Are you ready for Open Enrollment 2014?€¦ · way up to age 26 (natural, adopted & stepchildren). •This is applicable to both Grandfathered and Non-Grandfathered plans. •Even

Are you ready for

PPACA in 2014?

Consulting | Brokerage | Compliance | Communication | Administration

Presented by Patrick C. Haynes, Jr., Esq., LL.M.

11/21/2013

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Patrick C. Haynes, Jr.

As counsel for Crawford Advisors’ Employee Benefits and Executive Compensation Group, Mr. Haynes advises employers and plan sponsors in a variety of health and welfare benefit plan compliance matters, including, but not limited to, tax qualification and other Internal Revenue Code issues, ERISA, COBRA and HIPAA portability and privacy issues. Mr. Haynes lectures frequently and has published many articles on health and welfare benefit plan compliance topics.

Today’s presenter

Practice Areas Employee Benefits & Exec Comp, ERISA, COBRA, HIPAA, §125, and §§ 105, 106, 129, 132

Education Temple University School of Law, LL.M.

Rutgers University School of Law, J.D.

Rutgers University School of Business, M.B.A.

Rutgers University College of Arts & Sciences, B.A.

Admitted to Practice U.S. Supreme Court

Federal and State Courts of

New Jersey

Pennsylvania

Connecticut

District of Columbia

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Individual Mandate and Employer Mandate

Review…

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Individual Mandate

• The individual mandate is still in

effect!

- Americans must be covered under some

sort of Health Insurance Plan.

- If they chose not to enroll in any kind of

healthcare mode, they will be subject to a

penalty equal to 1% of your income or

$95/adult (whichever is greater).

• Plus the same penalty for your spouse and ½ of

the penalty for each uncovered child (all subject

to an annual maximum, $285/yr1, $975/yr1,

$2,085/yr3).

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Delay of Employer Mandate

• July 2, 2013:

- Via evening blog/post - Obama Senior Advisor Valerie Jarrett: White House announced delaying the PPACA employer mandate until January 1, 2015.

• Decision puts off reporting requirements necessary to track companies that are providing health insurance to their full time employees.*

• The “Pay or Play” portion of the employer mandate was also delayed.

- Large employers will not be fined in 2014 for not providing health care to qualified full time employees.

*A Full-Time employee qualifies as one that works an average of 30 hours/week or 130 hours/month.

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Household Income Test 1:

8% Test

• The 8% Rule tests whether an individual is subject to the individual mandate test.

• Beginning on 1/1/14 if an individual does not have MEC (Minimum Essential Coverage) they are subject to a shared responsibility payment (otherwise knows as the individual mandate tax).

• An individual may be exempt from the tax if the price of the lowest-priced bronze plan on the exchange is more than 8% of household income.

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Household Income Test #2

9.5% Rule • The 9.5% rule is used to test whether

an individual is eligible for a subsidy.

• An individual is eligible for a subsidy

if their income falls within 100%-

400% of the federal poverty level

AND if they are not eligible for

government health insurance or

AFFORDABLE Employer Health

insurance.

• A plan is considered affordable if the

employee cost is less than 9.5% of

household income.

• The two types of subsidies are

premium tax credits and cost-sharing

reductions.

• If an employee is eligible for an individual

subsidy in the marketplace because the

employer did not offer affordable MEC-

coverage the employer must pay a penalty

(beginning in 2015, due to the ER-mandate

delay).

• The cost must be more than 9.5% of one of

these 3 safe-harbors:

• 100% of Federal Poverty Level

• W-2, Box 1 Earnings

• Monthly rate of pay at the beginning of

the plan year

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Free-Choice Vouchers

• A provision in PPACA concerning free-choice vouchers was repealed effective April 15, 2013.

• The provision would have made it necessary for employers to offer vouchers to employees whose cost of coverage exceeded 8 percent but did not exceed 9.8% of household income.

• These vouchers could have been used to purchase health insurance on state exchanges.

• The law was supposed to have been effective 1/1/2014, but it is no longer a concern for employers.

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Health Exchange and CO-OPS

Review…

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Health Care Exchanges

• With the individual mandate still in effect, the health care exchanges are still being rolled out for 1/1/2014.

• If you are in a state that offers a health care exchange and you do not already have coverage, you must purchase a policy from the exchange or you will be subject to a fine.

• Possible “grace period for the first quarter of 2014” is available due to HC.gov’s botched roll-out.

• If you are in a state that does not have a health care exchange you must purchase care from the federal healthcare exchange.

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Health Exchange/Marketplace Notifications

• Employers were required (by 10/01/2013) to their W-2’d employees informing them that health care coverage is available through State or Federal Health Care exchanges.

- All W-2 EEs, not just “eligibles”.

• For new hires after October 1st, a notification must be sent to them within 14 days of hire.

