Category Archives: Self Funding

ACA Update: Summary of Benefits and Coverage and Uniform Glossary Details Remain Fuzzy, FAQ Released

The Affordable Care Act (ACA) created new disclosure tools—the summary of benefits and coverage (SBC) and uniform glossary—to help consumers compare coverage options available to them. Generally, group health plans and health insurance issuers are required to provide the SBC and uniform glossary free of charge. This disclosure requirement applies to both grandfathered and non-grandfathered plans.

On March 31, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued a Frequently Asked Question (FAQ) announcing their intention to issue final regulations on the SBC requirement in the near future. The final regulations are expected to apply for plan years beginning on or after Jan. 1, 2016 (including open enrollment periods in fall of 2015 for coverage beginning on or after Jan. 1, 2016).

However, according to this FAQ, the new template, instructions and uniform glossary will not be finalized until January 2016, and will apply for plan years beginning on or after Jan. 1, 2017 (including open enrollment periods in fall of 2016 for coverage beginning on or after Jan. 1, 2017).

Overview of the SBC Requirement

The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees, free of charge. The SBC is a concise document that provides simple and consistent information about health plan benefits and coverage.

The SBC requirement became effective for participants and beneficiaries who enroll or re-enroll through an open enrollment period beginning with the first open enrollment period starting on or after Sept. 23, 2012. For participants and beneficiaries who enroll other than through an open enrollment period (such as newly eligible or special enrollees), SBCs were required to be provided beginning with the first plan year starting on or after Sept. 23, 2012.

The DOL has provided a template for the SBC and Uniform Glossary documents along with instructions and sample language for completing the template, available on the DOL’s website. On April 23, 2013, the SBC template was updated for the second year of applicability to incorporate ACA changes that become effective in later years. Until further guidance is issued, these documents continue to be authorized.

On Dec. 22, 2014, the Departments released proposed regulations on the SBC requirement, which would revise the SBC template, instruction guides and uniform glossary. At that time, the Departments expected that the new requirements for the SBC and uniform glossary would apply to coverage that begins on or after Sept. 1, 2015. The draft-updated template, instructions and supplementary materials are available on the DOL’s website under the heading “Templates, Instructions, and Related Materials—Proposed (SBCs On or after 9/15/15).”

The SBC and Uniform Glossary must be provided in a culturally and linguistically appropriate manner. Translated versions of the template and glossary are available through the Centers for Consumer Information and Insurance Oversight (CCIIO) website.

To the extent a plan’s terms do not reasonably correspond to the template and instructions, the template should be completed in a manner that is as consistent with the instructions as reasonably as possible, while still accurately reflecting the plan’s terms. In addition, the DOL notes that ACA implementation will be marked by an emphasis on assisting (rather than imposing penalties on) plans and issuers that are working diligently and in good faith to understand and comply with the new law.

Thus, during the first and second years of applicability, penalties will not be imposed on plans and issuers that are working diligently and in good faith to comply with the new requirements. This enforcement relief will continue to apply until further guidance is issued.

Overview of the FAQ Guidance

In the FAQ issued on March 31, 2015, the Departments stated that they intend to issue final regulations in the near future. These regulations would finalize proposed changes in the proposed regulations from Dec. 22, 2014, which were proposed to apply beginning Sept. 1, 2015.

However, the FAQ notes that the final rules are expected to apply in connection with:

  • Coverage that would renew or begin on the first day of the first plan year (or policy year, in the individual market) that begins on or after Jan. 1, 2016; or
  • Open enrollment periods that occur in the fall of 2015 for coverage beginning on or after Jan. 1, 2016.

Despite this effective date, the new template, instructions and uniform glossary are not expected to be finalized until January 2016. According to the Departments, this delay is necessary to allow for consumer testing and offer an opportunity for the public to provide further input before finalizing revisions to the SBC template and associated documents.

The revised template and associated documents will apply to:

  • Coverage that would renew or begin on the first day of the first plan year (or policy year, in the individual market) that begins on or after Jan. 1, 2017; or
  • Open enrollment periods that occur in the fall of 2016 for coverage beginning on or after Jan. 1, 2017.

Impact on Employers

This FAQ guidance leaves a lot of uncertainty for employers with regard to their SBC documents. The changes included in the final regulations may require health plans to update their SBC documents before the new template is released.

The forthcoming final regulations may address this issue. In some cases, the Departments have provided temporary enforcement safe harbors when guidance is not issued sufficiently in advance of an effective date. However, at this time, no safe harbors or other relief has been provided on this issue.

For clarification of this information, or to be kept up to date with any and all parts of the Affordable Care Act, contact CIBC today.

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CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign

CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign

 

FOR IMMEDIATE RELEASE

Kankakee, IL– (February 9, 2015)- William Johnson, Chairman and CEO of CIBC of Illinois, Inc. is pleased to announce the successful merger of CIBC of Illinois and Strategic Employee Benefit Services of Champaign (SEBS). The new organization will operate as CIBC of Illinois, Inc. and include offices in both Kankakee and Champaign.

“This is an extremely exciting development for both of our organizations,” said Johnson. “The expertise that CIBC possesses in the ever-changing world of employee benefits and group health insurance is exactly what businesses are demanding, and the SEBS connection to the Central and Southern Illinois markets is a great opportunity for us to deliver these solutions on a consistent basis. The synergies we gain via this new powerhouse organization will position CIBC as an industry-leader in both size and capabilities that we deliver to businesses.”

