Regulation Roundup: The Hits Keep On Coming
Source: United Benefit Advisors
The federal government in the past few weeks has kept up the fast pace of pumping out benefits-related guidance -- a trend that started at the end of 2012 -- with a set of final and proposed regulations for the health care reform law, a final HIPAA rule and a compromise on the Obama administration's coverage requirement for contraceptives.
HIPAA: The Department of Health and Human Services (HHS) released its HIPAA omnibus final rule in late January. The final rule establishes new rights for individuals to access their health information, calls for updates to business associate contracts, beefs up privacy protections for patients and gives the government more power to enforce the law, according to a HealthLeaders Media article.
Employers should expect tougher policing of HIPAA-related infractions by federal agencies, experts say.
"The 'good old days' of voluntary compliance and 'slaps on the wrist' seem to be a thing of the past," Brad M. Rostolsky, a partner with Reed Smith, LLP, told HealthLeaders Media. "As a result, it's important that regulated businesses, from the top down, are seen to have buy-in to HIPAA compliance efforts."
Contraception Compromise: HHS has tweaked its requirement that religious nonprofit organizations provide their female members coverage for birth control, according to a PPACA Advisor release from United Benefit Advisors (UBA). Instead, insurance companies, after being notified of the employer's objection to the coverage, would be required to provide coverage at no cost to workers through separate policies. If the employer is self-insured, it can use a third party to set up a separate health policy that would provide coverage for contraceptives. The costs for this action may be be offset by the fees that insurers will pay to participate in the government-run health care exchanges, slated to go online in 2014.
Affordability: The IRS finalized a rule that clarified that the health coverage "affordability" requirement (that an employee's premium contribution not exceed 9.5 percent of household income) under the Patient Protection and Affordable Care Act (PPACA) will be based on self-only coverage, according to a Business Insurance online report. Employers with plans that fail that test face a $3,000 penalty for each full-time employee who is not offered affordable coverage and instead receives a premium subsidy from the government to purchase insurance in a health care exchange. The proposed regulation left open the possibility that the affordability test might have applied to family coverage, but the IRS removed that scenario with its final rule.
HRAs: A new set of frequently asked questions posted by federal agencies limits the use of health reimbursement arrangements (HRAs) in the coming government-run health insurance exchanges, an online report by the Society for Human Resource Management (SHRM) notes. The FAQs state that an HRA that is not integrated with a group health plan but instead functions as a "stand-alone" benefit falls under the PPACA provision that limits the annual amount an individual is required to spend on health care coverage. The report points out that this restriction means funds from stand-alone HRAs can't be used to buy individual coverage through the online exchanges, slated to open in 2014.
Timothy Jost, a professor at Washington and Lee University School of Law, told SHRM that many employers were hoping to offer employees "a fixed-dollar contribution" through an HRA. Such a move "would permit the employee to take advantage of the tax subsidies currently available through HRA coverage but get the employer out of the health insurance business." For many employers, this now will not be possible.
Minimum Coverage: A proposed PPACA rule clarifies what types of services would be considered "minimal essential coverage," UBA reports. Services such as on-site clinics, limited-scope dental and vision, long-term care, disability income and accident-only income would not qualify as employer-sponsored minimal essential coverage. More details can be found in the Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02141.pdf
Exchange Notice Delay: Employers who were concerned about a fast-approaching deadline to distribute notices on the exchanges can relax for a few more months. The Department of Labor (DOL) has pushed the date (originally March 1) to late summer or early fall. The DOL is preparing model language for the notice, and a final date will be announced later, the agency said.
Determining if 'play or pay' applies to you
Source: https://eba.benefitnews.com
By Deborah L. Grace
Under the Patient Protection and Affordable Care Act, a large employer is subject to penalties if it fails to offer to full-time employees health coverage or if the coverage that it offers is not affordable or does not provide minimum value. These new “shared responsibility” rules are effective as of January 1, 2014, and apply to all employers, including non-profits and governmental entities. This article describes the regulations proposed by the Internal Revenue Service in December 2012 for determining if an employer is a “large employer” for purposes of the shared responsibility rules of Section 4980H of the Internal Revenue Code.
