Changes to FF-SHOP Enrollment for Groups

For a small business in a state with a Federally Funded SHOP marketplace, changes have recently been release to ensure employers can take advantage of SHOP coverage and tax credits as soon as possible in 2014.

Small employers in 2014 will now be able to enroll their employees in SHOP coverage with the assistance of an agent, broker, or insurance company that offers a certified SHOP plan and who has agreed to conduct enrollment according to HHS standards.

This process called “direct enrollment” is similar to how most small employers currently get insurance today. A group will not be required to apply for SHOP eligibility before enrolling, or use Healthcare.gov, unless they would like to see information on plan options, including what insurance companies offer SHOP Qualified Health Plans in their area.

It is anticipated that small employers will have online access to an online SHOP Marketplace by November 2014. Also, effective on or after January 1, 2015, small employers will be able to offer their employees a choice of plans on the SHOP Marketplace from multiple insurers while continuing to remit a single monthly payment.

Please contact our office if your group is interested in reviewing the FF-SHOP plans available to your company.

Waiting Period Changes in 2014

As 2014 nears, small employers should begin to prepare for  more and more of the Affordable Care Act (ACA) requirements they will need to comply with.

One of the important changes that will affect groups on their first renewal date in 2014 is the change of waiting periods on their insurance contracts. Effective in 2014, no benefit eligibility waiting period can exceed 90 days. This means that the large majority of employers will need to revise their current insurance contracts at their 2014 renewal to ensure they are in compliance. Most insurance carriers will not automatically update the group’s waiting period so it is in compliance without guidance from the employer, so be sure to review any carrier requirements during your renewal process.

The longest waiting period that a group can implement for insurance benefits is either one where benefits will begin on the 91st day of full time employment or the 1st of the month following 60 days of employment. Each employer needs to evaluate the pros and cons of each type of waiting period as it will affect no only how the insurance carriers bill you for the premiums due, but also how the employee is added and removed from the policy at their termination.

Employers should also review their Section 125 Cafeteria Plan to ensure it all reflect the most accurate benefit information as well as the updated waiting period.

Please contact our office for further guidance on the ACA requirements that will affect your business and how you can ensure you are compliant.

Florida Minimum Wage to Increase on January 1, 2014

Florida’s minimum wage is currently $7.79 per hour. Beginning January 1, 2014, Florida’s minimum wage will increase to $7.93 per hour, which is a 1.7% (or $0.14) increase from last year.

Employers of “tipped employees” who meet eligibility requirements for the tip credit under the Fair Labor Standards Act (FLSA) may count tips actually received as wages under the FLSA. The employer, however, must pay “tipped employees” a direct wage. Effective January 1, 2014, the new minimum wage for tipped employees should become $4.91 per hour plus tips.

Florida law requires a new minimum wage calculation each year on September 30, based on the Consumer Price Index. If that calculation is higher than the federal rate (which is currently $7.25 per hour), the state’s rate would take effect the following January.

Please contact our office if you need a copy of the 2014 Florida Minimum Wage Poster. This will need to be posted in a visible place for all employees by January 1, 2014.

Health Care Reform: What Do Employers Need to Do Now?

Employers struggling with how to meet the Affordable Care Act (ACA) regulations received some relief in July 2013 when the U.S. Treasury announced a one-year delay on implementation of the “pay or play” mandate. This mandate would have required most employers with the at least 50 full-time equivalent employees to provide affordable, minimum value health insurance coverage to their full-time employees by January 1, 2014, or pay a penalty.

However, the delay on implementation of the “pay or play” mandate did not delay the individual mandate, which will require most individuals to purchase health insurance coverage in 2014, or pay a tax penalty. The Treasury has also indicated that the delay in the employer mandate will not affect an employee’s access to the premium tax credits available to individuals who purchase coverage through the Exchange beginning January 1, 2014.