As a result of the merger, former SEBS Benefit Consultant Tony Johnston was named as President and Chief Operating Officer for both the Kankakee and Champaign offices, and Erin Beck remains as Chief Financial Officer for CIBC.

“This is a great opportunity for the SEBS team to further commit to the exciting business opportunity of employee benefits, “said Tony Johnston. “Our extensive client base will now have access to the cutting edge benefits knowledge, wellness resources, technology, and regulatory compliance that is requisite in the healthcare reform era.”

About CIBC of Illinois, Inc.

CIBC is a leader in the development and implementation of innovative employee benefits plans. Headquartered an hour south of Chicago in Kankakee and with a branch office in Champaign, CIBC serves private sector clients, non-profit organizations, governmental bodies and agencies and Taft-Hartley health and welfare funds across the Midwest. Over the past two decades, they have creatively addressed the employee benefits needs of hundreds of organizations — some with as few as two employees and others with as many as 25,000 employees around the globe.

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High Deductible Plan Options: Bringing Consumerism and Cost-Savings to tthe Marketplace

CIBC of Illinois specializes in Group Benefit plans, and in order to best serve our clients, we also employ consultants that specialize in individual and family health insurance plans. In both of these areas, we continually get asked about high deductible plans because, in most cases, there is a significant cost advantage found in these types of plans. Hopefully this article will provide some basic information, and as always, please contact us for a detailed analysis.

Moving From a Standard Plan to an HDHP

There is no such thing as a one-size-fits-all health plan. Everyone has different health insurance needs depending on their health care requirements along with those of their dependents. While some prefer standard deductible health insurance (often called a PPO health insurance plan), people are increasingly switching to a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) as a better way to maximize their health care dollars.

Standard Plans vs. HDHPs

Standard plans and HDHPs are set up much in the same way. Under both plans, the member pays a premium for coverage. Both must cover preventive services free of charge. If a member receives nonpreventive medical care, he or she pays a deductible—a specified amount of money that the insured must pay before an insurance company will pay a claim. The chief difference between the plans is that under an HDHP, premium payments are considerably lower and the deductible is considerably higher.

The minimum deductibles for HDHPs are established by the IRS. For 2015, the minimum deductible is $1,300 for individuals and $2,600 for families. Comparatively, standard plans come with a deductible that is generally quite a bit lower.

The cost of the higher premiums for HDHP plans is offset by two factors. First, as previously mentioned, the premium price for an HDHP is much lower than standard plans. This means that members who use little or no medical care during the year can save hundreds of dollars that would otherwise go to unnecessary health coverage, while still remaining compliant with the individual mandate provision of the Affordable Care Act (ACA).

While some people prefer standard deductible health insurance, people are increasingly switching to an HDHP with an HSA as a better way to maximize their health care dollars.

The second major factor setting HDHPs apart from standard plans is the addition of an HSA.

Health Savings Accounts

HSAs are one of several types of tax-advantaged health accounts, and are exclusively available to people enrolled in an HSA-compliant HDHP.

With an HSA, the account holder or his or her employer (usually both) make contributions into a savings account. No taxes are deducted from money placed into the account, as the HSA contribution is withdrawn from a paycheck before taxes are assessed. While in the savings account, the money can earn interest. The employee is free to spend that money on qualified medical expenses.

The total amount that can be placed in an HSA per year is capped by the IRS. For 2015, the maximum contribution limit is $3,350 for individuals and $6,650 for families, though account holders over 55 years old may contribute an extra $1,000 to those totals.

These limits are significantly higher than other types of tax-advantaged health accounts, and unlike the other options, HSAs have additional unique features that allow you to save more money and keep it over a longer period of time. Whereas funds in health Flexible Spending Accounts (FSAs) and Health Reimbursements Arrangements (HRAs) come with an expiration date or a maximum carry-over dollar amount, HSAs allow you to build your balance as high as you wish in perpetuity. Except for the cap on total contributions per year, there are no limits on how much money can be in your account and how long it remains open.

Additionally, HSAs are individually owned accounts, meaning employees take the account—including any employer contributions—with them if they leave their employer.

Using Health Care with an HDHP

Because of the high deductibles associated with HDHPs, having an HDHP means you need to become a smart health care shopper.

The most important thing to keep in mind is that some types of health care products and services cost much more than similar items, and the more expensive option may not be necessary for the treatment you require.

Additionally, like most other health plans, HDHPs cover preventive services at no cost. Preventive care is defined as medical checkups and tests, immunizations and counseling services used to prevent chronic illnesses from occurring. Preventive care not only keeps you healthy, but it can also monitor and even reduce the risk of developing future, costly health problems.

Most types of specific preventive services are listed here. While it can sometimes be difficult to determine if a specific medical service qualifies as preventive, you can call your health plan to learn if a service is considered preventive before receiving it.

Other medial savings strategies people with HDHPs should consider are:

  • Using a generic in place of a name brand prescription can result in significant savings. While there is not a generic version for every type of drug, the only difference between a branded drug and a generic counterpart is the name; they both have the same active ingredients. If you need medication, find out what class of drugs your prescription is classified under. If you receive a name brand prescription from a doctor, ask if a generic is available.
  • Emergency Room vs. Urgent Care.Like prescriptions, there is a sizable cost adjustment between emergency rooms and urgent care. It is very expensive for hospitals to support all of the equipment and staff that an emergency room requires, so visits to the emergency room generally cost much more than those to a doctor’s office or an urgent care center. If you develop a problem that needs to be treated quickly, but it is not life threatening or risking disability, go to an urgent care clinic.
  • Qualified Medical Expenses. Use your HSA to pay for qualified medical expenses without paying taxes. Qualified medical expenses include the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for medical services rendered by physicians, surgeons, dentists and other medical practitioners. They also include the costs of equipment, supplies and diagnostic devices needed for these purposes. Like preventive care, there can sometimes be uncertainty surrounding what is an allowable qualified medical expense. Specific qualified medical expenses are approved by the IRS, and a list of them can be found here.

