On November 4, 2014, the IRS released Notice 2014-69 which outlines that health plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services (or both) referred to as Non-Hospital/Non-Physician Services Plan) are now not considered as providing the minimum value coverage as intended by the minimum value plan requirements for the employer mandate under ACA.
For employers who have already entered into a binding written commitment to adopt, or have begun enrolling employees in, a Non-Hospital/Non-Physician Services Plan prior to November 4, 2014, they will not be penalized for not meeting the employer mandate for the 2015 plan year if that plan year begins no later than March 1, 2015. This is based on the employer’s reliance on the results of the Minimum Value Calculator (a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan) as outlined in previous guidance.
For employers who have not entered in to a written commitment to adopt, have not begun enrolling employees in a Non-Hospital/Non-Physician Services Plan on or after November 4, 2014, or have a plan year that begins after March 1,2015, no relief will be given under the employer mandate.
Pending final regulations, employees will not be required to treat a Non-Hospital/Non-Physician Services Plan as providing minimum value coverage for purposes of determining their eligibility for a premium tax credit “aka premium subsidy” in the Marketplace.
An employer that offers a Non-Hospital/Non-Physician Services Plan (including a Pre-November 4, 2014 Non-Hospital/Non-Physician Services Plan) to an employee:
(1) must not state or imply in any disclosure that the offer of coverage under the Non-Hospital/Non-Physician Services Plan prevents an employee from obtaining a premium tax credit, if otherwise eligible, and
(2) must timely correct any prior disclosures that stated or implied that the offer of the Non-Hospital/Non-Physician Services Plan would prevent an otherwise tax-credit-eligible employee from obtaining a premium tax credit.
Without such a corrective disclosure, a statement a Non-Hospital/Non-Physician Services Plan provides minimum value will be considered to imply that the offer of such a plan prevents employees from obtaining a premium tax credit/subsidy. However, an employer that also offers an employee another plan that is not a Non-Hospital/Non/-Physician Services Plan and that is affordable and provides minimum value is permitted to advise the employee that the offer of this other plan will or may preclude the employee from obtaining a premium tax credit.
The deadline for submitting the required information and scheduling the requirement payment, which must be done through www.pay.gov is November 15, 2014.
The Affordable Care Act (ACA) provides for a transitional reinsurance program to help stabilize premiums for coverage in the individual health insurance marketplace during the first 3 years of operation (2014-2016). The program is designed to primarily transfer funds from the group market to the individual market, where high risk individuals are more likely to be covered.
Payments under the reinsurance program are funded by “contributions” (aka fees) payable by health insurance carriers for fully funded groups and third party administrators on behalf of self-insured group health plans. However, under ACA regulations, the self insured group is ultimately responsible for the payment.
The transitional reinsurance fee requirement applies on a per capita basis with respect to each individual covered by a plan that is subject to the fee. The total amount of the fee for 2014 is $63 per covered life and will decrease to $44 per covered life in 2015. The amount of the fee in 2016 has not yet been established by CMS, but will be lower than the 2015 amount. The fee applies to major medical coverage, retiree medical coverage, and COBRA coverage. Plans that are not subject to the reinsurance fee include FSAs, HSAs, Dental & Vision coverage, coverage that fails to provide minimum value, and EAP programs to name a few.
The transitional reinsurance fee is imposed on the “contributing entity”, defined as an insurer/carrier for fully-insured coverage or the group for self insured coverage. Third -party administrators (TPAs), administrative service only entities (ASO) and others may submit on behalf of the contributing entity, though CMS has specified that the TPA or ASO is not required by law to do so.
Because the fee is imposed on the self insured plan and not the plan sponsor, plan assets may be used to pay the assessment/fee. The IRS has also noted that plan sponsors can treat the fee as an ordinary and necessary business expense for tax purposes.
The term covered lives includes everyone under the plan, including spouses, dependents, and retirees. CMS has named several options for counting covered lives, depending on if the plan is fully insured or self funded. The methods of counting covered lives for the reinsurance fee are similar to, but not exactly the same, as the Patient Centered Outcomes Research Institute (PCORI) count methods. A full description of each counting method can be found on the CMS website here.
Regardless of the counting method chosen, plans must maintain documentation of the count, including all materials provided by TPAs in arriving at the figure, for at least 10 years. CMS may audit a plan to assess its compliance with the program requirements and it will be crucial to be able to produce this information.