There are many other ACA provisions that will require compliance by January 1, 2014, including:

• Minimum value compliance for employer-sponsored group health plans still needs to be determined for the 2014 plan year. This information is reported both in written notices about the new health insurance exchanges, (which most employers should have distributed by October 1, 2013), and in summaries of benefits and coverage (aka SBCs)
• New fees and assessments, such as the PCORI and transitional reinsurance fees and health insurer tax.
• Summaries of benefits and coverage (SBCs) must be updated, prepared and distributed for 2014 during open enrollment to everyone eligible for benefits, as well as new hires and anyone experiencing a qualifying event during the plan year
• Elimination of annual dollar limits on essential health benefits under group health plans, beginning January 1, 2014.
• No more pre-existing condition exclusions for adults as well as children for plan years beginning in 2014.
• Grandfathered health plans can no longer exclude adult children under age 26 who have access to other employment-based coverage, effective January 1, 2014.
• Benefit coverage waiting periods can’t be longer than 90 days effective for plan years beginning in 2014.
• Coverage of clinical trials is required for non-grandfathered group health plans, along with prohibition on discrimination based on participation in a clinical trial.
• New wellness incentive rules for plan years beginning in 2014.
• Maximum out-of-pocket limitation will prohibit, for both insured and self-insured non-grandfathered plans, out-of-pocket limits that that exceed $6,350 (self) and $12,700 (family) coverage, for plan years beginning in 2014.

So, What Should Employers Be Doing Now?

Employers should first make sure their plans comply, or will comply in 2014, with all ACA provisions that have not been delayed. Next, employers should plan for eventual application of the pay or play mandate to their workforce. This should include:

• For a smaller employer, confirming whether or not it will meet the threshold to be subject to the “pay or play” mandate in 2015, particularly if the organization could be considered under common control with other entities that share some common ownership.
• Confirming how the employer will comply with the mandate—whether it will pay or play and how to implement its compliance strategy in 2015.
• If 2014 coverage expansions were planned to achieve compliance, deciding whether to proceed, delay until 2015 or consider another compliance strategy.
• Identifying which employees are full-time, seasonal or variable hour employees.
• Considering whether and how to utilize the safe harbor “look-back measurement method” of determining full-time status of some or all ongoing employees or new variable hour and seasonal employees (which would include selecting appropriate measurement, administrative and stability periods).

The one-year delay also gives employers more time to see whether changes in the law may relieve them from expanding coverage to workers who average more than 30 hours per week or perform only seasonal labor. As of mid -September, at least four bills had been introduced to change the full-time employee standard to 40 hours. At this point, the chances of passage are unclear, so this will be an important issue to watch.

While the delay in the pay or play mandate gives employers additional time, the clock is ticking for many other ACA compliance efforts, and employers should be prepared and seek guidance now.

Changes Coming for Small Business Health Care Tax Credit

For tax years 2010 – 2013, eligible small employers are entitled to a 35% tax credit for health insurance premiums they pay for employees. Tax-exempt entities are eligible for a 25% credit.

To qualify for the credit, an employer must:

• Have fewer than 25 full-time equivalent (FTE) employees for the tax year

   

• Pay average annual wages of less than $50,000 per FTE

   

• Pay no less than 50% of the premium for qualifying employee health insurance

   

Employers with less than 10 FTEs and average annual wages of $25,000 or less are eligible for the full credit. There is a phase-out of the credit for employers that have between 10 and 25 FTEs or average annual wages between $25,000 and $50,000.

All employers calculate the credit using IRS Form 8941, Credit for Small Employer Health Insurance Premiums. Taxable employers claim the credit on their federal tax return and can apply the credit to both regular and alternative minimum tax. Tax-exempt employers claim the credit by filing Form 990-T, Exempt Organization Business Income Tax Return, and can receive a refundable credit up to the amount of the employer’s payroll taxes.

Changes in 2014

In 2014, the credit will continue to be available, but with significant modifications. Employers will only be eligible for the credit if they purchase health insurance through the new Small Business Health Options Program (SHOP). The SHOP is one component of the internet-based health insurance marketplace, also known as an exchange, which launches on Oct. 1, 2013.

Other upcoming changes include:

• The maximum credit increases to 50% (or 35% for tax-exempt organizations)

   

• The $50,000 and $25,000 average annual dollar amounts will be indexed for inflation

   

• The credit is based on the lesser of the employer’s actual premium payments or the average premiums in the small group market in its employees’ rating area

   

• The credit is only available for two consecutive tax years after 2013, but it can be carried back or carried forward

Medicare Part D Notice Required Before October 15th

This is a reminder that the deadline to distribute the Annual Notice of Creditable Coverage required under Medicare Part D is rapidly approaching. This notice informs participants whether the prescription drug coverage offered under your health plan constitutes creditable or noncreditable coverage. As the Medicare Part D annual enrollment period now runs from October 15 to December 7, you must distribute the notices before October 15.

