Released 4/2/13, the Obama Administration is delaying a key portion of the federally-run SHOP Marketplace, in which small businesses can offer a choice of health plans to their employees through the public marketplace. As a result, small businesses will be limited to offering a single plan through the federally-run SHOP Marketplace until 2015.
The multi-place choice option was supposed to become available to small employers via the federally-run SHOP Marketplace in January 2014. But administration officials said they would delay it until 2015 in the 33 states where the federal government will be running the SHOP insurance marketplaces.
Many feel this delay will “prolong and exacerbate healthcare costs that are crippling 29 million small businesses” according to a recent NY Times article.
What is the SHOP Marketplace?
As part of the Affordable Care Act (ACA), states are required to provide a Group Market Health Insurance Exchange for businesses (called the Small Business Health Options Program or “SHOP”). The SHOP Marketplace is essentially a public group health insurance exchange that will be available for small businesses starting January 1, 2014. The new program was designed to simplify the process of finding health insurance for small businesses and applying any applicable tax credits that an individual may qualify for.
As with the individual health insurance marketplace, all states have three options for offering a SHOP marketplace: (1) create their own state-run marketplace, (2) join a federal-state partnership, or (3) default to the federally-run SHOP marketplace. As mentioned above, 33 states are expected to default to the federally-run marketplace.
Initially, the SHOP marketplaces are for businesses with up to 100 employees. However, states can limit participation to businesses with up to 50 employees until 2016, so eligibility will ultimately vary from state to state.
Proposed guidance on the 90 day waiting period limit that was set in place by the Affordable Care Act (ACA) was issued on March 21, 2013 by the Department of Labor, Health & Human Services, and the Treasury (the “Departments”). This rule will apply to plan years beginning on or after January 1, 2014.
The 90 day limit set under Health Care Reform prevents an eligible employee or dependent from having to wait more than 90 days before coverage under a group health plan becomes effective. All calendar days (including weekends and holidays) are counted when determining what date the employee has satisfied the 90 day probationary period.
The Departments have confirmed that there is no de minimis exception for the difference between 90 days and 3 months. Therefore, plans with a 3 month waiting period in their group benefit contracts (including the Section 125 plan document) will need to make sure these are amended for the 2014 plan year. In addition, plans with a waiting period in which coverage begins on the first day of the month immediately following 90 days will also need to be amended as coverage can not begin any later than the 90th day. Employers who prefer to use a first day of the month starting date for coverage rather than a date sometime mid-month should consider implementing a 60 day waiting period instead. If an employer runs into an instance where an employee is in the middle of their waiting period when the regulations become effective (on the group’s renewal anniversary date on or following January 1, 2014), the waiting period for the employee may need to be shortened if it would exceed the 90 days.
Caution: Employers sponsoring a group health plan should also be mindful of the rules under the employer “pay or play” mandate. The 90 day limit on waiting periods offers slightly more flexibility than the employer mandate. For instance, if an employer’s health plan provides employees will become eligible for coverage 90 days after obtaining a pilot’s license, that requirement would comply with the 90 day limit on waiting periods. However, the same employer could be liable under the employer mandate for failing to provide coverage to a full time employee within 3 months of their date of hire. So, employers sponsoring a group health plan should confirm that any plan eligibility criteria aligns with both the employer mandate and the 90 day limit on waiting periods.
The Departments have also announced that HIPAA Certificates of Creditable Coverage will be phased out by 2015. Plans will not be permitted to impose any pre-existing condition exclusions effective for plan years beginning on or after January 1, 2014. This provision is also in effect for enrollees who are under age 19. Plan sponsors must continue to provide Certificates through December 31, 2014 since individuals enrolling in plans with plan years beginning later than January 1 may still be subject to pre-existing condition exclusions up through 2014.
The Patient Protection and Affordable Care Act (the “ACA”) adds a new Section 4980H to the Internal Revenue Code of 1986 which requires employers to offer health coverage to their employees (aka the “Employer Mandate”). The following Q&As are designed to deal with commonly asked questions. These Q&As are based on proposed regulations and final regulations, when issued, may change the requirements.
Question 3: When Is the Employer Mandate Effective and What Transition Rules Apply?
Large employers are subject to the Employer Mandate beginning on January 1, 2014. However, the effective date for employers that have fiscal year health plans is deferred if certain requirements are met. There are also special transition rules for offering coverage to dependents, offering coverage through multi-employer plans, change in status events under cafeteria plans, determining large employer status, and determining who is a full-time employee.