- Hand out to new hires with W-4/I-9 paperwork

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CO-OPS

• HHS created Consumer Operated and Oriented Plans or CO-OPS.

• These are organizations designed to be non-profit, consumer governed health insurers.

• Designed for small businesses looking for insurance through the “SHOP”.

• These non-profits are funded through $3.4 billion in federal start up money.

• In January Congress and the Obama Administration passed a law preventing any more start up funding for CO-OPS that didn’t have existing loan commitments.

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CO-OPS continued..

• CO-OPS

• Could not have been selling insurance before 2010.

• Are prevented from converting to for-profit-status.

• 23 states comprise NASHCO, or National Alliance of State Health CO-OPS.

• Those states that had received funding for CO-OPs have already started providing health insurance on the healthcare exchanges.

• It remains to be seen how these non-profit organizations will compete with the for-profit carriers in the exchange.

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Plan Design Requirements

Review…

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Grandfathered Plans

• A grandfathered plan is one that was in place before March 23, 2010.

• If significant changes were made to the plan since then, the plan may

have lost its grandfathered status.

• Should you plan to move from to a non-grandfathered plan, make sure

that you adhere to the new requirements that have been enacted.

• For more information on grandfathered status, please visit Crawford

Advisors May 2010 webinar which explains the ins and outs of

grandfathered plans.

• Grandfathered Plans Webinar

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Non-Grandfathered Plans

• Specific plan design requirements

for non-grandfathered plans still

apply.

• Preventive Care requirements

• Small group health plans

• Limits on annual deductibles

• $2,000 for EE

• $4,000 for all other tiers

• Not applicable to GF plans, SF plans

and Large-ER plans.

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Pre-existing Limit Conditions

• Prohibitions on Pre-existing limit conditions still apply.

• Policies that start on or after 1/1/2014 are subject to the prohibition.

• Currently only individuals under the age of 19 are subject to these provisions, but they will be extended to all citizens this upcoming year.

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Out of Pocket Maximums

• On 8/13/2013 multiple news outlets broadcasted news that out of pocket maximums for employees were being delayed until 2015.

• This was not new news however, as this was cited in February 2013 Federal Register Notice and had been written on extensively by Crawford Advisors both in February and May of this year.

• The one-year-delay is only for non-grandfathered health plans with separate health and Rx vendors. All individual plans/policies must comply now.

• The maximums are:

- $6,350 for employee only coverage

- $12,700 for family coverage

http://www.crawfordadvisors.com/employee-benefits-news/limit-on-consumer-costs-out-of-pocket-max-delayed

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Annual Limits on Essential benefits

• Policies/Plans starting on

or after 1/1/2014 must not

have annual limits built

into the “essential health

benefits” of their

policy/plan.

• 10 Essential Health Benefits

• Emergency services

• Hospitalization

• Laboratory services

• Maternity and newborn care

• Mental health and substance use disorder

services, including behavioral health

• Treatment

• Pediatric services, including oral and vision care

• Prescription drugs

• Preventive and wellness services and chronic

disease management

• Rehabilitative and habilitative care and devices

• Ambulatory care

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Standalone HRAs and Integrated Health Plans

• Since there are no longer annual limits on essential

benefits, your standalone HRA may be out of compliance.

• The majority of HRAs put annual limits on reimbursable

expenses. Starting 1/1/2014, a standalone HRA must not

have annual limits on essential benefits.

• An integrated HRA plan (one that you only get with your

HDHP election) will still be able to have an annual

maximum.

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Waiting Period

• Starting 1/1/14, waiting period for eligibility can be

no longer than 90 days.

• On the 91st day employees will immediately

become eligible for coverage.*

• Make sure your plan is amended to include this

rule.

*If the 91st day is a weekend or holiday, the plan or carrier may choose to permit coverage to

be effective earlier than the 91st day for administrative convenience, but may not make the

effective date later than the 91st day.

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Dependent Children

• Employers must extend coverage to children all the

way up to age 26 (natural, adopted & stepchildren).

• This is applicable to both Grandfathered and Non-

Grandfathered plans.

• Even if the child is available for other-employer-

sponsored benefits (at his/her job or his/her spouse’s

job), dependent coverage must still be made available.

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Wellness Program

• Starting in 2014, PPACA has increased the maximum contributions that can be made for wellness programs.

• Health Programs may increase their rewards from 20-30%... And may increase to 50% if they are aimed toward preventing tobacco use.

• Employers may consider increasing rewards for the 2014 plan year. – June 3, 2013 Article: www.crawfordadvisors.com/employee-benefits-

news/final-wellness-rules-expand-protections-and-incentives

– And, our May 2, 2013 article about Wellness and PPACA-affordability tests: http://www.crawfordadvisors.com/employee-benefits-news/ppaca-minimum-value-win-self-funded-plans

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Non-Discrimination

• For non-grandfathered plans in 2014, there must not

be any plan language that discriminates between any

class of healthcare provider.

