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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 On April 1, 2014, the ACA’s annual deductible limit was repealed.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.

 

Paying Premiums for Individual Health Insurance Policies

Starting in 2014, the Affordable Care Act (ACA) may make purchasing health insurance in the individual market more accessible for individuals. Due to the ACA’s reforms and the rising costs of health coverage, some employers have considered whether they should help employees pay for individual health insurance policies instead of offering an employer-sponsored group health plan.

On Sept. 13, 2013, the Internal Revenue Service (IRS) issued Notice 2013-54 (Notice) to address how certain ACA reforms apply to health reimbursement arrangements (HRAs), cafeteria plans and other employer payment plans. The Notice is effective for plan years beginning on or after Jan. 1, 2014.

The Notice discourages employers from helping employees pay for individual policies in lieu of offering a group health plan by eliminating the tax savings associated with contributions toward individual coverage. Effective for 2014, if employers want to help employees pay their individual policy premiums, it generally must be on an after-tax basis. However, employers may continue to provide group health coverage for their employees on a tax-free basis.

This Legislative Brief outlines how employers have traditionally paid for employees’ individual policy premiums on a tax-free basis, and summarizes how the ACA affects these arrangements starting in 2014.

HRAs

HRAs have been used by employers to help employees pay for the cost of individual insurance policies on a tax-free basis. Unlike health flexible spending accounts (FSAs) and health savings accounts (HSAs), HRAs can be used to reimburse health insurance premiums. Also, unlike an HSA, an individual does not need to be covered under a high-deductible health plan (HDHP) to participate in an HRA. This has made HRAs particularly compatible with individual health insurance policies.

The Notice addresses how the ACA’s market reforms apply to HRAs, including HRAs that are not integrated with other group health coverage, or “stand-alone” HRAs. An HRA used to purchase coverage on the individual market cannot be integrated with that individual coverage, and is considered a stand-alone HRA. Some stand-alone HRAs are not subject to the ACA’s market reforms because they fall under an exception, such as retiree-only HRAs. However, beginning in 2014, stand-alone HRAs that do not fall under an exception will not be permitted due to the ACA’s annual limit prohibition and preventive care requirements.

Thus, effective for 2014 plan years, employers will not be able to offer a stand-alone HRA for employees to purchase individual coverage, inside or outside of an Exchange, without violating specific provisions of the ACA and risking exposure to severe financial penalties.

Employer Payment Plans

In Revenue Ruling 61-146, the IRS provided that if an employer reimburses an employee’s substantiated premiums for non-employer sponsored hospital and medical insurance, the payments are excluded from the employee’s gross income under Internal Revenue Code (Code) section 106. This IRS guidance allowed an employer to pay an employee’s premiums for individual health insurance coverage without the employee paying tax on the amount.

The Notice refers to this type of arrangement as an “employer payment plan.” An employer payment plan appears to also include any tax-advantaged arrangement to pay for individual health insurance premiums, including employee pre-tax salary reduction contributions paid through a cafeteria plan.

Similar to the guidance for HRAs, the Notice provides that an employer payment plan that reimburses employees for their individual insurance policy premiums will not comply with the ACA’s annual limit prohibition and preventive care requirements. Thus, effective for 2014 plan years, these plans will essentially be prohibited.

However, an employer payment plan does not include an employer-sponsored arrangement that allows an employee to choose either cash or an after-tax amount to be applied toward health coverage. Thus, premium reimbursement arrangements made on an after-tax basis will still be permitted.

Cafeteria Plans

A Section 125 Plan, or a cafeteria plan, can be used by employers to help employees pay for certain expenses, including health insurance, on a pre-tax basis. The proposed cafeteria plan regulations from 2007 allow for the pre-tax payment or reimbursement of individual health insurance policy premiums under a cafeteria plan. However, the ACA changes this rule and prohibits cafeteria plans from paying or reimbursing premiums for individual health insurance policies, effective for 2014.