Fiscal Year Health Plans
An employer with a health plan on a fiscal year faces unique challenges concerning the Employer Mandate. Because terms and conditions of coverage may be difficult to change mid-year, a January 1, 2014 effective date would force fiscal year plans to be compliant for the entire fiscal 2013 plan year. Recognizing the potential burdens, the IRS has granted special transition relief for employers that maintained fiscal year health plans as of December 27, 2012. Both transition relief rules apply separately to each employer in a group of related employers under common control.
Coverage of Dependents
Large employers must offer coverage not just to their full-time employees but also to their dependents to avoid the Employer Mandate penalty. A “dependent” for this purpose is defined as a full-time employee’s child who is under age 26. Because this requirement may result in substantial changes to eligibility for some employer-sponsored plans, the IRS is providing transition relief for 2014. As long as employers “take steps” during the 2014 plan year to comply and offer coverage that meets this requirement no later than the beginning of the 2015 plan year, no penalty will be imposed during the 2014 plan year solely due to the failure of the employer to offer coverage to dependents.
Multiemployer Plans
Multiemployer plans represent another special circumstance because their unique structure complicates application of the Employer Mandate rules. These plans generally are operated under collective bargaining agreements and include multiple participating employers. Typically, an employee’s is determined by considering the employee’s hours of service for all participating employers, even though those employers generally are unrelated. Furthermore, contributions may be made on a basis other than hours worked, such as days worked, projects completed, or a percentage of earnings. Thus, it may be difficult to determine how many hours a particular employee has worked over any given period of time.
To ease the administrative burden faced by employers participating in multiemployer plans, a special transition rule applies through 2014. Under this transition rule, an employer whose full-time employees participate in a multiemployer plan will not be subject to any Employer Mandate penalties with respect to such full-time employees, provided that:
(i) the employer contributes to a multiemployer plan for those employees under a collective bargaining agreement or participation agreement
(ii) full-time employees and their dependents are offered coverage under the multiemployer plan, and
(iii) such coverage is affordable and provides minimum value.
This rule applies only to employees who are eligible for coverage under the multiemployer plan. Employers must still comply with the Employer Mandate under the normal rules with respect to its other full-time employees.
Change in Status Events under Fiscal Year Cafeteria Plans
The IRS has also issued transition rules that apply specifically to fiscal year cafeteria plans. Under tax rules applicable to cafeteria plans, an employee’s elections must be made prior to the beginning of the plan year and may not be changed during the plan year, unless the employee experiences a “qualifying event”. An employee’s mid-year enrollment in health coverage through an Exchange or in an employer’s health plan to meet the obligation under the ACA’s individual mandate to obtain health coverage is not a “qualifying event” under the current cafeteria plan rules.
The IRS addresses this by providing that a large employer that operates a fiscal year cafeteria plan may amend the plan to allow for mid-year changes to employee elections for the 2013 fiscal plan year if they are consistent with an employee’s election of health coverage under the employer’s plan or through an Exchange. Specifically, the plan may provide that an employee who did not make a Sec. 125 election to purchase health coverage before the deadline for the 2013 fiscal plan year is permitted to make such an election during the 2013 fiscal plan year, and/or that an employee who made a Section 125 election to purchase health coverage is permitted to revoke/change such election once during the 2013 fiscal plan year, regardless of whether a qualifying event occurs with respect to the employee.
This transition rule applies only to elections related to health coverage and not to any other benefits offered under a cafeteria plan. Any amendment to implement this transition rule must be adopted no later than December 31, 2014 and can be retroactively effective if adopted by such date.
Determining Large Employer Status and Who is a Full-Time Employee
The IRS has also issued transition rules for determining large employer status and determining who is a full-time employee. In general, large employer status is based on the number of employees employed during the immediately preceding year. In order to allow employers to have sufficient time to prepare for the Employer Mandate before the beginning of 2014, for purposes of determining large employer status for 2014 only, employers may use a period of no less than 6 calendar months in 2013 to determine their status for 2014 (rather than using the entire 2013 calendar year).
The Patient Protection and Affordable Care Act (the “ACA”) adds a new Section 4980H to the Internal Revenue Code of 1986 which requires employers to offer health coverage to their employees (aka the “Employer Mandate”). The following Q&As are designed to deal with commonly asked questions. These Q&As are based on proposed regulations and final regulations, when issued, may change the requirements.