HDHPs and HSAs are not the ideal health coverage plan for everyone. However, for many people, HDHPs are a great way to avoid paying for superfluous coverage and HSAs are an excellent vehicle for stockpiling tax-free money to use on future health care needs.

Self-Insurance Update: PCORI Fee Amount Adjusted for 2014

The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-insured plan sponsors in order to fund comparative effectiveness research. These fees are widely known as Patient-Centered Outcomes Research Institute fees (PCORI fees).

On Sept. 18, 2014, the Internal Revenue Service (IRS) published Notice 2014-56, which provides the adjusted PCORI fee amount for plan years ending on or after Oct. 1, 2014, and before Oct. 1, 2015 (that is, 2014 for calendar year plans). For plan years ending on or after Oct. 1, 2014, and before Oct. 1, 2015, the PCORI fee amount is $2.08 multiplied by the average number of lives covered under the plan.

In the future, the IRS will publish the adjusted PCORI fee amount for plan years ending on or after Oct. 1, 2015, and before Oct. 1, 2019.

Overview of PCORI Fees

The PCORI fees apply for plan years ending on or after Oct. 1, 2012, but do not apply for plan years ending on or after Oct. 1, 2019. For calendar year plans, the fees will be effective for the 2012 through 2018 plan years.

Issuers and plan sponsors must pay PCORI fees annually on IRS Form 720 by July 31 of each year. The fee will generally cover plan years that end during the preceding calendar year.

PCORI Fee Amounts

The PCORI fees are calculated by multiplying an applicable rate for each tax year by the average number of lives covered under the plan. The applicable rate for each tax year is as follows:

  • $1 for plan years ending before Oct. 1, 2013 (that is, 2012 for calendar year plans); and
  • $2 for plan years ending on or after Oct. 1, 2013, and before Oct. 1, 2014.

For plan years ending on or after Oct. 1, 2014, the PCORI fee amount will increase based on increases in the projected per capita amount of National Health Expenditures.

Under Notice 2014-56, for plan years ending on or after Oct. 1, 2014, and before Oct. 1, 2015, the adjusted PCORI fee amount is $2.08 multiplied by the average number of lives covered under the plan. This amount was calculated based on the percentage increase in the projected per capita amount of the National Health Expenditures published by the U.S. Department of Health and Human Services on Sept. 3, 2014 (Table 3).

As always, call us today for a full analysis of your employee benefit structure and options!

Open Enrollment Checklist From CIBC of Illinois, Inc.

To prepare for open enrollment, health plan sponsors should become familiar with the legal changes affecting the design of their plans for the 2015 plan year. These changes are primarily due to the Affordable Care Act (ACA). Employers should review their plan documents to confirm that they include these required changes.

In addition, any changes to a health plan’s benefits for the 2015 plan year should be communicated to plan participants. Health plan sponsors should also confirm that their open enrollment materials contain certain required participant notices, such as the summary of benefits and coverage (SBC).

There are also some participant notices that must be provided annually or upon initial enrollment. To minimize cost and streamline administration, employers should consider including these notices in their open enrollment materials.

 

Grandfathered Plan Status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered. Contact CIBC of Illinois, Inc. if you have questions about changes you have made, or are considering making, to your plan.

  • If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2015 plan year. Grandfathered plans are exempt from some of the ACA’s requirements. A grandfathered plan’s status will affect its compliance obligations from year to year.
  • If your plan will lose grandfathered status for 2015, confirm that the plan has all of the additional patient rights and benefits required by the ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.

Cost-sharing Limits

Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost-sharing for essential health benefits (EHB). As enacted, the ACA included an overall annual limit (or an out-of-pocket maximum) for all health plans and an annual deductible limit for small insured health plans. On April 1, 2014, the ACA’s annual deductible limit was repealed. This repeal is effective as of the date that the ACA was enacted, back on March 23, 2010.

The out-of-pocket maximum, however, continues to apply to all non-grandfathered group health plans, including self-insured health plans and insured plans. Effective for plan years beginning on or after Jan. 1, 2015, a health plan’s out-of-pocket maximum for EHB may not exceed $6,600 for self-only coverage and $13,200 for family coverage.

  • Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2015 plan year ($6,600 for self-only coverage and $13,200 for family coverage).
  • If you have a health savings account (HSA)-compatible high deductible health plan (HDHP), keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2015, the out-of-pocket maximum limit for HDHPs is $6,450 for self-only coverage and $12,900 for family coverage.
  • If your plan uses multiple service providers to administer benefits, confirm that the plan will coordinate all claims for EHB across the plan’s service providers, or will divide the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2015.
  • Be aware that the ACA’s annual deductible limit no longer applies to small insured health plans.

Health FSA Contributions

Effective for plan years beginning on or after Jan. 1, 2013, an employee’s annual pre-tax salary reduction contributions to a health flexible spending account (FSA) must be limited to $2,500. On Oct. 31, 2013, the Internal Revenue Service (IRS) announced that the health FSA limit remained unchanged at $2,500 for 2014. However, the $2,500 limit is expected to be adjusted for cost-of-living increases for later years. The IRS is expected to release the health FSA limit for 2015 later this year.

