?

  • Yes, if the QSE HRA offers affordable coverage, then an individual will not be subsidy eligible.
  • Potentially, if the QSE HRA offers unaffordable coverage. In that case, an individual’s subsidy eligibility would be reduced by the dollar amount provided for the month through the QSE HRA

How are QSE HRAs funded?

  • A QSE HRA can only be funded by an employer. Employees cannot contribute to QSE HRAs on a pre- or post-tax basis. Employers should avoid plan designs that provide incentive/reward money to employees through a QSE HRA that is not provided to all similarly situated employees on a uniform basis, or requires employees to meet additional requirements to “earn” the money.

How is affordability calculated for a QSE HRA?

  • Affordability will be determined by calculating the “net cost of coverage” to the employee.
  • Net cost of coverage is the amount an employee would pay for self-only coverage under the lowest cost silver plan offered in the Marketplace minus the reimbursement from the QSE HRA.
  • If the net cost of coverage is less than 9.69 percent of household income, coverage is affordable. If it is more costly, the coverage is unaffordable.

If an employee with a QSE HRA receives a subsidy, is the employer at risk for penalties?

  • No, because employers with fewer than 50 full-time and fulltime equivalent employees are not obligated to provide coverage under the ACA

Are QSE HRAs subject to COBRA?

  • No.

Are QSE HRAs subject to ERISA?

  • A QSE HRA is excluded from the ERISA Title I, Part 7 group health plan definition. The rest of ERISA may apply to QSE HRAs, although this issue remains undetermined by an administrative agency or court.

Do employers have any notice requirements if they offer a QSE HRA?

  • Yes. QSE HRA benefits have an annual notice requirement. Written notice must be provided to all eligible employees no later than 90 days prior to the beginning of the benefit year.
  • On February 27, 2017, the IRS issued Notice 2017-20 that delays the initial written notice deadline. The Treasury and IRS intend to issue guidance to provide eligible employers with additional time to furnish the initial required written notice to eligible employees; the extended deadline will be no earlier than 90 days following issuance of future guidance. Further, no penalties will be imposed for failure to provide the initial written notice before the extended deadline.

What information must be contained in the written notice?

  • The dollar figure the individual is eligible to receive through the QSE HRA.
  • A statement that the eligible employee should provide information about the QSE HRA to the Marketplace or Exchange if the employee has applied for an advance premium tax credit.
  • A statement that employees who are not covered by minimum essential coverage (MEC) for any month may be subject to penalty.

Does an employer that offers a QSE HRA have reporting requirements?

  • Yes. Employers sponsoring QSE HRAs are subject to ACA related reporting with Form 1095-B and 1094-B as the sponsor of MEC.
  • Employers sponsoring QSE HRAs must report money provided through a QSE HRA on an employee’s W-2 under the aggregate cost of employer-sponsored coverage.
  • It is unclear if the existing safe harbor on reporting the aggregate cost of employer-sponsored coverage for employers with fewer than 250 W-2s would apply, as arguably many of the small employers eligible to offer QSE HRAs would have fewer than 250 W-2s

To download the full compliance alert click Here.


Compliance Recap February 2017

Stay up-to-date with the most recent ACA regulations thanks to our partners at United Benefits Advisor (UBA)

February had relatively little activity in the employee benefits world because a new Secretary of the Department of Health and Humans (HHS) was recently confirmed and HHS started its rulemaking under the new administration.

On February 10, 2017, the U.S. Senate confirmed Rep. Tom Price as the new Secretary of HHS, who has a budget of more than $1 trillion, the largest budget of any Cabinet secretary. HHS administers the Patient Protection and Affordable Care Act (ACA), Medicare, and Medicaid, and oversees other programs and agencies.

The Centers for Medicare & Medicaid Services (CMS) extended its transitional policy for nongrandfathered coverage in the small group and individual health insurance markets. The Internal Revenue Service (IRS) delayed the deadline for small employers to provide its initial written notices to employees regarding Qualified Small Employer Health Reimbursement Arrangements (QSE HRAs). CMS proposed a rule on ACA market stabilization.