Question 2: Who Is Eligible for a Premium Tax Credit or Cost-Sharing Subsidy?
As noted in Part 1, failing to offer full-time employees minimum essential coverage, or coverage that meets the affordability or minimum value requirements, is not enough to trigger liability under the Employer Mandate. Two additional things must occur before any penalty will be assessed:
Thus, an employer should consider which employees are potentially eligible for an Exchange subsidy when deciding how to comply with the Employer Mandate. It is important to note that the employee must qualify for the Exchange subsidy. An employee’s dependent receiving an Exchange subsidy (i.e. an adult child who is not a tax dependent of the employee) will not cause an Employer Mandate penalty.
Coverage Through an Exchange
In order to be eligible to receive an Exchange subsidy, an individual must enroll in health coverage offered through the Exchange. Under the ACA, an Exchange will be established in each state, either by the state or by the federal government (or a combination of the two). An Exchange is a governmental entity or nonprofit organization that serves as a marketplace for health insurance for individuals and small employers. Health insurance offered through the Exchanges must cover a minimum set of specified benefits and must be issued by an insurer that has complied with certain licensing and regulatory requirements.
Eligibility for an Exchange Subsidy
There are two Exchange subsidies available:
“Certification” of Eligibility for an Exchange Subsidy to Employer
The Employer Mandate penalty applies only when the employer has first received “certification” that one or more employees have received an Exchange subsidy. The IRS will provide this certification as part of its process for determining whether an employer is liable for the penalty. This penalty will occur in the calendar year following the year for which the employee received the Exchange subsidy (i.e. the employer would receive the penalty in 2015 for a employee Exchange subsidy beginning in 2014). Under IRS issued procedures, employers that receive notice of certification will be given an opportunity to contest the certification before any penalty is assessed.
In addition, Exchanges are required to notify employers that an employee has been determined eligible to receive an Exchange subsidy. The notification provided will identify the employee, indicate that the employee has been determined eligible to receive an Exchange subsidy, indicate that employer may be liable for an Employer Mandate penalty, and notify the employer of the right to appeal the determination. These notices will be useful in giving employers an opportunity to correct erroneous Exchange information and protect against erroneous penalty notices from the IRS. These notices will also be useful in budgeting for any penalties that may be owed.
Planning Consideration
The Employer Mandate penalty applies only to an employer failing to offer health coverage if one or more of its full-time employees enrolls in insurance coverage through an Exchange, and actually receives either a premium tax credit or a cost-sharing subsidy. Unless a full-time employee enrolls in an Exchange and obtains the tax credit or subsidy, the employer is off the hook. This can lead to some surprising exemptions from the penalty.
The Patient Protection and Affordable Care Act (the “ACA”) adds a new Section 4980H to the Internal Revenue Code of 1986 which requires employers to offer health coverage to their employees (aka the “Employer Mandate”). The following Q&As are designed to deal with commonly asked questions. These Q&As are based on proposed regulations and final regulations, when issued, may change the requirements.
Question 1: What Is the Employer Mandate?
On January 1, 2014, the Employer Mandate will requiring large employers to offer health coverage to full-time employees and their children up to age 26 or risk paying a penalty. These employers will be forced to make a choice:
OR
This “play or pay” system has become known as the Employer Mandate. The January 1, 2014 effective date is deferred for employers with fiscal year plans that meet certain requirements.
Only “large employers” are required to comply with this mandate. Generally speaking, “large employers” are those that had an average of 50 or more full-time or full-time equivalent employees on business days during the preceding year. “Full-time employees” include all employees who work at least 30 hours on average each week. The number of “full-time equivalent employees” is determined by combining the hours worked by all non-full-time employees.
To “play” under the Employer Mandate, a large employer must offer health coverage that is:
This includes coverage under an employer-sponsored group health plan, whether it be fully insured or self-insured, but does not include stand-alone dental or vision coverage, or flexible spending accounts (FSA).
Coverage is considered “affordable” if an employee’s required contribution for the lowest-cost self-only coverage option does not exceed 9.5% of the employee’s household income. Coverage provides “minimum value” if the plan’s share of the actuarially projected cost of covered benefits is at least 60%.
If a large employer does not “play” for some or all of its full-time employees, the employer will have to pay a penalty, as shown in following two scenarios.
