Group Health Plans Available with Lower Contribution & Participation Requirements

Did you know that some of the major insurance carriers have revised their requirements on small group medical insurance regarding employee participation and employer contribution?

One major carrier offers 5 group medical plans in Florida for employers (with 2-100 employees) that lowers the required employer contribution to the lesser of 25% of the employee medical premium or $50 per employee. Additionally, they also only require 50% employee participation on any of these 5 plans.

Currently most major medical carriers require the employer to contribute 50% towards the cost of the employee premium and the group must maintain 75% employee participation (this does not include any eligible employees who can provide proof of valid coverage elsewhere).

Another national medical insurance carrier just lowered their employee participation requirements for all small group medical plans in Florida. This is valid only for new business with 2-50 eligible employees, but it does apply to all of their small business medical plans offered. Any existing small group clients with this carrier are still subject to the 75% participation requirement currently.

If you would like more information on any of the plans offered, please contact our office for more information.

Higher Limits for HSA Contributions in 2014

The IRS has announced higher limits for 2014 contributions to health savings accounts (HSAs).The increased amounts reflect cost of living adjustments.

For 2014, the HSA contribution limit is $3300 for an individual and $6550 for a family. The HSA catch up contribution for those age 55 or older will remain at $1000. For an medical plan to be considered a qualified HDHP that can be paired with an HSA, it must have a minimum deductible of $1250 for an individual and $2500 for a family.

For those under age 65 (unless totally and permanently disabled) who use HSA funds for nonqualified medical expenses, they face a 20% penalty of 20% for nonqualified expenses. Funds spent for nonqualified purposes are also subject to income tax.

While the PPACA allows parents to add their adult children up to age 26 onto their medical plans, the IRS has not changed its definition of a dependent for HSAs. This means that an employee whose 24 year old child is covered on his HSA qualified high deductible health plan is not eligible to use HSA funds to pay for that child’s medical bills. If HSA account holders can’t claim a child as a dependent on their tax returns, then they can not spend HSA dollars on services provided to that child. According to the IRS definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or stepsibling, or any descendent of these) who:

• has the same principal place of residency as the covered employee for more than ½ of the taxable year
• has not provided more than ½ of his or her own support during the taxable year
• is not yet 19 (or, if a student, not yet 24) at the end of the tax year or is permanently disabled

Please contact our office with questions on high deductible health plans (HDHPs) as well as Health Saving Accounts (HSAs).

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.

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.

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.

Q&A Regarding Premium Subsidies in the Exchange

With the open enrollment period for the Exchange beginning October 1, 2013, many questions are beginning to surface regarding how premium subsidies will work as individuals start to evaluate all of their options available to them.

Q1: It sounds like individuals who choose to buy health insurance on the Exchange will have to pay the full monthly premium for the coverage they choose and subsidies will be paid through tax credit that are received annual as a tax refund. How can a low income person who is living paycheck to paycheck afford this?

A: When consumers apply for a plan on the Exchange (aka marketplace), you will be asked to provide income information to determine if you are eligible for a premium tax credit (aka subsidy). A subsidy will be available to people with incomes up to 400% of the federal poverty level ($45,960 for an individual in 2013 or $94,200 for a family of four).

If you qualify for the subsidy, consumers can opt to receive their tax credits in advance, and the exchange will send the money directly to the insurer every month. This subsidy will reduce the amount you owe up front on  your medical premium. You can also choose, instead, to receive your credit when you file your taxes the following year.

It is important to estimate your income as accurately as possible and to contact the Exchange during the year if you find out that you are making more or less than expected. When completing your 2014 taxes, your estimate will be reconciles with what you actually earned. If you have received more than you were due, you could have to repay those amounts.

Q2: What happens if I do not pay my premium in a timely manner after I have purchased insurance on the Exchange? If I am terminated from the policy, will I be able to have it re-instated?

A:Consumers who are receiving premium tax credit for coverage on the Exchange will have a 90 day grace period to catch up on late premiums. Other consumers who do not receive a subsidy may get more or less time, depending on the Exchange rules. Once the grace period has passed, consumers will generally have to wait until the next annual open enrollment period in the fall to re-enroll in coverage. Please note though, if an individual goes uninsured for more than 3 months, they could be assess a penalty for not having insurance coverage of up to $95, or 1% of income in 2014, whichever is greater.

Please contact our office for assistance with evalutating your options and obtaining coverage through the Exchange.

IRS Launches New PPACA-focused Website

The Internal Revenue Service (IRS) launched a new website aimed at clarifying many of the tax provision of the Patient Protection and Affordable Care Act (PPACA). The site (www.irs.gov/aca) aims to provide a tool to more clearly explain responsibilities and potential benefits to individuals, employers, and other organizations including insurers and others affects by the law’s tax changes.

Please contact our office for more information on how you can prepare for the many changes coming with Health Care Reform in 2014.