Employers who sponsor a health plan offering prescription drug benefits must provide an annual notice to all Medicare-eligible participants that explains whether the prescription drug benefits offered under the plan are at least as good as the benefits offered under the Medicare Part D plan. The only employers exempt from this requirement are those that establish their own Part D plan or contract with a Part D plan.

The Centers for Medicare and Medicaid Services (CMS) has posted forms and instructions for providing this notice. The forms were last updated in 2011. They are available, both in English and Spanish.

The Notice of Creditable Coverage must be provided:

• At least once a year before October 15 (the start of the annual Medicare Part D enrollment period)
• Whenever a Medicare-eligible employee, spouse or dependent enrolls in your health plan
• Whenever there is a change in the creditable or non-creditable status of your health plan’s prescription drug coverage
• Whenever an individual requests the notice

Because it is difficult to keep track of which employees (and their spouses or dependents) are eligible for Medicare benefits, you may want to consider making the Notice a part of your new-hire enrollment materials and your annual open enrollment materials. If distributed before October 15, this should take care of the first two bullet points above.

Remember that you must also submit a Disclosure to CMS Form each year, reporting whether your prescription drug coverage is creditable or non-creditable. This form must be submitted electronically within 60 days of the beginning of each plan year (i.e. if you are on a calendar year, you must submit the form by March 1, 2014).

FAQs for Federally Facilitated Marketplace (FF-SHOP) on Tobacco Rating

CMS recently issued a list of FAQs regarding the Federally Facilitated Marketplace (FF-SHOP aka Marketplace aka Exchange) and how they will handle the issue of tobacco rating for medical plans.

Q1: If an employee or an employee’s dependent obtaining coverage through the FF-SHOP uses tobacco, how can the employee or dependent avoid the tobacco premium rating surcharge?

A1: The FF-SHOPs will not impose the tobacco rating surcharge at the time of initial enrollment (or re-enrollment) if the employee or dependent, as applicable, agrees at the time of enrollment (or renewal or re-enrollment) to participate in a wellness program meeting the standards of section 2705 of the Public Health Service Act, such as a tobacco cessation program.

Q2: If an employee or enrollee’s dependent who is already enrolled in coverage through the FF-SHOP decides to participate in a wellness program in the middle of the plan year after initially declining to participate, will his/her premium be reduced immediately or retroactively to the time of enrollment?

A2: In the FF-SHOPs, an employee’s or employee’s dependent’s premium will be established for a period of one year upon enrollment, renewal, or re-enrollment of that employee or dependent. At that time, the enrollee or dependent can agree to participate in a wellness program to avoid the tobacco premium surcharge. If the employee or dependent does not agree at that time to participate in such a wellness program, the employee/dependent will have an opportunity to avoid the tobacco premium surcharge upon renewal or re-enrollment.

DOL Announced Companies Will Not Be Fined If They Don’t Notify Employees About Exchange

As a business owner, it is important to understand how the Affordable Care Act may affect your business. However, with so many misconceptions about about Health Care Reform works, this can be difficult.

A common myth is that business owners will be fined if they do not provide notification to their employees about the new Health Insurance Marketplace.

If your company is covered by the Fair Labor Standards Act (FLSA), you must provide a written notice to your employees about the Health Insurance Marketplace (aka Exchange) by October 1, 2013, however the Department of Labor has announced is no fine or penalty currently under the law for failing to provide this notice.

For more information on the Exchange notice, please contact our office or review a previous post on this topic.

FAQ on the Health Insurance Marketplace and Income Verification

The following is a frequently asked question recently released by CMS regarding the Marketplace and Income Verification for the purpose of advance payment of the premium tax credit and cost sharing reductions.

Q: Will Marketplaces verify the income of consumers as part of the eligibility process for advance payments of the premium tax credit and cost sharing reductions?

A: Yes. The Marketplaces will use data from tax filings and Social Security data to verify household income provided on an application, and in many cases, will also use current wage information that is available electronically. The multi-step process will begin when an applicant applies for insurance affordability programs (such as the advance payments of the premium tax credit and cost sharing reductions) through the Marketplace and affirms or inputs their projected annual household income. The applicant’s inputted projected annual household income is then compared with information available from the IRS and Social Security Administration (SSA). If the data submitted as part of the application process cannot be verified using IRS and SSA data, then the information is compared with wage information from employers provided by Equifax. If Equifax data does not substantiate the inputted information, the Marketplace will request an explanation or additional documentation to substantiate the applicant’s household income.