Scenario #1- An employer does not offer health coverage to “substantially all” of its full-time employees and any one of its full-time employees both enrolls in health coverage offered through a State Insurance Exchange, which is also being called a Marketplace (aka an “Exchange”), and receives a premium tax credit or a cost-sharing subsidy (aka “Exchange subsidy”).
In this scenario, the employer will owe a “no coverage penalty.” The no coverage penalty is $2,000 per year (adjusted for inflation) for each of the employer’s full-time employees (excluding the first 30). This is the penalty that an employer should be prepared to pay if it is contemplating not offering group health coverage to its employees.
Scenario #2- An employer does provide health coverage to its employees, but such coverage is deemed inadequate for Employer Mandate purposes, either because it is not “affordable,” does not provide at least “minimum value,” or the employer offers coverage to substantially all (but not all) of its full-time employees and one or more of its full-time employees both enrolls in Exchange coverage and receives an Exchange subsidy.
In this second scenario, the employer will owe an “inadequate coverage penalty.” The inadequate coverage penalty is $3,000 per person and is calculated, based not on the employer’s total number of full-time employees, but only on each full-time employee who receives an Exchange subsidy. The penalty is capped each month by the maximum potential “no coverage penalty” discussed above.
Because Exchange subsidies are available only to individuals with household incomes of at least 100% and up to 400% of the federal poverty line (in 2013, a maximum of $44,680 for an individual and $92,200 for a family of four), employers that pay relatively high wages may not be at risk for the penalty, even if they fail to provide coverage that satisfies the affordability and minimum value requirements.
Exchange subsidies are also not available to individuals who are eligible for Medicaid, so some employers may be partially immune to the penalty with respect to their low-wage employees, particularly in states that elect the Medicaid expansion. Medicaid eligibility is based on household income. It may be difficult for an employer to assume its low-paid employees will be eligible for Medicaid and not eligible for Exchange subsidies as an employee’s household may have more income than just the wages they collect from the employer. But for employers with low-wage workforces, examination of the extent to which the workforce is Medicaid eligible may be worth exploring.
Exchange subsidies will also not be available to any employee whose employer offers the employee affordable coverage that provides minimum value. Thus, by “playing” for employees who would otherwise be eligible for an Exchange subsidy, employers can ensure they are not subject to any penalty, even if they don’t “play” for all employees.
Our payroll stuffer this month will focus on the important topic of Nutrition. It covers topics important to your employees such as:
Increasing Your Nutrition IQ
More and more people are learning to read the labels when grocery shopping, but so you know what all the terms mean? Learn how to decode a few of the more confusing food label phrases.
Three Surprising Superfoods
Learn about the many health benefits of mushrooms, quinoa, and pistachio nuts.
Surprising Fact about Mushrooms: Mushrooms as medicine have been used for centuries in Asian cultures. Today, maitake and shiitake mushrooms are being studied for potential cancer-fighting properties. Studies are being done to see if the shiitakes may also help boost the immune system and fight heart disease.
Never heard of quinoa? It is a grain with a fluffy, creamy, slightly crunchy texture and a nutty flavor when cooked. It is higher in protein than other grains and the protein is provides is a complete protein meaning it includes all nine essential amino acids just like animal protein.
Pistachios rank as one of the most popular nuts that contain high amounts of phytosterols. These are substances that are known to help lower cholesterol in your body.
Why Kids Overeat and How You Can Help Them Stop
Overweight and obese kids face serious health concerns. The extra weight puts kids and teens at risk for many health problems, including high blood pressure, type 2 diabetes, and heart disease. By understanding why kids overeat, you can help your child get on the right path to a healthy weight.
For the full version of this document, please contact luann@visitaag.com.
According to a recent employer survey by the nonprofit National Business Group on Health and Fidelity Investments, corporate employers plan on spending an average of $521 per employee on wellness-based incentives in 2013. This marks a 13% increase from the average of $460 per employee in 2011 and almost doubles the per employee average from 2009.
The survey also found that the overall use of these incentives among corporate employers continues to increase. 86% of employers surveyed indicated that they offered wellness-based incentives.