The entire reinsurance fee process takes place on www.pay.gov. This process is separate from the Health Insurance Oversight System (HIOS) which is used, for example, to obtain a Health Plan Identifier (HPID). The applicable form became available on October 24, 2014. While this leaves somewhat limited time for plan sponsors to submit the applicable form and schedule the fee by the November 15, 2014 deadline, CMS has yet to issue guidance that the submission date will be delayed.
In order to successfully complete the reinsurance fee submission, plan sponsors (or their representatives) need to:
After registering on Pay.gov, the submitter will select the Transitional Reinsurance program Annual Enrollment and Contribution Submission Form. The form requires basic company and contact info, payment type, benefit year, and the annual enrollment count. After the information is entered on the form, plan sponsors will need to upload their supporting documentation CSV file. After the enrollment and supporting documentation is submitted, the form will auto-calculate the amount owed. Plans then need to schedule payment(s) for this amount . The form cannot be submitted without payment information. Plans can choose to remit payment for the entire benefit year once (the full $63 per covered life) or plans can submit two separate payments for the year. If the separate payment method is used, the first payment ($52.50 per covered life) is due by January 15, 2015 and the second payment ($10.50 per covered life) is due by November 15, 2015. Regardless of the option chose, all payments MUST be scheduled by November 15, 2014.
The IRS and Social Security Administration released the 2015 cost-of-living (COLA) adjustments that apply to health flexible spending accounts (FSAs) in Revenue Procedure 2014-61. The new annual limit for health FSAs, including general-purpose and limited-purpose health FSAs, is $2,550 for plan years starting on or after January 1, 2015.
The $2,550 limit is prorated for short plan years (plan years that are shorter than 12 months) and any carry over amount from participants’ previous plan years may be added to the limit. For instance, participants may elect $2,550 for the 2015 plan year and carry over a maximum of $500 from the previous plan year, making their total account value $3,050 for the 2015 plan year. In other words, the $500 carryover does not count against or affect the $2,550 salary reduction limit. Please note that an employer must decide to allow to either offer participants a option of a max $500 carryover OR the 2.5 month extension to use funds. An employer can not offer both options under their plan.
The rush for group health plan administrators to navigate the Centers for Medicare & Medicaid Services (CMS) website and obtain a Health Plan Identifier (HPID) ahead of the November 5th deadline is over. On October 31, 2014, the CMS Office of e-Health Standards and Services (OESS), the division of the Department of Health & Human Services (HHS) that is responsible for enforcement of the HIPAA standard transaction requirements, announced a “delay, until further notice,” of the HPID requirements. The regulatory obligations of plan administrators delayed by this notice are the: (i) obtaining of a HPID, and (ii) the use of the HPID in HIPAA transactions.
This delay comes on the heels of a recommendation by the National Committee on Vital and Health Statistics (NCVHS), an advisory body to HHS. The NCVHS asked HHS to review the HPID requirement and recommended that HPIDs not be used in HIPAA transactions. NCVHS’s primary opposing argument to implementation of the HPID standard was that the healthcare industry has already adopted a “standardized national payer identifier based on the National Association of Insurance Commissioners (NAIC) identifier.”
Whether HHS will adopt the recommendations of the NCVHS on a permanent basis remains to be seen, but for the time being, plan administrators may discontinue the HPID application process and should stay tuned for further announcements from HHS.
Health Care Reform requires most self-funded and fully-insured group health plans to obtain a Health Plan Identifier (HPID). The HPID is a 10-digit number that will be used to identify the plan in covered electronic HIPAA transactions (for example,electronic communications between the plan and certain third parties regarding health care claims, health plan premium payments, or health care electronic fund transfers).
Large health plans (plans with annual receipts in excess of $5 million) must obtain an HPID by November 5, 2014. Small health plans have until November 5, 2015 to comply. “Receipts” for this purpose appear to be claims paid.
Who is Responsible? For self-funded plans, the plan sponsor is responsible for obtaining an HPID (third-party administrators cannot obtain an HPID on behalf of a self-funded plan sponsor). Although it appears that most insurers will obtain the HPID on behalf of fully-insured plans, some insurers are requiring the plan sponsor to obtain an HPID.
Application Process. To sign up for an HPID, plan sponsors must first be registered within the Centers for Medicare & Medicaid Services’ (CMS) Health Insurance Oversight System (HIOS) .