When documentation is requested, the Affordable Care Act and implementing regulations specify that if an applicant meets all other eligibility requirements, he/she will be provided with eligibility for advance payments of premium tax credit and cost sharing reductions based on the inputted projected annual household income for 90 days (which may be extended based on good faith), provided that the tax filer attests to the Marketplace that he/she understands that any advance payments of the premium tax credit paid on his/her behalf are subject to reconciliation. If documentation is requested and is not provided within the specified timeframe, regulations specify that the Marketplace will base its eligibility determination on IRS and SSA data, unless IRS data is unavailable. In this case, the Marketplace will discontinue any advance payments of the premium tax credit and cost sharing reductions.

Please note that applicants for advance payment of the premium tax credit and cost sharing reductions must attest, under penalty of perjury, that they are not providing false or fraudulent information. In addition to the existing penalties for perjury, the Affordable Care Act applies penalties when an individual fails to provide correct information based on negligence or disregard of program rules, or knowingly and willfully provides false or fraudulent info. Moreover, the IRS has said they will reconcile advance payments of the premium tax credit when consumers file their annual tax returns at the end of the year, and it will recoup overpayments and provide refunds when appropriate, subject to statutory limits.  

CMS Answers Key FF-SHOP Questions from Small Employers

Small businesses may participate in several federally facilitated Small Business Health Option Program (SHOP) exchanges – for example, if an employer has offices in different states – but each small employer is limited to establishing one FF-SHOP account per state.

If an employer has  worksites in several states, it may (1) establish an account in each state where the company has a primary work location for workers; or (2) it may establish an account in one state and use that to provide health insurance for all members of the group. If it does establish accounts in several states, it must submit a separate report on the participation rate to each FF-SHOP.

An employer is considered to be a small employer eligible for SHOP coverage if its average number of employees is 50 or fewer. Employers participating in the FF-SHOP must offer coverage to all full-time employees, defined as those working 30 or more hours per week on average.

The SHOP system is a way for employers to help satisfy health reform’s mandate for individuals to obtain coverage or pay extra taxes. Furthermore, most (34 out of 50, not including the District of Columbia) states will house (but not run) FF-SHOP exchanges.

In March 2013, the CMS released final rules that described the 70% participation requirement for small employers. Under those rules, insurers may deny coverage to small employers that fail to meet the minimum participation requirements.

Minimum Participation

Insurers may impose a 70% workforce participation requirement for small employers to partake in FF-SHOP coverage. In the first open enrollment period (Nov. 15 through Dec. 15, 2013), however, workers can obtain coverage on an interim basis even if an employer falls below the minimum participation amount, according to CMS. On renewal one year later, however, insurers will be able to invoke the participation requirement. State law may impose a different minimum participation requirement. Small employers are required to keep records of coverage held by workers to substantiate minimum participation and to ensure that workers do not have double coverage.

Other Highlights

Here are a few other policies small employers will want to know when considering group coverage with an FF-SHOP:

• The employer’s principal business address will determine premium rate factors, not the worker’s home address

   

• The FF-SHOP will not allow varying coverage for different classes of employees, whether they are owners, salaried or hourly

   

• The FF-SHOP exchanges will allow for coverage for retirees, but they must pay the same contribution rate as active employees

   

• COBRA enrollees are eligible and they are included in minimum participation rate calculations. Their premiums will be calculated based on health care reform’s allowed rating factors- age & tobacco use

   

• Insurers are responsible for making sure that Summary of Benefits and Coverage (SBCs) are given to small employer group plan sponsors and members

   

• If an employer group in the FF-SHOP allows coverage of domestic partners but an insurer on the exchange does not, then the domestic partner may be added as a dependent and the insurer would be expected to cover the partner as a dependent according to CMS

   

• Employers will be notified of the option to renew SHOP coverage 90 days before the end of the plan year. They have that time to decide whether to continue with existing coverage and help employees enroll or renew. If the employer elects to stay with the same “qualified health plan” employees can be automatically renewed into that plan.