  • Work with your advisors to monitor IRS guidance on the health FSA limit for 2015.
  • Once the 2015 limit is announced by the IRS, confirm that your health FSA will not allow employees to make pre-tax contributions in excess of that amount for 2015. Also, communicate the 2015 health FSA limit to employees as part of the open enrollment process.

Transition Policy for Small Group Health Plans

Some non-grandfathered health plans in the small group market were allowed to renew for 2014 without adopting all of the ACA’s market reforms under a temporary transition policy adopted by the Obama Administration. The transition policy was originally a one-year reprieve from certain ACA market reforms; however, it was later extended for two more years, to policy years beginning on or before Oct. 1, 2016.

The transition relief is not available to all small group health plans. It only applies to small businesses with coverage that was in effect on Oct. 1, 2013. Also, because the insurance market is primarily regulated at the state level, state governors or insurance commissioners must allow for the transition relief. In addition, health insurance issuers are not required to follow the transition relief and renew plans.

Even if transition relief was available for a small group plan in 2014, it may not be available in 2015 and later years due to insurance market regulations or issuer decisions. If the transition relief no longer applies to your small group plan, confirm that your plan includes the following ACA market reforms for 2015:

  • Pre-existing Condition ExclusionsThe ACA prohibits health plans from imposing pre-existing condition exclusions (PCEs) on any enrollees. (PCEs for enrollees under 19 years of age were eliminated by the ACA for plan years beginning on or after Sept. 23, 2010).
  • Coverage for Clinical Trial ParticipantsNon-grandfathered health plans cannot terminate coverage because an individual chooses to participate in a clinical trial for cancer or other life-threatening diseases or deny coverage for routine care that would otherwise be provided just because an individual is enrolled in a clinical trial.
    • Comprehensive Benefits PackageInsured plans in the individual and small group market must cover each of the essential benefits categories listed under the ACA. Each state has a specific benchmark plan for determining the essential health benefits for insurance coverage in that state.

Employer Penalty Rules

Under the ACA’s employer penalty rules, applicable large employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange. The ACA sections that contain the employer penalty requirements are known as the “employer shared responsibility” provisions or “pay or play” rules. These rules were set to take effect on Jan. 1, 2014, but the IRS delayed the employer penalty provisions and related reporting requirements for one year, until Jan. 1, 2015.

On Feb. 10, 2014, the IRS released final regulations implementing the ACA’s employer shared responsibility rules. Among other provisions, the final regulations establish an additional one-year delay for medium-sized ALEs, include transition relief for non-calendar plans and clarify the methods for determining employees’ full-time status.

To prepare for the employer shared responsibility requirements, an employer should consider taking the following key steps:

  • Determine ALE status for 2015, including eligibility for the one-year delay for medium-sized ALEs;
  • For sponsors of non-calendar year plans, determine whether you qualify for the transition relief that allows you to delay complying with the pay or play rules until the start of your 2015 plan year;
  • Establish a system for identifying full-time employees (those working 30 or more hours per week);
  • Document plan eligibility rules; and
  • Test your health plan for affordability and minimum value.

HSA Limits for 2015

If you offer a high deductible health plan (HDHP) to your employees that is compatible with a health savings account (HSA), you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2015 limits. Also, the 2015 increased HSA contribution limits should be communicated to participants. The following table contains the HDHP and HSA contribution limits for 2015.

HDHP Minimum Deductible Amount                                                                                                                             Individual                                                        $1,300

Family                                                              $2,600

 

            HDHP Maximum Out-of-Pocket Amount

Individual                                                         $6,450

Family                                                               $12,900

 

            HSA Maximum Contribution Amount

Individual                                                         $3,350

Family                                                               $6,650

           

            Catch-up Contributions (age 55 or older)   $1,000

 

  • Summary of Benefits and Coverage

The ACA requires health plans and health insurance issuers to provide a summary of benefits and coverage (SBC) to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees).

Federal agencies have issued a template for SBCs, which should be used for 2015 plan years. The template includes information on whether the plan provides minimum essential coverage and meets minimum value requirements. The SBC template (and sample completed SBC) are available on the Department of Labor (DOL) website.

In connection with your plan’s 2015 open enrollment period, the SBC should be included with the plan’s application materials. If plan coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.

For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should work with your health insurance issuer to determine which entity will assume responsibility for providing the SBCs. Please contact your CIBC of Illinois, Inc. representative for assistance.

  • Grandfathered Plan Notice

If you have a grandfathered plan, make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as summary plan descriptions (SPDs) and open enrollment materials. Model language is available from the DOL.

  • Notice of Patient Protections

Under the ACA, non-grandfathered group health plans and issuers that require designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Also, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for obstetrical/gynecological care.

If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant, such as open enrollment materials. If your plan is subject to this notice requirement, you should confirm that it is included in the plan’s open enrollment materials. Model language is available from the DOL.

 

Group health plan sponsors should consider including the following enrollment and annual notices with the plan’s open enrollment materials.

  • Initial COBRA Notice

Plan administrators must provide an initial COBRA notice to participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD. A model initial COBRA Notice is available from the DOL.

  • Notice of HIPAA Special Enrollment Rights

At or prior to the time of enrollment, a group health plan must provide each eligible employee with a notice of his or her special enrollment rights under HIPAA.

  • Annual CHIPRA Notice

Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual notice about the available assistance to all employees residing in that state. The DOL has provided a model notice.