HHS issued its Annual Civil Monetary Penalties Inflation Adjustment to reflect required inflation-related increases to the civil monetary penalties in its regulations. The IRS released a letter that discusses retroactive Medicare coverage’s effect on HSA contributions. Also, the IRS announced that it will not automatically reject individual tax returns when the taxpayer failed to indicate continuous coverage, failed to claim an exemption from the individual mandate, or failed to pay the penalty.

UBA Updates

UBA released three new advisors in February:

  •  CMS’ Proposed Rule on ACA Market Stabilization
  • Medicare Part D: Creditable Coverage Disclosures
  • Health Insurance Marketplace Notice and OMB Expiration Date

UBA updated existing guidance:

  •  Qualified Small Employer Health Reimbursement Arrangements FAQ

CMS Allows States to Extend Life of “Grandmothered” or Transitional Health Insurance Policies

On February 23, 2017, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) released its Insurance Standards Bulletin Series, in which it re-extended its transitional policy for non-grandfathered coverage in the small group and individual health insurance markets.

States may permit issuers that have renewed policies under the transitional policy continually since 2014 to renew such coverage for a policy year starting on or before October 1, 2018; however, any policies renewed under this transitional policy must not extend past December 31, 2018.

If permitted by applicable state authorities, health insurance issuers may choose to continue certain coverage that would otherwise be cancelled, and affected individuals and small businesses may choose to re-enroll in such coverage.

As background, CMS’ transitional policy was first announced in November 14, 2013; CMS had most recently extended the transitional policy on February 29, 2016, for an additional year for policy years beginning on or before October 1, 2017, provided that all policies end by December 31, 2017.

Policies subject to the transitional relief are not considered to be out of compliance with the ACA’s single risk pool requirement or the following Public Health Service Act (PHS Act) provisions:

  • Section 2701 – relating to fair health insurance premiums
  • Section 2702 – relating to guaranteed availability of coverage
  • Section 2703 – relating to guaranteed renewability of coverage
  • Section 2704 – relating to the prohibition of pre-existing condition exclusions or other discrimination based on health status, with respect to adults, except with respect to group coverage
  • Section 2705 – relating to the prohibition of discrimination against individual participants and beneficiaries based on health status, except with respect to group coverage
  • Section 2706 – relating to non-discrimination in health care
  • Section 2707 – relating to comprehensive health insurance coverage
  • Section 2709 – relating to coverage for individuals participating in approved clinical trials

However, issuers can choose to adopt some of or all these provisions in their renewed policies.

IRS Delays Initial Notice Requirements for QSE HRAs

Under the 21st Century Cures Act, small employers that want to reimburse individual health coverage premiums through HRAs called “Qualified Small Employer Health Reimbursement Arrangements” (QSE HRAs) must provide annual written notice to all eligible employees no later than 90 days before the beginning of the benefit year.

On February 27, 2017, the Internal Revenue Service (IRS) issued Notice 2017-20 that delays the initial written notice deadline. The Department of the Treasury and the IRS intend to issue guidance to provide employers with additional time to furnish the initial notice to employees; the extended deadline will be no earlier than 90 days following the issuance of future guidance. Further, no penalties will be imposed for failure to provide the initial notice before the extended deadline.

CMS’ Proposed Rule on ACA Market Stabilization

On February 17, 2017, the Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to stabilize the health insurance market and address risks to the individual and small group markets. CMS proposes changes to guaranteed availability of coverage, network adequacy, essential community providers, open enrollment periods, special enrollment periods, continuous coverage, and standards for the Exchanges.

The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers’ plans because the changes affect standards that apply to issuers.

Public comments are due by March 7, 2017.