What is a large employer?
For any calendar year, an employer is a “large employer” if it employed an average of at least 50 full-time and full-time equivalent employees on business days during the preceding calendar year. The calculation used to determine large employer status seems deceptively easy. An employer totals the number of full-time employees and FTEs that it employed each month and then divides that total by 12. If the resulting number is 50 or greater, the employer is a large employer.
An exception is provided for an employer who, for 120 days or less during the calendar year, exceeded the 50 full-time employee threshold due to the employment of seasonal employees. This means that hiring activity for 2013 may affect an employer’s status as a large employer for 2014. Note also that this analysis must be made for every calendar year.
All employees of entities that are under common control, as determined under Code Section 414(b) or (c), or that are members of an affiliated service group under Code Section 414(m) or (o), are taken into account in determining if the members of the group constitute a large employer. For example, suppose Company A has 20 full-time employees and Company B has 40 full-time employees. Company A owns 80% of the stock of Company B.
Under Code Section 414(b), Company A’s ownership of at least 80% of the stock of Company B causes Companies A and B to be members of a parent-subsidiary controlled group. Because of the controlled group status, the employees of Company A and B are added together when determining large employer status, resulting in both Company A and Company B being large employers for purposes of the shared responsibility rules.
Who is an employee?
For purposes of these rules, only common-law employees are counted. A sole proprietor, a partner in a partnership, a member of a limited liability company taxed as a partnership, and a 2-percent or more S corporation shareholder is not counted as an employee. Also excluded from this test’s definition of “employee” is any individual who is paid by a staffing agency but provides services to an employer on a substantially full-time basis, including an individual whose services would meet the “leased employee” definition of Code Section 414(n).
How does an employer determine if an employee is full-time?
A “full-time employee” is one who is employed by the employer an average of at least 30 hours of service per week or 130 hours of service per calendar month. Consistent with longstanding Department of Labor rules, hours of service include both hours for which the employee is paid for services performed and also hours for which the employee is paid and no services are performed due to vacation, holiday, illness, disability, layoff, jury duty, military duty or leave of absence. If an employee is paid on an hourly basis, then the employer must use those hours to determine if the employee’s status for the month is full-time.
Use of equivalencies for non-hourly employees. If an employee is not paid on an hourly basis, then the employer may use one of the following methods to determine the hours that the employee worked: (i) count actual hours worked by the employee; (ii) credit 8 hours of service for any day that the employee would be credited with at least 1 hour of service; or (iii) credit 40 hours for each week that the employee would be credited with at least 1 hour of service. An employer cannot use an equivalency method if it would result in understating an employee’s hours. For example, if an employee usually works three 10 hour days a week, the employer cannot use the days-worked equivalency, since that would understate the employee’s hours.
Service outside the U.S. Hours worked outside the U.S. where the employee does not receive the U.S. source income for that service are disregarded. As a result, a U.S. entity that is a member of a multinational controlled group may, for purposes of determining whether it is a large employer, exclude individuals who do not work in the U.S. For example, a U.S. sales office of a multinational entity with no other presence in the U.S. that has 5 full-time employees will not be a large employer for purposes of the shared responsibility rules. Note, the proposed regulations do not change the rules under COBRA that require all employees, including foreign nationals with no U.S. source income, to be counted when determining if the entity has crossed the 20 employee threshold and thereby be required to offer COBRA continuation coverage to qualified beneficiaries.
How does an employer calculate the number of full-time equivalents?
All employees (including seasonal employees) who were not full-time employees for any month are included in calculating the employer’s FTEs for that month. The number of FTEs is determined using a two-step process. First, the employer must calculate the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not employed on average at least 30 hours of service per week for that month; second, the total hours for the month for all such non-full-time employees is divided by 120. Fractions are included in determining a monthly FTE count but, as explained in the next paragraph, are disregarded for the determination of whether an employer is a large employer.