The most populate wellness-based incentives continue to be:
A large majority of employers (54%) have also expanded their wellness-based incentives to include dependents as well. As part of the wellness incentives, employer are requiring employees to complete a health activity- like an employer sponsored biometric screening or health risk assessment- in order to determine their eligibility for the company’s health plans in 2013. Some employers are even taking steps as far informing employees that their failure to complete a health risk assessment may result in the employee being moved automatically into a less attractive medical plan offered by the company or even completely being removing them from the health coverage.
Forty-one percent of employers include, or plan to include, an outcomes based metrics as part of their incentive program. This will give both the employer and employees a measurable goal that can be used to reward behavior or results in certain health categories, such as lowering cholesterol or blood pressure or their waist line.
The official revised Employment Eligibility Verification Form I-9 was released March 8, 2013 by the U.S. Citizenship and Immigration Services (USCIS).
Employers should begin using this new form immediately. The new Form I-9 will contain a revision date of 03/08/13 that is located on the bottom left-hand corner of the form.
Final Changes to the Form I-9
The revised Form I-9 makes several improvements designed to minimize completion errors. The key revisions to Form I-9 include:
60-Day Grace Period
Prior versions of the I-9 will no longer be accepted and should not be used after May 7, 2013. The agency is providing employers 60 days to make the necessary internal changes in their business processes to implement the new form.
The new I-9 form can be downloaded here.
A Spanish-language version of the new Form I-9 is available, however may only be filled out by employers and employees in Puerto Rico only.
Handbook for Employer
The M-274 Handbook for Employers is in the process of being updated as well. Employers are advised by USCIS to follow instructions on the new Form I-9 until the revised handbook has been updated.
Employers are required to maintain an I-9 for as long as an individual is employed and for the required retention period following their employment termination, which is the later of three years after the date of hire or one year after the date employment ended.
Failure of an employer to ensure proper I-9 completion and retention may subject the employer to civil monetary penalties, and possibly even criminal penalties.
USCIS noted that employers do not need to complete the new Form I-9 for current employees for whom there is already a properly completed Form I-9 on file, unless reverification applies.
The infamous internal memo concerning eliminating telework at Yahoo was never intended for public release. At the top of the memo the call for privacy was clearly defined as “Proprietary and Confidential Information- Do Not Forward”. However, despite Yahoo’s directive, the memo was leaked on a blog post on February 22, 2013. This leak resulted in a lot of online attention – most of it bad. But it is not the first time a firm’s information has been leaked online and it will not be the last.
Recently, a Groupon CEO tweeted “I was fired today”. As a British entertainment retailer was announcing that it was laying off nearly 200 employees, a member of the company’s social media team took to Twitter and posted “We’re tweeting live from HR where we’re all being fired! Exciting!!”.
It is an aspect of the business world now. From layoffs to policy changes, decisions and information that was intended only for the eyes of your staff may actually be shared with the world via social media now.
The question- what is management to do?
Be Transparent and Proactive
To be transparent is to be clear and concise about expected or even suspected changes that have the potential to be controversial and could cause issues internally with your staff. Employer privacy is very limited and you can not realistically control what someone posts on their blog, Facebook, or Twitter account. Corporate bad news has a way of seeping into the limelight online.
“In the era of social medial and social sharing there’s almost no such thing as a truly internal e-mail announcement,” said Curtis Midkiff, director of social strategy and engagement at SHRM. “There are ways to share confidential information with your employees, but e-mail may not be the most appropriate because it is not a truly private form of communication. You can put as may disclaimers as you want, but when you push send…you always have to be prepared for it to fall in the wrong hands. You should almost pre plan that the e-mail may be seen by unintended audiences.”
One way to pre plan and be proactive is to break the news on social media sites yourself first. For example, Zappos CEO often tweets memos to employees from his Zappos Twitter account. He did so a few years ago when the company announced layoffs.
Another good rule of thumb? Try to limit surprises by including workers in decision early on, if at all possible. There are different obligations depending on if the company is a public or privately held company, but the more input that employees feel they have the better they will handle change in the long run.
Companies can try to soften the blow of bad news by keeping employees in the loop and telling them that change is coming. They can educate their employees on the process so that when the memo actually comes out, they are expecting it and do not freak out and leak it online.
Bad news is never good news and you can strive to be as transparent as possible with information. However, business leaders often have to make difficult and unpopular decisions and it can, in the end, become difficult to manage the emotions or reaction of one employee.
Our topic this month covers the Final Rule from HHS and the Exchanges.
Areas discussed include:
Contact us today for more information on this topic.