HHS Civil Monetary Penalties Increase

On February 3, 2017, the Department of Health and Human Services (HHS) issued its Annual Civil Monetary Penalties Inflation Adjustment to reflect required inflation-related increases to the civil monetary penalties in its regulations. Here are some of the adjustments:

  • Medical Loss Ratio report and rebating: The maximum penalty increases to $111 per day, per individual affected by the violation.
  • Summary of Benefits and Coverage: For failure to provide, the maximum penalty increases to $1,105 per failure.
  • HIPAA: The penalty range increases to a minimum penalty of $112 up to a maximum of $55,910 per violation, and the maximum penalty for all violations of an identical requirement in a calendar year increases to $1,677,299.

Most adjustments are effective for penalties assessed after February 3, 2017, for violations occurring after November 2, 2015. The HIPAA penalty adjustments are effective for penalties assessed after February 3, 2017, for violations occurring on or after February 18, 2009.

IRS Letter Regarding the Retroactive Medicare Coverage Effect on HSA Contributions

The Internal Revenue Service (IRS) recently released a letter regarding retroactive Medicare coverage and health savings account (HSA) contributions.

As background, 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.

Individual Mandate – IRS Will Not Reject Silent Returns

For 2016 returns, the Internal Revenue Service (IRS) intended to reject electronically filed “silent returns,” when the taxpayer failed to indicate continuous coverage on Line 61, failed to file a Form 8965 to claim an exemption from the individual mandate, or failed to pay the penalty.

On February 15, 2017, the IRS issued a statement that it would change course and process silent returns. This means that returns without a completed Line 61 will not be systemically rejected by the IRS at the time of filing. The IRS determined that allowing returns to be accepted for processing – when a taxpayer doesn’t indicate health insurance coverage status – is consistent with the January 20, 2017, Executive Order directing federal agencies to exercise authority and discretion to reduce potential burden under the ACA.

Per the IRS, the ACA’s provisions are still in force until changed by Congress; further, taxpayers remain required to follow the law and pay what they may owe. The IRS indicates that if it has questions about a return, it will follow up with correspondence and questions to taxpayers at a future date, after the filing process is complete.

Please be aware that this change in IRS policy for individual filers does not affect employer reporting.

To download the full compliance click Here.


9 questions employees have about ACA – and how to answer them

Have your employees been asking more questions about the ACA? Check out this great article from HR Morning about some of the question your employees might ask and how to answer them by Christian Schappel.

Even under the Trump administration, the Affordable Care Act (ACA) is still a real, enforceable law. You already know this. But do all of your employees? 

Chances are, once employees start getting their ACA-mandated 1095 forms from you in the next few weeks, some of them are going to have questions — à la: What is this? I thought Trump did away with Obamacare.

Here are some of the questions employees are asking — and are bound to ask — along with how HR can answer them:

1. Didn’t Trump repeal Obamacare?

No. While he has promised to “repeal and replace” the ACA, all he has done so far is sign an executive order that directs federal agencies to grant certain exemptions from the law, as well as waive any requirements that they’re able to by law.

Surely, the executive order will eventually weaken some parts of the ACA — and maybe even lead to some repeals — but nothing concrete has happened yet. As a result, employers still have to comply with the “play or pay” mandates, and individuals still have to carry health insurance or risk penalties.

2. Didn’t Republicans in Congress start repealing the law?

No. Republicans in Congress don’t have the votes they need to repeal the ACA outright. They can’t avoid a Democratic filibuster.

As a result, what they have done is state their intention to attack the law through a process known as reconciliation. It’ll allow Republicans to vote on budgetary pieces of the law — like the individual mandate (which is imposed with a tax) and healthcare subsidies — without giving the Democrats a chance to filibuster.

The problem for Republicans, though, is that reconciliation limits how they can reshape (or repeal) Obamacare.

3. Then when will Obamacare be repealed?

All you can tell employees right now is that it hasn’t happened, and there is no clear answer on when (or even if) it will happen in its entirety.