The individual responsible for applying will need to sign up as an individual and request to be linked to the relevant company. The individual will then complete the requested information (including company name, address, and EIN, authorizing official information, and the plan’s “Payer ID” number or “NAIC” number).
Some self-funded plan sponsors have reported difficulty with the registration process because self-funded plans do not have a Payer ID or NAIC number. Although CMS has not yet released any formal guidance on this issue, it is expected that self-funded plans will enter “not applicable” for the Payer ID and either leave the NAIC number blank or use the plan sponsor’s EIN in lieu of the NAIC number.
Once the required information has been submitted, an authorized individual within the company must request access to the HIOS. CMS will then grant access to the HIOS system by electronically sending an authorization code to the authorized individual.
The CMS website has step-by-step instructions via a “cheat sheet” and a YouTube video explaining the entire process.
Next Steps. The registration process can be time consuming as there are a number of different registration screens to work through, the collection of the required data may be cumbersome, and delays have been reported within the CMS registration portal. Accordingly, plan sponsors of large self-funded group health plans may wish to begin the registration process as soon as possible in order to meet the November 5, 2014 deadline. Plan sponsors for fully-insured plans should contact the plan’s insurer to see if the insurer will apply for the HPID on behalf of the plan.
Employers must provide a creditable or non-creditable coverage notice at least once a year to all Medicare eligible individuals who are covered under, or who apply for, the group’s prescription drug plan. This notice must be provided to both active employees and retirees who are eligible for Medicare Part D.
The Medicare Modernization Act mandates that all employers offering prescription drug coverage disclose to all Medicare eligible individuals with prescription drug coverage under the plan whether the coverage is “creditable”. This information is essential to the Medicare eligible’s decision whether to enroll in a Medicare Part D prescription drug plan.
Employers are required by the Centers for Medicare and Medicaid Services (CMS) to provide creditable coverage at least once a year and at the following times:
This notice does not need to be a separate mailing and can be included with other plan information materials either printed or electronic. Employers are required to provide this notice and to provide CMS with your plan’s creditable or non-creditable coverage status annually via online form within 60 days of the beginning of each plan year.
Please contact our office for assistance in determining if your prescription drug plan is considered creditable or non-creditable coverage or if you need a copy of the model notice for employees.
Fisher & Phillips has recently released a Family Medical & Leave Act (FMLA) Calculator App. This free, award-winning app is available for smartphones and tablets. There’s even a version you can use in your web browser. Please visit www.laborlawyers.com/FMLALeaveApp for links to download the Android and iOS versions, or to launch the web browser version on your computer.
The app helps employers calculate leaves of absence under FMLA. Anyone managing people can use the app to calculate leave requests (other than intermittent and reduced schedule) and determine how much FMLA leave an employee has available. The user-friendly interface works very simply. In seconds a manager is able to see how much FMLA leave an employee has available, when an employee should return to work after the current leave request, and how much FMLA leave is remaining, if any.
The app features include:
The app reports the number of days of leave available, when the employee should return to work based on the new leave request, and how much leave, if any, the employee has remaining after the current leave request is completed.
Human Resources or any other manager using the app can email the information directly to the employee who requested the leave. Of course, further documentation to the employee should be provided as required by the FMLA.
Please note: The FMLA Leave App should not be construed as or relied upon for legal advice. The Family and Medical Leave Act is a complicated law and it is difficult to anticipate the various circumstances that may arise in handling requests for leave. The contents are intended for general information purposes only and are only able to calculate leaves in limited circumstances.
If you employed more than 100 people in the preceding calendar year, you are required to complete and submit your EEOC Report 1 (Survey) by September 30th. You should have received a reminder letter via mail from the EEOC in August also with the link to file the report online.
Please contact our office for information about the EEOC Report 1 or for the link to the EEOC’s web based filing system.
With Congress in its summer recess, now is a good time to reflect on the top ACA issues worth monitoring as 2015 quickly approaches. Here are a handful of key issues to watch:
Dueling Court Cases on Federal Subsidies
One issue grabbing national headlines is the dueling decisions coming out of the U.S. Court of Appeals for the District of Columbia (Halbig v. Burwell) and the U.S. Court of Appeals for the Fourth Circuit (King v. Burwell) on missing language in the ACA that would have authorized the federal government to provide premium subsidies to individuals who sign up for health plans through the federal Exchanges. The legal issue in these court cases is whether the ACA premium tax credit (aka subsidy) is available to those individuals who enroll in qualified health plans (QHP) through state operated Exchanges or if it is available only to those to enroll in a QHP through a federally funded Exchange.