  • WHCRA Notice

Plans and issuers must provide notice of participants’ rights under the Women’s Health and Cancer Rights Act (WHCRA) at the time of enrollment and on an annual basis. Model language for this disclosure is available on the DOL’s website in the compliance assistance guide.

  • Medicare Part D Notices

Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals as to whether or not their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the plan and each year before Oct. 15 (when the Medicare annual open enrollment period begins). Model notices are available at www.cms.gov/creditablecoverage.

  • Michelle’s Law Notice

Group health plans that condition dependent eligibility on a child’s full-time student status must provide a notice of the requirements of Michelle’s Law in any materials describing a requirement for certifying student status for plan coverage. Under Michelle’s Law, a plan cannot terminate a child’s coverage for loss of full-time student status if the change in status is due to a medically necessary leave of absence.

  • HIPAA Opt-out for Self-funded, Non-federal Governmental Plans

Sponsors of self-funded, non-federal governmental plans may opt out of certain federal mandates, such as the mental health parity requirements and the WHCRA coverage requirements. Under an opt-out election, the plan must provide a notice to enrollees regarding the election. The notice must be provided annually and at the time of enrollment. Model language for this notice is available for sponsors to use.

This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

 

Draft Instructions for Employer Reporting of Health Coverage Released

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056. Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

On Aug. 28, 2014, the Internal Revenue Service (IRS) released draft instructions for the forms that employers will use to report under Code Sections 6055 and 6056.

  • Instructions for Forms 1094-B and 1095-B: These forms will be used by entities reporting under Section 6055 as health insurance issuers, sponsors of self-insured group health plans that are not reporting as applicable large employers (ALEs), sponsors of multiemployer plans and providers of government-sponsored coverage.
  • Instructions for Forms 1094-C and 1095-C: These forms will be used by ALEs that are reporting under Section 6056, as well as for combined reporting by ALEs who report under both Sections 6055 and 6056.

These instructions are draft versions only, and should not be relied upon for filing. The IRS may make changes to the instructions prior to releasing final versions.

Draft versions of Forms 1094-B, 1095-B, 1094-C and 1095-C were released in July 2014. The IRS expects both the forms and instructions to be finalized later this year.

Overview of Sections 6055 & 6056

The Code Sections 6055 and 6056 reporting requirements are intended to promote transparency with respect to health plan coverage and costs. They will also provide the government with information to administer other ACA mandates, such as the employer and individual mandates.

Code Section 6055 requires health insurance issuers, self-insured health plan sponsors, government agencies that administer government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to report information on that coverage to the IRS and covered individuals.

Code Section 6056 requires ALEs subject to the employer shared responsibility rules to report information on the health coverage offered to full-time employees to the IRS and covered individuals.

Filing Requirements

Under both Sections 6055 and 6056, each reporting entity will be required to file all of the following with the IRS:

  • A separate information return for each individual who is provided MEC (for ALEs, this includes only full-time employees); and
  • A single transmittal form for all of the returns filed for a given calendar year.

Filing Due Dates

Under both Sections 6055 and 6056, the return and transmittal forms must be filed with the IRS on or before Feb. 28 (March 31, if filed electronically) of the year following the calendar year of coverage. However, if the regular due date falls on a Saturday, Sunday or legal holiday, entities should file by the next business day. For calendar year 2015, these forms must be filed by Feb. 29, 2016, (or March 31, 2016, if filing electronically).

These forms are not required to be filed for 2014. However, in preparation for the first required filing (in 2016 for 2015 coverage), reporting entities may voluntarily file in 2015 for 2014 in accordance with the draft forms and instructions. More information about voluntary filing is available on the IRS website.

Statements Furnished to Individuals

All entities reporting under Section 6055 or 6056 must furnish a copy of Form 1094-C or 1095-C, as applicable, to the person identified as the responsible individual named on the form. Statements must be furnished by mail, unless the recipient affirmatively consents to receive the statement electronically.

The statement must be furnished on or before Jan. 31 of the year following the calendar year of coverage. The first statements are due to individuals by Feb. 1, 2016.

 

 

Where To File

Any reporting entity that is required to file at least 250 returns under Section 6055 or 6056 must file electronically. The 250-or-more requirement applies separately to each type of return and separately to each type of corrected return.

Reporting entities that are filing on paper will send paper returns to the address provided in the instructions, based on where their principal business, office or agency (or legal residence, in the case of an individual) is located.

Instructions for Forms 1094-B and 1095-B

Under Section 6055, every person that provides MEC to an individual during a calendar year must file Forms 1094-B (a transmittal) and 1095-B (an information return). This includes:

  • Health insurance issuers or carriers;
  • Self-insured health plan sponsors;
  • Government agencies that administer government-sponsored health insurance programs; and
  • Any other entity that provides MEC.

However, ALEs subject to the employer shared responsibility rules that sponsor self-insured group health plans will report information about the coverage in Part III of Form 1095-C, instead of on Form 1095-B. In general, an employer with 50 or more full-time employees (including full-time equivalents) during the prior calendar year is considered an ALE.

Instructions for Forms 1094-C and 1095-C

All ALEs subject to the employer shared responsibility rules must file Form 1094-C (a transmittal) and Form 1095-C (an information return) for each full-time employee for any month.

  • Form 1094-C is used to report summary information for each employer to the IRS and to transmit Forms 1095-C to the IRS.
  • Form 1095-C is used to report information about each employee.

These forms help the IRS determine whether an ALE owes penalties under the employer shared responsibility rules, as well as whether an employee is eligible for premium tax credits.