However, Republicans recently made two things clear at its recent annual retreat in Philadelphia:

  • They plans to use the reconciliation process to “repeal and replace” parts of the law.
  • The GOP will bring a final reconciliation package to the floor of the House of Representatives by late February or early March.

Chances are, we’ll find out more once Trump’s cabinet picks — specifically his pick to lead the Department of Health and Human Services — have been confirmed.

4. If I have a pre-existing condition, will I have trouble finding a health plan?

President Trump, as well as Republicans in Congress, have stated their intentions to attempt to keep two popular requirements of the ACA in place:

  • The need for insurance companies to offer coverage to individuals with pre-existing conditions.
  • The ability for children to be able to stay on their parents’ health plans until age 26.

Form 1095 questions

5. What is this form?

Form 1095 is a little like Form W-2: The employer or insurer sends one copy to the Internal Revenue Service (IRS) and one copy to the employee. It describes whether the person obtained the minimum required level of health insurance under the ACA in 2016.

It also informs the IRS, and the employee, if the person was eligible for a premium tax credit in 2016.

6. If Obamacare is going to be repealed, do I still need this form?

Yes. The reason is because the ACA was in effect for all of 2016, and this form is for reporting information that reflects what happened in 2016.

7. What do I have to do with it?

In most cases, no action will be necessary. When filing taxes for 2016, individuals will be asked if they obtained minimum insurance coverage. This form will help individuals answer that question.

8. Do I have to wait to receive the form to file my taxes?

Again, in most cases, the answer is no. Only those who received insurance via an exchange or the “marketplace” will have to wait for their 1095 to file their taxes.

If a person received insurance through an employer, that person doesn’t have to wait for Form 1095 to file his or her taxes, assuming the person already knows whether or not they had minimum coverage throughout the year. In that case, the person can just keep the form for their records.

If a person’s unsure whether he or she had minimum coverage for the entire year, that person can wait for the form to file their taxes or ask their employer whether he or she had minimum coverage.

9. How will I receive the form(s)?

Individuals may receive their form(s) in one of three ways:

  • mail
  • hand delivery, or
  • electronically (if they have consented to receive it electronically).

See the original article Here.

Source:

Schappel C. (2017 February 1). 9 questions employees have about ACA- and how to answer them [Web blog post]. Retrieved from address http://www.hrmorning.com/employee-questions-aca-obamacare-repeal-answers/


Medicare Part D: Creditable Coverage Disclosures

Information courtesy of our partner, United Benefits Advisors.

Entities such as employers with group health plans that provide prescription drug coverage to individuals that are eligible for Medicare Part D have two major disclosure requirements that they must meet at least annually:

  • Provide annual written notice to all Medicare eligible individuals (employees, spouses, dependents, retirees, COBRA participants, etc.) who are covered under the prescription drug plan.
  • Disclose to the Centers for Medicare and Medicaid Services (CMS) whether the coverage is “creditable prescription drug coverage.”

Because there is often ambiguity regarding who in a covered population is Medicare eligible, it is best practice for employers to provide the notice to all plan participants.

CMS provides guidance for disclosure of creditable coverage for both individuals and employers.

 

 

Who Must Disclose?

These disclosure requirements apply regardless of whether the plan is large or small, is self-funded or fully insured, or whether the group health plan pays primary or secondary to Medicare. Entities that provide prescription drug coverage through a group health plan must provide the disclosures. Group health plans include:

  • Group health plans under ERISA, including health reimbursement arrangements (HRAs), dental and vision plans, certain cancer policies, and employee assistance plans (EAPs) if they provide medical care
  • Group health plans sponsored for employees or retirees by a multiple employer welfare arrangement (MEWA)
  • Qualified prescription drug plans

Health flexible spending accounts (FSAs), Archer medical savings accounts, and health savings accounts (HSAs) do not have disclosure requirements. In contrast, the high deductible health plan (HDHP) offered in conjunction with the HSA would have disclosure requirements.