– If a licensed provider can perform that service then you

may not limit/alter/reduce their payment.

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Clinical Trials

• Starting Jan 1, 2014 there are new rules for non-

grandfathered plans concerning clinical trials.

– The plans must pay for certain trial costs.

– The plans may not discriminate against individuals

participating in qualified trials.

– The plans may not limit routine patient costs connected

with the trial.

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DOMA Considerations –

Now and for Open Enrollment

• Fully insured health plans vs.

self-funded health plans

• IRS guidance – retirement plans –

state of “celebration rule” • http://www.crawfordadvisors.com/employee-benefits-news/tax-answers-to-faqs-for-same-sex-spouses

• DOL guidance – ERISA plans • http://www.dol.gov/ebsa/newsroom/tr13-04.html

• Spousal Life Insurance

• Imputed Income – State definitions of

marriage

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Fees

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PPACA Fees

Transitional Reinsurance Fee (Carriers & Self-Funded Plans) • Plans must pay a $63 dollar per enrollee

fee ($45 per in 2015; $25 per in 2016)

• These must be reported by 11/15/2014

• Fees must be paid by 1/15/2015

• ASO vendor may submit monies to HHS on behalf of a self-funded plan

• Tax deductible

Health Insurance Industry Fee • Fee on all health insurers (including HMOs)

starts at $8B in 2014 – up to $14.3B in 2018

• Fee applies only to insured business

• Not tax deductible

PCORI Fees (Carriers & Self-Funded Plans) • Self-Funded plan sponsors and health

insurance issuers must pay a $2 fee to fund the Patient-Centered Outcomes Research Institute

• Plan must sign, file and pay via IRS Form 720, annually in July

• The fee expires in 2019

• Tax deductible

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Fines? There aren’t any, right?!

While ER-reporting has been delayed, Health Plans are still subject to PPACA-requirements. An Employer with a 6-month waiting period asks if they can keep it that way for 2014?

Putting aside the pay-or-play penalties, failure to have your plan conform to PPACA means:

• A violation of the PHSA provisions of PPACA; liable for a $100/day excise tax for each

person affected by this (i.e., each new employee with between 90 days and 6-months);

• must be self-reported on Form 8928 (so penalties would apply if ER fails to file/pay the

tax as well, since there would be no reasonable cause for not complying).

• If an ERISA plan – possible DOL penalties too.

Is the same true for failing to have an OOPMax that complies? Or failing to remove my

HIPAA pre-existing condition limitation?

• Yes. Anything that is part of the PHSA mandate provisions of PPACA, because those

provisions are incorporated into the HIPAA provisions of the IRC and any violation of

those provisions is subject to that $100/day tax.

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Take-Aways

• There are plenty of compliance issues still to be handled for 2014 despite the delays.

• Make sure your plans are up to code with the new mandates for non-grandfathered plans.

• If you do have a grandfathered plan make sure it retains its status – or be prepared to implement the changes required.

• It is important to understand the differences between the 8% and 9.5% tests.

• Be aware of potential penalties!

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Checklist Modify or Not? Modify 125 plan to permit Jan 2014 adds (to avoid mandate penalty) and/or drops (to

leave your plan for an exchange plan)

Modify 2014 offering to prepare for the full-effect of 2015’s ER-Mandate & Affordability issues (9.5% test)

Eliminate dependent rules that contained pre-2014 language (like access to other ER-based coverage, etc.)

Pre-Exes removed for everyone

Dealt with 2014 OOPMaxes? (Med and Rx, or separate Med & Rx).

Situs decision? If you have a Self-Funded plan--Which state’s definition are you using for “Essential

Health Benefits” rules? Why that state?

Wellness plans increased to 30%. Did you perform the HIPAA nondiscrimination tests on those rates?

Have you amended plans to account for same-sex marriage concerns – in your state? In each state where

your EEs live? Work? Have any fully insured carriers made decisions that are different from your

approach? Does each certificate booklet reflect your decisions?

Have you issued/sent/distributed your “Year-2” compliant SBCs?

Have you amended your HCFSA to permit the new, optional $500 rollover to the next FSA plan year?

Fees: Has your CFO planned for the large Transitional Reinsurance Fee and the smaller PCORI fee

expenses?

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Crawford Advisors, LLC

200 International Circle, Suite 4500, Hunt Valley, MD 21031

Devon Square Two, 744 West Lancaster Avenue, Suite 215

Wayne, PA 19087

800.451.8519 • www.CrawfordAdvisors.com

Via E-mail to: [email protected]

To Download These Slides: http://www.crawfordwebinars.com

Questions & Requests: [email protected]

Questions