A primary concern is that a significant number of people in about two-thirds of the states (who did not set up a state-run Exchange) rely on the subsidy to purchase a plan in the federal Exchange. Specifically, the ACA’s employer mandate penalty of $3000 is based upon an employer having an employee seek coverage through an Exchange and receive the federal premium subsidy. In general, the employer mandate requires that “applicable large employers” offer their full-time employees minimum essential coverage or potentially pay a tax penalty. However, according to the statutory text of the ACA, the penalties under the employer mandate are triggered only if an employee receives a subsidy to purchase coverage through an Exchange established by the states. Both cases are being appealed to higher courts and will likely be consolidated into one case to be heard by the U.S. Supreme Court in the not so distant future.
In an interesting development, a video surfaced last week featuring one of the ACA’s chief architects (John Gruber) saying that health insurance subsidies should only be available in those states who opt to build and implement state-based Exchanges to gain participation. The idea was to create an incentive to have states actively involved in the hosting of an Exchange, rather than relying on the federal government to operate the Exchanges in each state. Whether this video will be used as evidence to uphold the argument that subsidies can only be offered by state-based Exchanges remains to be seen.
Lack of Back End Software for Federal Exchange
Of course, one of the big news stories in 2013 and early 2014 was the substandard launch of the federal Exchange, which led to many Americans having to wait to be enrolled in an ACA-compliant health plan. Although some technical snafus have been addressed, there are many that still remain. For example, a top White House official recently told Congress that the automated system that is supposed to send premium payments to insurance companies is still under development, and they did not have a completion date for it yet. The lack of an electronic verification process is only one part of the “backend” software that is still problematic five years after PPACA was passed.
Future of Navigators in Comparison with the Value of Brokers
Several recent studies have touted the benefits of using third parties, such as Brokers, to help consumers find coverage under the ACA. Some of these studies have focused on the usefulness of using Brokers/Agents over the benefits of using Navigators. A recent Urban Institute study found that health insurance Brokers were the most helpful in providing health insurance Exchange information when compared to other types of resources, including Navigators and website content. However, there are other published studies showcasing how Navigators have been useful to consumers. That being said, Brokers have assumed an integral role supporting millions of Americans in securing and maintaining coverage for many decades, and continue to be knowledgeable resources, as they are licensed in the states they operate in, whereas Navigators are not required to meet the same licensing standards as Brokers/Agents. It will be interesting to see what the future holds for Navigators, who are not as experienced and who are, in the end, dependent upon federal grants to provide their services.
Provider Access Issues & Emergency Room Over-Usage
A number of public policymakers have raised concerns recently about the fact that there are shortages of key physicians and other providers and as a result is causing a increase in non-emergent patient visits to expensive ER departments. A recent story in the New York Times highlighted similar concerns, saying the ACA cannot change the fact that visiting an emergency room may be easier than seeing a primary care physician in some instances or locations. Other stories and studies highlight how the ACA and health care reform initiatives can affect access to providers in many different ways, such as changing reimbursement levels, improving the availability of certain types of specialists, or re-educating the patient to move from visiting the ER department to either making an appointment ahead-of-time or visiting a less expensive Urgent Care center for care.
Premium Rate Increases
Another critical issue to monitor are premium increases that might be occurring in spite of the initial promises that the ACA would lower health care costs. Health plans have begun publishing proposed rates for 2015, resulting in a recent flurry of news articles and reports addressing the impact of the ACA on insurance premiums.
The Wall Street Journal published a front page report discussing the ACA’s impact on premium increases earlier this summer, saying, “Hundreds of thousands of consumers nationwide, who bought insurance plans under the Affordable Care Act, will face a choice this fall: swallow higher premiums to stay in their plans or save money by switching.”
The Journal goes on to say that a new picture is emerging in 10 states where 2015 premium insurance rates for individual plans have been filed, “In all but one (state), the largest health insurer is proposing to increase premiums between 8.5% to 22.8% next year.” Ironically, smaller health plans are reducing their 2015 rates in the same market in an attempt to gain market share.