There are no exceptions for church plans or government plans.

 


Determining if Coverage is Creditable

The Medicare Modernization Act (MMA) provides that coverage is creditable if it provides prescription drug “coverage of the cost of the prescription drugs the actuarial value of which . . . to the individual equals or exceeds the actuarial value of standard prescription drug coverage.”

Plans can determine if they are creditable or not by meeting the plan design safe harbor or by actuarial determination. Practically speaking, many carriers for fully insured plans provide employers with creditable coverage information; however, employers are still responsible for the applicable disclosures to participants and CMS.

CMS guidance offers a design-based safe harbor for determining creditable coverage status. Specifically, a plan is deemed to be creditable if it:

  1. Provides coverage for brand and generic prescriptions;
  2. Provides reasonable access to retail providers;
  3. Is designed to pay on average at least 60 percent of participants’ prescription drug expenses; and
  4. Satisfies at least one of the following:
    1. The prescription drug coverage has no annual benefit maximum benefit or a maximum annual benefit payable by the plan of at least $25,000.
    2. The prescription drug coverage has an actuarial expectation that the amount payable by the plan will be at least $2,000 annually per Medicare eligible individual.
    3. For entities that have integrated health coverage, the integrated health plan has no more than a $250 deductible per year, has no annual benefit maximum or a maximum annual benefit payable by the plan of at least $25,000, and has no less than a $1 million lifetime combined benefit maximum.

An integrated plan is any plan of benefits that is offered to a Medicare eligible individual where the prescription drug benefit is combined with other coverage offered by the entity (for example, medical, dental, vision, etc.) and the plan has all of the following plan provisions:

  • A combined plan year deductible for all benefits under the plan
  • A combined annual benefit maximum for all benefits under the plan
  • A combined lifetime benefit maximum for all benefits under the plan

If a plan does not meet the safe harbor based on its design, it will need to obtain an actuarial determination. Only plans that are seeking the retiree drug subsidy must provide CMS with the actual attestation documents from the actuary; however, employers should consider retaining the documents as best practice.

 

 

Disclosures to Plan Participants

The MMA penalizes individuals for late enrollment in Medicare Part D if they do not maintain “creditable coverage” for a period of 63 days or longer following their initial enrollment period for drug benefits. Therefore, individuals must be informed if the employer-provided coverage is, in fact, creditable. CMS provides model notices for creditable coverage and non-creditable coverage disclosures in both English and Spanish.

Disclosures to individuals must be made:

  1. Prior to the Medicare Part D Annual Coordinated Election Period (ACEP) which runs from October 15 through December 7 of each year;
  2. Prior to an individual’s Initial Enrollment Period (IEP) for Medicare Part D;
  3. Prior to the effective date of coverage for any Medicare eligible individual that joins the plan;
  4. Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable; and
  5. Upon request by the individual.

If the creditable coverage disclosure notice is provided to all plan participants annually, prior to October 15 of each year, CMS will consider items 1 and 2 above to be met.

 

 

Method of Delivery

Employers can provide participants with separate notices, or, under certain conditions, can provide the notice with enrollment materials or summary plan descriptions (SPDs).

If the disclosure is provided with other information (such as in the SPD), it must be “prominent and conspicuous,” which means it must be in “at least 14 point font, in a separate box, bolded, or offset on the first page” of the other information provided.

Tip: An SPD is the document provided to participants to explain their rights and obligations under the plan. It is intended to provide a summary of the plan’s terms and should be written in a way the average participant can understand it. However, it has become increasingly common for plans to use a combination plan document/SPD and most Department of Labor (DOL) offices permit this. The group insurance policy or certificate is not an SPD.

Employers may provide the notice by mail, or electronically if electronic distribution method requirements are met. Disclosures should not be handed out in person.