How does an employer calculate its large employer status?
Once the employer has the number of full-time employees and FTEs that it employs each month during the prior calendar year, the employer totals these monthly numbers and then divides that total by 12 to determine the average. Fractions are disregarded for this purpose. For example, an employer that has on average 49.9 full-time employees (including FTEs) for the preceding calendar year is allowed to round the total down, and therefore would not be a large employer.
Transition Rule. For 2014, an employer may determine its large employer status by using a period of at least 6 consecutive months in 2013 rather than the full 2013 calendar year. This transition rule will allow an employer who is close to the 50 full-time employee threshold time to determine its status for 2014 and make any needed adjustments to its health plan to comply with Code Section 4980H. For example, an employer could determine its large employer status during the period of March through August 2013 and then decide what changes are needed for its health plan (or implement a plan) between September through December 2013.
What is the seasonal employee exception?
An employer that on average exceeds the 50 full-time employee threshold (taking into account FTEs) for 120 days or fewer during a calendar year due to the employment of seasonal workers during that 120 day period is not a large employer. The 12 day period does not need to be consecutive, and an employer may choose to use four months as a measuring period in place of 120 days. An employee may be able to be treated as a “seasonal worker” for purposes of the large employer definition if the employee worked on a seasonal basis for more than four consecutive months.
Definition of Seasonal Worker. Under Code Section 4980H, employees who perform services on a seasonal basis as defined by the Secretary of Labor, including migrant and seasonal agricultural workers, and retail workers employed exclusively during holiday season qualify as seasonal workers. Under the proposed regulations, the IRS has determined that the term seasonal employee is not limited to agricultural or retail workers, and would include individuals whose employment “is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year.” Until further guidance is issued, an employer may apply a reasonable good faith interpretation of this definition. For example, it may be reasonable for an accounting firm to determine that the additional staff hired during the months of February through April to prepare individual income tax returns are seasonal workers.
If an employer is not in existence during all of 2013, then it will be a large employer if it reasonable expects to employ an average of at least 50 full-time employees (taking into account FTEs) on business days during 2014.
In a merger of acquisition situation, Code Section 4980H defines the term “employer” to include any predecessor to such employer. The IRS has indicated that in defining a predecessor employer, it may use rules similar to those that apply for determining a successor employer for employment tax purposes. Under those rules, an employer that acquires all of the property used in a trade or business of another employer is a successor employer to the predecessor business.
What are the Suggested Next Steps?
Determine if your business will be a large employer for 2014, based on the company’s anticipated full-time employee count for 2013. If the company and other members of its controlled group regularly employ between 40 and 60 full-time employees and FTEs, establish a 6 month or longer transition period in 2013 to determine large employer status for 2014.
Steps that a large employer will want to take, including determining if the health plan that it offers employees is affordable and provides minimum value and identifying full-time employees who must be offered coverage to avoid a penalty, will be addressed in a subsequent article.
5 things on Americans’ 2013 health policy agenda
Source: https://eba.benefitnews.com
By Gillian Roberts
With the 113th Congress up and running and the president’s policy schedule filling up by the day, a recent poll by the Kaiser Family Foundation and Harvard School of Public Health identified five things Americans would like the government to set as top health care priorities this year:
1. State exchanges. Fifty-five percent of respondents say state-based health insurance exchanges are a top priority for their lawmakers. With only 18 states and Washington, D.C., declaring they will create state exchanges, more information is needed on how federally run exchanges will operate in the remaining states. “This is the year of the health insurance exchange,” said David Colby of the Robert Wood Johnson Foundation at a luncheon held Thursday at the Kaiser Family Foundation. The panelists, including Drew Altman, CEO of KFF, noted that governors are still split along partisan lines about the creation of exchanges.