How to Complete Forms

ALEs that sponsor a self-insured health plan must also complete Form 1095-C, Parts I and III, for any individual (including any full-time employee, non-full-time employee, family members and others) who enrolled in the self-insured health plan. If the employee is full-time for any month, the ALE must also complete Part II. If the employee is not full-time for all 12 months of the calendar year, the ALE must complete only Part II, line 14, by entering code 1G in the “All 12 Months” column.

For other types of coverage, the issuer or plan sponsor will provide the information about their health coverage to any enrolled employees. The employer should not complete Form 1095-C, Part III, for those employees.

An employer that sponsors self-insured health coverage but is not subject to the employer shared responsibility rules is not required to file Forms 1094-C and 1095-C. Instead, these employers report on Forms 1094-B and 1095-B for employees who enrolled in the employer-sponsored self-insured health coverage.

Authoritative Transmittal for ALEs Filing Multiple Forms 1094-C

A Form 1094-C must be attached to any Forms 1095-C filed by an ALE. An ALE may submit multiple Forms 1094-C, each accompanied by Forms 1095-C, for some of its employees, provided that Forms 1095-C are filed for each employee for whom the ALE is required to file.

ALEs must file a single Form 1094-C reporting aggregate employer-level data for all full-time employees, identifying the form, on line 19 of Part II, as the Authoritative Transmittal. One Authoritative Transmittal must be filed for each ALE, even if multiple Forms 1094-C are filed by and on behalf of the ALE. For example, if an employer has prepared a separate Form 1094-C for each of its two divisions to transmit Forms 1095-C for each division’s full-time employees, one of the Forms 1094-C filed must be designated as the Authoritative Transmittal and report aggregate employer-level data for all full-time employees (for both divisions).

One Form 1095-C for Each Employee of Each ALE

There must be only one Form 1095-C for each full-time employee of an ALE. For example, if an ALE separately reports for the full-time employees of its two divisions, the ALE must combine the information for any employee who worked at both divisions during the year so that there is only a single Form 1095-C for that employee which reports information for all 12 months of the calendar year.

In contrast, a full-time employee who works for more than one ALE that is a member of the same aggregated ALE group (that is, works for two separate ALE members) must receive a separate Form 1095-C from each ALE member.

More Information

Please contact CIBC of Illinois, Inc. for more information on reporting under Code Sections 6055 and 6056.

Self-Funding Your Benefit Plans: Take Advantage of Probability

Importance of claims analysis

In today’s business climate, managers need benefits solutions as resourceful and cutting-edge as the organizations they run. For many employers, pre-packaged full insurance health plans do not provide the greatest value to meet their organizations’ needs. Employers of all sizes are looking to mold their plans around the requirements of their businesses.

There are many reasons employers might eschew a traditional plan system. Small and mid-sized employers might want to avoid risk charges and state premium taxes. Large employers may want administer their benefits plans themselves and grow their cash flow by holding their reserves in an interest-bearing account. Multi-state employers might want to free themselves from the burden of complying with the insurance regulations of multiple states. Employers of young, healthy workforces may be looking to capitalize on their advantages by saving on health insurance.

Because each business is unique and requires its own set of insurance solutions, diversity in provided benefits plans is needed. For many employers it may be far more beneficial to pursue self-funding as a benefits solution.

Self-funding Advantages

A self-funded group health plan is one in which the employer eliminates obligations to a health plan provider by assuming the financial risk for providing health care benefits directly to its employees. While experienced, successful business managers are experts at mitigating risks, many will gladly take on risk exposure if the probability is good for a high payout. There are numerous well-documented advantages to self-funding for employers that manage risk well; including:

  • Reduced insurance overhead costs. Carriers assess a risk charge for insured policies (approximately 2 percent annually), but self-insurance removes this charge.
  • Reduced state premium taxes. Self-insured programs, unlike insured policies, are not subject to state premium taxes. The premium tax savings is about 2 to 3 percent of the premium dollar value.
  • Avoidance of state-mandated benefits. Self-insured plans are exempt from state insurance laws, subject only to ERISA compliance.
  • Choosing benefits services à la carte
  • Flexibility in plan designs, administration and offered services
  • Customizable stop-loss insurance to reduce the risk associated with high claims
  • Improved cash flow. Self-insured employers do not have to pre-pay for coverage, and claims are paid as they become due.
  • Additional cash flow if reserves are held in an interest-bearing account

Complete Customization

One of the greatest assets offered by self-funding is the complete freedom to structure benefits according to needs of your company. Employers can choose what benefits they want to offer, while opting to insure individual benefits through traditional means or forgo offering them altogether.

The following benefits may be self-insured:

  • Health care (indemnity, PPO, POS and HMO)
  • Dental
  • Short-term disability
  • Prescription drugs
  • Vision care

Employers can also make the final call on important variables, such as:

  • Eligibility
  • Exclusions
  • Cost-sharing
  • Policy limits
  • Retiree benefits

Employers are also free to administer benefits themselves if they have the resources, or to retain a third-party administrator at a fraction of the cost of a traditional benefits provider.

Most advantageous to employers worried about the potential for large claims is the ability to acquire stopgap insurance, allowing managers to determine their total amount of yearly costs with 100 percent certainty.

CIBC of Illinois, Inc. welcomes the opportunity to help your organization examine its plan designs and make recommendations for improvement.

Rules “Clarification” of Benefit and Payment Parameters for 2015

On March 5, 2014, the Department of Health and Human Services (HHS) released its 2015 Notice of Benefit and Payment Parameters Final Rule. The final rule describes payment parameters applicable to the 2015 benefit year and standards relating to the:

  • Premium stabilization programs;
  • Open enrollment period for 2015; and
  • Annual limitations on cost-sharing.