The ACA’s prohibition on including individual health insurance policies under a cafeteria plan applies to policies purchased on an Exchange and through the private market, as follows:

  • Exchange Coverage: The ACA provides that individual health insurance offered through an Exchange cannot be reimbursed or paid for under a cafeteria plan. Exchange coverage may be funded through a cafeteria plan only if the employee’s employer elects to make group coverage available through the Exchange’s Small Business Health Options Program (SHOP).
  • Non-Exchange Coverage: The Notice indicates that, effective for 2014, cafeteria plans may not be used to pay premiums for individual health insurance policies that provide major medical coverage. However, it appears that this restriction does not apply to individual policies that are limited to coverage that is excepted from the ACA’s market reforms, such as retiree-only coverage, or limited-scope dental or vision benefits.

Thus, effective for 2014, the tax exclusion provided through a cafeteria plan is only available when group coverage is purchased. Employers that want to contribute toward the cost of individual coverage must do so on a taxable basis.

The Notice provides a transition rule for certain cafeteria plans for plan years beginning before Jan. 1, 2014. For cafeteria plans that as of Sept. 13, 2013, operate on a plan year other than a calendar year, the restriction on purchasing individual Exchange coverage through a cafeteria plan will not apply before the first plan year that begins after Dec. 31, 2013. However, individuals may not claim a premium tax subsidy for any month in which they are covered by an individual plan purchased through an Exchange as a benefit under a cafeteria plan.

Affordable Care Act Regulations on Wellness Programs Released: What Employers and Employees Need to Know

By Andrew Wheeler
Director of eCommerce
CIBC of Illinois, Inc.
http://www.cibcinc.com

Like it or not, The Affordable Care Act is upon us. Many of us in the industry know that cost can be controlled in the benefits world by engaging in well-designed and implemented wellness programs for employees. We also know that it isn’t easy to get employees engaged in these initiatives, so we come up with incentives to entice (coerce) employees into addressing their health. Thankfully, there are parts of this law that are designed to encourage wellness programs in group health benefit settings, and employers need to know that there are specific limitations with these programs that will go into effect in January 2014.

Regardless of the type of wellness program, every individual in the program should have the opportunity to get the full amount of any incentive or reward regardless of any personal health factors. Keep in mind that these regulations apply to both grandfathered and non-grandfathered plans with plan years beginning on or after January 2014.

Participatory Wellness Programs
Participatory programs are wellness programs that, among other things, reimburse for the cost of health clubs, participation in monthly wellness meetings or seminars, and completing a health risk assessment. The member does not need to take further action beyond the initial action(s), and the final ACA rules tend to support these wellness programs. In essence, these types of initiatives comply with nondiscrimination requirements “as long as participation is made available to all similarly situated individuals regardless of health status.” It is important to note that there is no maximum amount of award on participatory wellness programs.

 
Health Contingent Wellness Programs
The final regulations for health contingent wellness programs, meaning those programs that require plan participants to satisfy a required standard related to a health factor in order to receive a reward, are capped at 30 percent of the total employee-only premium (50 percent if reduced tobacco use is a criterion).
Within the health contingent area, there are two separate categories that need to be considered for nondiscrimination purposes. Activity-only wellness programs require a plan participant to complete an activity (walking, diet, exercise), whereas an outcome based program requires one to attain/maintain a certain outcome (smoking, exercise, etc…). Outcome-based programs, however, require the member to achieve and maintain a particular outcome to receive the reward (smoking cessation, positive biometrics, etc….).

Non-discrimination rules apply differently depending on which program type is offered by the employer. Outcome-based programs have to offer a “Reasonable alternative standard” for achieving the reward for a broader group of participants than if an activity-based program is utilized.

 
Call us today for more information about wellness programs, especially ACA compliant programs geared to benefit you and your employees. It’s all part of the Solutions Approach that CIBC is known for.

Solutions….that Work!

 
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 http://www.CIBCINC.Com or call toll free 877-936-3580.

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