The significance of this trend is underscored in a statement released earlier this summer by Karen Ignagni, president & CEO of America’s Health Insurance Plans (AHIP), in which she expressed concerns about keeping health insurance affordable for patients. “Affordability remains a top priority for consumers when it comes to their health care,” she said.
Bonus: Be Sure To Watch The Political Races
With the ACA’s continued challenges, the ups and downs of the U.S. economy, key world events in the Middle East, and other confounding variables, one has to wonder what will happen during the mid-year elections this fall. As reported by CNN and other news outlets, the ACA became an key issue in Obama’s 2012 re-election victory as well as Democrats picking up seats in the Senate and House in that election.
As November 3, 2015 approaches, many different messages could be sent back to the White House and Congress. If Republicans take over the Senate and retain control of the House, how will this impact the ACA over the next several years? If the congressional houses remain split, we may have less going on by either political party. How will the state-level elections impact the ACA and state-run Exchanges? Only time will tell.
Under the Patient Protection and Affordable Care Act (PPACA), beginning in 2015, certain large employers who do not offer affordable health insurance that provides minimum value to their full-time employees may be subject to significant penalties.
In a nutshell, in 2015, “applicable large employers” will be subject to an annualized employer “shared responsibility” penalty of $2,000 (indexed) per full-time employee (minus the first 80 full-time employees in 2015) if the employer does not offer health insurance to at least 70% of their full-time employees and their dependents. This amount will be increase from 70% to 95% after 2015. This is commonly referred to as the “Pay or Play” penalty.
Even if an applicable large employer offers insurance coverage to full-time employees, the employer still could be subject to an annualized penalty of $3,000 (indexed) per employee who receives an Exchange subsidy if the offered employer-sponsored health coverage does not meet minimum value standards or is not affordable. This $3000 penalty is capped at the amount that would apply if the $2,000 penalty described above were to apply.
What should an employer do now to prepare for these penalties?
(A) Determine if they are an “applicable large employer” -To do this, employers should count both full-time employees and part-time employee hours as follows:
1) Count the full-time employees for each month in the prior year.
2) Count the full-time equivalents for each month in the prior year.
a) Add total hours for non-full-time employees but count no more than 120 hours per month for any one non-full-time employee.
b) Divide the number obtained in (a) by 120. This is the full-time equivalent number.
3) Add the numbers obtained in (1) and (2) above (i.e., the full-time employee and full-time equivalent numbers) for each month.
4) Add the 12 sums obtained in (3) and divide by 12. This is the average number of full-time employees and full-time equivalents.
5) If this number obtained in (4) is under 50 (or under 100 for the 2015 determination for certain employers), the employer is not an applicable large employer for the year being determined.
Note: The applicable large employer is determined on a controlled group basis. For example, if there are three companies, each of which is wholly owned by the same parent company, the companies are all considered one employer for this calculation. Also note that, special transition rules apply in determining applicable large employer status for 2015 and that a special seasonal employee exception may apply even if the threshold in (5) is exceeded.
(B) If an employer will be an applicable large employer in 2015, it should determine whether it could be subject to penalties in 2015. For example, the employer should review its group health plan to determine if the insurance coverage is “offered” to full-time employees meets minimum value standards and is considered affordable to employees.
© An employer also will need to address how it will determine the full-time status of employees – will it use the “monthly measurement period” or the “look back measurement period.” This is particularly important for employers who have many variable-hour employees or seasonal employees.
(D) If the employer’s group health plan does not meet the threshold tests to avoid the penalties noted above, the employer should evaluate whether it wants to restructure its health care offerings or pay the penalties (which are non-deductible).
(E) Finally, employers should review their data collection procedures to ensure that they will be able to report the healthcare information required to be reported for 2015 (the actual reporting will occur in 2016 for the 2015 calendar year). Insurers, sponsors of self-insured plans, and other entities that provide minimum essential coverage during a calendar year will be required to report certain information to the IRS and to participants. In addition, applicable large employers will be required to report about the coverage they provide to both the IRS and to their employees. Drafts of the IRS forms to be used in reporting this information have recently been published (Form 1095-B, Form 1095-B Transmittal, Form 1095-C, Form 1095-C Transmittal). Employers should review these forms to understand the data that will need to be reported.
It is not too late for employers to take action now to avoid penalties in 2015.