Recipients of electronic disclosures are divided into two groups – those with work-related computer usage, and those who do not use computers as part of their jobs. An employee is considered to have work-related computer usage if:

  • The employee is able to access documents that are sent in electronic format at any location where the employee performs his or her job duties, and
  • The employee is expected to access the employer’s electronic information system as part of his or her key job duties

An employee who uses a computer as part of his or her job does not need to consent to receive disclosures electronically.

Individuals who do not access a computer as part of their work for the employer must specifically consent to receive disclosures electronically. This would include retirees, as well as active employees in many types of jobs. The written consent requirements are fairly complicated. Prior to providing consent, an individual must be given a clear statement that explains:

  • The types of documents to which the consent will apply
  • That the consent can be withdrawn at any time without charge
  • The procedures for withdrawing consent and for updating the address used for receipt of electronically furnished documents
  • The right to request and obtain a paper version of an electronically distributed document, and whether the paper version will be provided at no charge
  • The hardware or software needed to access and retain the documents delivered electronically

The individual must provide an email address for delivery of the documents. The individual must provide consent in a manner that demonstrates his or her ability to access the information in the electronic format that will be used, so many employers require that the consent be provided electronically. An employer may not simply provide a kiosk for employees who do not use computers as part of their jobs. Likewise, it may not provide thumb drives of documents to employees who do not use computers as part of their jobs unless it obtains the employee’s consent.

 

 

Delivery to Spouses and Dependents

If an employee and an employee’s spouse or dependents are covered under the same plan, a single notice is sufficient for the eligible individual and the individual’s family. However, if an employer knows that a spouse or dependent is Part D eligible and has a different address, the employer is obligated to send a separate notice to the spouse or dependent.

 

 

Disclosures to CMS

Employers must provide CMS with a “Disclosure to CMS Form” that is completed and sent electronically through the CMS website. The form must be provided annually and:

  1. For plan years that ended in 2006, no later than March 31, 2006
  2. For plan years that end in 2007 and beyond, within 60 days after the beginning date of the plan year for which the entity is providing the form
  3. Within 30 days after the termination of the prescription drug plan
  4. Within 30 days after any change in the creditable coverage status of the prescription drug plan

CMS provides an instruction guide with screen shots for completing the form online. Employers should gather the information necessary to complete the form prior to beginning to complete the form, as some of the questions may require preparation on the part of the employer. For example, employers must estimate how many Part D eligible individuals they expect to be covered as of the first day of the plan year.

 

Download the UBA Compliance Advisor here.


Who Are You Benchmarking Your Health Plan Against?

Great article about the importance of benchmarking your employer health plans from our partner, United Benefit Advisors (UBA) by RJ Nelson

Many employers benchmark their health plan against carrier provided national data. While that is a good place to start, regional cost averages vary, making it essential to benchmark both nationally and regionally—as well as state by state. For example, a significant difference exists between the cost to insure an employee in the Northeast versus the Central U.S.—plans in the Northeast continue to cost the most since they typically have lower deductibles, contain more state-mandated benefits, and feature higher in-network coinsurance, among other factors.

Drilling down even more, comparing yourself to your industry peers can tell a very different story.

Consider a manufacturing plant in Georgia that offers a PPO. Its premium cost for single coverage is $507 per month. Compare this with the benchmarks for all plans and you can see that it is $2 per month less than the national average. When compared with other PPOs in the Southeast region, this employer’s cost is actually $2 more than the average. This employer’s cost appears to be higher or lower compared with national and regional benchmarks, depending on which benchmark is used. Yet this employer’s cost is actually higher than its closest peers’ costs when using the state-specific benchmark, which in Georgia is $468. Bottom line, this employer’s monthly single premium is actually $39 more than its competitors in the state.

As our CEO, Les McPhearson, recently stated, “Benchmarking by state, region, industry, and group size is critical. We see it time and time again, especially with new clients. An employer benchmarks their rates nationally and they seem at or below average, but once we look at their rates by plan type across multiple carriers and among their neighboring competitors or like-size groups, we find many employers leave a lot on the bargaining table.”