Among other provisions, the final rule also implements patient safety standards for qualified health plans (QHPs) offered in the Exchanges and includes standards related to the employee choice and premium aggregation provisions in federally-facilitated Small Business Health Options Programs (SHOPs).

Reinsurance Program

Beginning in 2014, the Affordable Care Act (ACA) requires a three-year transitional reinsurance program to be established in each state. This program is intended to help stabilize premiums for coverage in the individual market during the first three years of Exchange operation (2014 through 2016) when individuals with higher-cost medical needs gain insurance coverage. This program will impose a fee on health insurance issuers and self-insured group health plans.

The final rule modifies the definition of “contributing entity” for the 2015 and 2016 benefit years to exempt certain self-insured, self-administered group health plans from the reinsurance contribution requirement.

The final rule implements a two-installment contribution schedule for the reinsurance fees.  For example, the $63 per capita reinsurance contribution for the 2014 benefit year will be collected in two installments: $52.50 in January 2015 and $10.50 late in the fourth quarter of 2015. The final rule also refines the definition of “major medical coverage” to prevent more than one payment per enrollee.

In addition, the rule finalizes the annual reinsurance contribution rate of $44 per enrollee for 2015.

Open Enrollment Period for 2015

The rule finalizes the Exchange’s annual open enrollment period for the 2015 benefit year, which will begin on Nov. 15, 2014, and extend through Feb. 15, 2015.  According to HHS, this schedule gives issuers additional time before they need to set their 2015 rates and submit their QHP applications, gives states and HHS more time to prepare for open enrollment, and gives consumers until Feb. 15, 2015, to shop for coverage.  The rule does not change the schedule for the Exchange’s initial open enrollment period, which began on Oct. 1, 2013, and goes until March 31, 2014.

Annual Limitations on Cost-sharing

Effective for plan years beginning on or after Jan. 1, 2014, the ACA requires certain non-grandfathered health plans to comply with cost-sharing limits with respect to their coverage of essential health benefits. The cost-sharing limits include both an overall annual limit, or an out-of-pocket maximum, and an annual deductible limit.

The ACA requires that these limits be updated annually based on the percent increase in average premiums per person for health insurance coverage. The final rule establishes the cost-sharing limits for 2015, which are lower than the limits HHS originally proposed.  For 2015:

  • The annual deductible for a health plan in the small group market may not exceed $2,050 for self-only coverage and $4,100 for family coverage; and
  • The annual out-of-pocket maximum for all health plans is $6,600 for self-only coverage and $13,200 for family coverage.

 As always, call us at 877-936-3580 to see how these rules apply to you and your business.

Source: Department of Health and Human Services

Pay or Play for Educational Institutions

By Andrew Wheeler

Director of eCommerce

www.CIBCinc.com

When I was growing up, I remember many of my teachers saying that there was five hours of prep time for every hour spent in the classroom teaching. At the time, I couldn’t have cared less, especially when adjunct professors would try and use this equation to motivate us to prepare for class more effectively. It was a calculation that I made in my head; me plus preparation equaled no 25 cent drafts at the Village Green. Hence my 20 year gap between when I started college and when I finished my Masters.

Now, I have many clients in the world of education. That old axiom, especially since the Affordable Care Act became law, rings loud and clear. Educational organizations have a distinct and separate set of hoops to jump through, and only careful preparation and calculation will help administrators negotiate around the pitfalls.  The same shared responsibility mandate apples for these institutions, whether they are self or fully insured. The difference lies in how they quantify and qualify full time employees.

Every Hour Counts

 

First, let’s look at how to calculate the hours of employees of educational institutions with relation to their full time or part time status. Remember, all employees over 30 hours per week, or 130 hours per month are considered full time.

Until final guidance is issued, employers must use a reasonable method for crediting hours of service. The IRS says that a method of crediting hours would not be reasonable if it took into account only classroom or other instruction time and not other hours that are necessary to perform the employee’s duties, such as class preparation time.  Clear as mud, right?  Basically, office hours count toward full time status, as do any other prep time.

Looking Forward Back

There is also something called a look-back period that will be used for this industry segment, as well as other segments. For ongoing employees, an employer looks at each employee’s full-time status by looking back at a measurement period lasting between 3 to 12 consecutive calendar months, as chosen by the employer, to decide whether the employee averaged at least 30 hours of service per week during this time.  If the employee was employed for at least 30 hours of service per week during the measurement period, he or she is considered a full-time employee for a set period into the future, known as the stability period. The stability period must be at least six calendar months and no shorter in duration than the measurement period.

Employers may need some time between the measurement and stability periods to figure out which employees are eligible for coverage….and also to notify and enroll employees. Hence, employers may use a 90 day administrative period between the measurement and stability periods.

An employer will not be subject to a tax /penalty for not offering coverage to new full-time employees during the first three calendar months of employment, so probationary periods for new employees still are legal under ACA. If the employer uses a look-back period for its ongoing employees, the employer may also use a similar method for new variable hour or seasonal employees.

Leaves and Breaks

When looking at breaks in the academic year that are paid leave periods, the employer must credit employees with hours of service. The proposed regulations include special averaging methodologies for employment break periods of employees of educational organizations. The proposed regulations state that an employment break period is a period of at least four consecutive weeks during which an employee is not credited with an hour of service. Special unpaid leave, which does not apply in this scenario, includes leave under the Family and Medical Leave Act (FMLA), the Uniformed Services Employment and Reemployment Rights Act (USERRA) and jury duty. 

The proposed regulations assess that the educational organization must apply one of the following methods to employment break periods related to or arising out of non-working weeks or months under the academic calendar. An educational organization either:

          •        Treats employees as credited with hours of service for the                employment break period at a rate equal                                              to the average weekly rate at which the                                                       employee was credited with hours of service during the                     weeks in the measurement period that are not part of an                      employment break period; or,

          •        Averages hours of service per week for the employee                       during the    measurement period excluding the                                     employment break period and uses that     average as the                      average for the entire measurement period.

We have found this is difficult for institutions of higher learning to manage. They have a stable of adjunct professors that will surely see credit-hour class assignments reduced in order to mitigate the financial exposure to ACA. Considering the nature of most labor agreements, it becomes problematic for institutions to be able to afford the increase in benefits allocation. When push comes to shove, it seems that the educator is getting shoved into a more limited class schedule. Again, this is a generalization…but it is not an uncommon scenario. We look at each scenario on its own merit, we do our homework, and then we present our findings. We know that there will be a test, and educational intuitions don’t have the resources to fail. That’s where we come in.

This article is intended for informational purposes only and should not be construed as legal advice. Please consult with a legal professional for legal opinions.

 To get more information on CIBC of Illinois, visit us at www.CIBCINC.Com or call toll free 877-936-3580.

Pay or Play for Educational Institutions: There WILL Be a Test!

By Andrew Wheeler

Director of eCommerce

 www.CIBCinc.com

When I was growing up, I remember many of my teachers saying that there was five hours of prep time for every hour spent in the classroom teaching. At the time, I couldn’t have cared less, especially when adjunct professors would try and use this equation to motivate us to prepare for class more effectively. It was a calculation that I made in my head; me plus preparation equaled no 25 cent drafts at the Village Green. Hence my 20 year gap between when I started college and when I finished my Masters.

Now, I have many clients in the world of education. That old axiom, especially since the Affordable Care Act became law, rings loud and clear. Educational organizations have a distinct and separate set of hoops to jump through, and only careful preparation and calculation will help administrators negotiate around the pitfalls.  The same shared responsibility mandate apples for these institutions, whether they are self or fully insured. The difference lies in how they quantify and qualify full time employees.

Every Hour Counts

 

First, let’s look at how to calculate the hours of employees of educational institutions with relation to their full time or part time status. Remember, all employees over 30 hours per week, or 130 hours per month are considered full time.OfficeProfessor

Until final guidance is issued, employers must use a reasonable method for crediting hours of service. The IRS says that a method of crediting hours would not be reasonable if it took into account only classroom or other instruction time and not other hours that are necessary to perform the employee’s duties, such as class preparation time.  Clear as mud, right?  Basically, office hours count toward full time status, as do any other prep time.

Looking Forward Back

There is also something called a look-back period that will be used for this industry segment, as well as other segments. For ongoing employees, an employer looks at each employee’s full-time status by looking back at a measurement period lasting between 3 to 12 consecutive calendar months, as chosen by the employer, to decide whether the employee averaged at least 30 hours of service per week during this time.  If the employee was employed for at least 30 hours of service per week during the measurement period, he or she is considered a full-time employee for a set period into the future, known as the stability period. The stability period must be at least six calendar months and no shorter in duration than the measurement period.

Employers may need some time between the measurement and stability periods to figure out which employees are eligible for coverage….and also to notify and enroll employees. Hence, employers may use a 90 day administrative period between the measurement and stability periods.

An employer will not be subject to a tax /penalty for not offering coverage to new full-time employees during the first three calendar months of employment, so probationary periods for new employees still are legal under ACA. If the employer uses a look-back period for its ongoing employees, the employer may also use a similar method for new variable hour or seasonal employees.

Leaves and Breaks

When looking at breaks in the academic year that are paid leave periods, the employer must credit employees with hours of service. The proposed regulations include special averaging methodologies for employment break periods of employees of educational organizations. The proposed regulations state that an employment break period is a period of at least four consecutive weeks during which an employee is not credited with an hour of service. Special unpaid leave, which does not apply in this scenario, includes leave under the Family and Medical Leave Act (FMLA), the Uniformed Services Employment and Reemployment Rights Act (USERRA) and jury duty. 

The proposed regulations assess that the educational organization must apply one of the following methods to employment break periods related to or arising out of non-working weeks or months under the academic calendar. An educational organization either:

  • Treats employees as credited with hours of service for the employment break period at a rate equal  to the average weekly rate at which the  employee was credited with hours of service during the  weeks in the measurement period that are not part of an  employment break period; or,
  • Averages hours of service per week for the employee during the measurement period excluding the  employment break period and uses that average as the average for the entire measurement period.

We have found this is difficult for institutions of higher learning to manage. They have a stable of adjunct professors that will surely see credit-hour class assignments reduced in order to mitigate the financial exposure to ACA. Considering the nature of most labor agreements, it becomes problematic for institutions to be able to afford the increase in benefits allocation. When push comes to shove, it seems that the educator is getting shoved into a more limited class schedule. Again, this is a generalization…but it is not an uncommon scenario. We look at each scenario on its own merit, we do our homework, and then we present our findings. We know that there will be a test, and educational intuitions don’t have the resources to fail. That’s where we come in.

 To get more information on CIBC of Illinois, visit us at www.CIBCINC.Com or call toll free 877-936-3580.

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