See the original article Here.

Source:

Nelson R. (2017 January 27). Who are you benchmarking your health plan against? [Web blog post]. Retrieved from address http://blog.ubabenefits.com/who-are-you-benchmarking-your-health-plan-against


What Trump’s ACA executive order means for employers

Great article from our partner, United Benefit Advisors (UBA) by Nick Otto

President Donald Trump wasted no time in fulfilling one promise he made time and again on his campaign trail in undoing the Affordable Care Act on day one in office.

On Friday, Trump issued an executive order directing members of his administration to take steps that will facilitate the repeal and replacement of the ACA, but experts note employers should continue with business as usual until solid formalities come out.

From an employer’s perspective, “every regulation they need to comply with, they still need to until they hear differently,” says Steve Wojcik, vice president of public policy at the National Business Group on Health.

What Trump’s order did was send a signal to everyone that his administration is prioritizing to repeal major parts of the ACA and to replace it with something else.

“In terms of specifics, nothing changes now, and it makes it clear that some changes may take longer than others because of the regulatory process to revise existing regulations,” Wojcik notes.

This specific order reiterates that it is administration policy to seek the repeal and replacement of the ACA and directs relevant agencies like Health and Human Services, Treasury and Labor, to utilize their authorities under the act “to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market,” according to the order.

But the different agencies will have to follow the law that requires notice and commenting periods before any final regulation is put in place, adds Chatrane Birbal, a government relations senior advisor with the Society for Human Resource Management.

“Trump’s administration is drawing a line in the sand,” she says. “While Congress is working on making its changes on a legislative front, Trump wants to move forward with the regulatory side.”

The most immediate focus will be whether the IRS acts to delay the employer reporting requirements under the employer shared responsibility provisions of the law, points out Joy Napier-Joyce, principal and leader of the employee benefits group at labor & employment law firm Jackson Lewis P.C.

“Employer reporting is key to assessing employer penalties under the employer mandate, [but it] represents a significant burden to employers and the deadlines are fast approaching,” she says. Similarly, Napier-Joyce says, “we have not seen enforcement of employer penalties under the employer mandate to date.”

Especially given Trump’s announcement Monday of a hiring freeze for federal workers and the known shortage of resources at the IRS, employers will be eager to glean hints as to any non-enforcement stances, she says. Much of the requirements under the employer mandate have been formalized through statute and regulation, so in order to effectively and completely reverse course, formal processes will need to be followed, which will in turn take time.

“For now, employers should stay the course, but stay tuned as we await how and when the agencies, particularly the IRS, choose to exercise discretion,” Napier-Joyce adds.

One issue Birbal advises keeping an eye on is that the executive order calls for greater flexibility to states.

“This could be a concern for employers because it doesn’t recognize ERISA preemption,” she notes. “It has provided employers and employees with a workable regulatory framework for benefits, offering uniform set of benefits to employees throughout out the U.S.”

“We believe the flexibility and certainty of the ERISA framework already in place has been a success to the employers sponsored system and we hope that’ll be maintained,” she adds.

Another area to note, says NBGH’s Wojcik, is how providers could be impacted by the order.

“There are a lot of punitive delivery reform regulations that are in various stages of completion or haven’t been issued,” he says. “To the extent that that affects hospitals and physicians, it could be an area where you see a lot of impact besides issues like the individual mandates and excise tax.”

As for policies that were still in the works, “if something hasn’t come out yet, it’s likely that it won’t come out ever based on executive order,” Wojcik notes.

See the original article Here.

Source:

Otto N. (2017 January 23). What trump’s ACA executive order means for employers [Web blog post]. Retrieved from address http://www.benefitnews.com/news/what-trumps-aca-executive-order-means-for-employers?feed=00000152-18a4-d58e-ad5a-99fc032b0000