2. PPACA opposition. Fifty-two percent, including 78% of Republicans, say the Patient Protection and Affordable Care Act opponents in Congress should continue trying to overturn the law. When asked why, a majority of respondents cited overturning the law for “less impact on taxpayers, employers and health care providers.”
3. PPACA complacency. Forty percent think that PPACA opponents in Congress should “accept that it is now the law of the land,” and move on to focus on implementation.
4. Premiums. Increasing state regulation of health insurance premiums should be a priority for lawmakers, 37% of respondents say.
5. Women’s health care. One-fifth of respondents believe lawmakers should limit women’s family planning, reproductive health and other services. A timely topic as PPACA’s birth control mandate seems poised to head to the Supreme Court later this year, according to the Associated Press.
What is my State doing with Exchanges, Medicaid under PPACA?
Source: United Benefit Advisors
States have two major decisions to make with respect to the Patient Protection and Affordable Care Act (PPACA) -- whether they will run the health exchange themselves, and whether they will expand Medicaid to cover most individuals whose income is below 133 percent of the federal poverty level.
Exchange Election
Beginning in 2014, all states will have a health exchange. If a state chooses not to run an exchange, the federal government will run the exchange for the state. An exchange run by the federal government for a state is called a federally facilitated exchange (FFE). States may also choose to share the operation of an exchange with the federal government - that is called a partnership exchange.
Medicaid Election
States also have to decide whether they will expand Medicaid coverage to most individuals who have an income below 133 percent of the federal poverty level (FPL). The FPL is $11,490 for a single person and $23,550 for a family of four in 2013. The federal government will pay most of the cost of expanded Medicaid coverage, but some states have concerns about the ultimate cost of the expansion to the states.
As of Feb. 1, 2013, the states had made the following choices. (The deadline for most exchange elections for 2014 has passed, although states may elect a partnership exchange for 2014 until Feb. 15, 2013. There is no deadline for the Medicaid election. It is expected that many states will make the Medicaid expansion decision as part of their 2013 budgeting process.)
Click Map to See results for your state
Medicaid Election
Source: United Benefit Advisors
Medicaid is a joint state-federal program. States are not required to participate in Medicaid, but all of the states currently do. The federal government pays 50 percent to 75 percent of the cost of Medicaid. In return, the states must follow a variety of rules, although they have the ability to make a number of choices. Currently, to obtain federal funding the states must provide Medicaid to pregnant women and children under age six with family incomes below 133 percent of FPL, to children aged six through 18 with family incomes below 100 percent of FPL, and to disabled and elderly adults who qualify for Supplemental Security Income based on low income and assets. Some states currently provide Medicaid to working parents and adults without dependents, but many do not, or do so only for those with incomes well below FPL.
In an effort to reduce the number of uninsured, PPACA would require Medicaid to cover virtually all adults with household incomes at or below 133 percent of FPL as of Jan.1, 2014. The federal government would pay 100 percent of the cost of coverage for the expanded coverage group during 2014 through 2016, and then gradually decrease its contribution to 90 percent of the cost for 2020 and later years. The Supreme Court ruled that Congress did not have the power to cut off all Medicaid funding if a state didn’t expand Medicaid to meet the expanded eligibility under PPACA, so states are now deciding whether expanding Medicaid eligibility makes sense for them.
Individuals who are eligible for Medicaid will not be eligible for premium subsidies. This means that employers in states that choose not to increase Medicaid eligibility may have to pay penalties on more employees than those in states that have chosen to expand Medicaid eligibility.
Click Map to See results for your state
Exchange Election
Source: United Benefit Advisors
The purpose of an exchange is to make it simpler for individuals and small businesses to obtain coverage. The exchanges will not provide insurance, but they will provide a way for people to compare the cost and coverage available from different insurers, provide resources to individuals to help them choose a plan, and oversee the insurance options available through the exchanges. Virtually all Americans will be able to buy coverage through an exchange, even if they have access to coverage through an employer. However, premium subsidies will not be available to people who have access to adequate coverage through their employer, no matter how large or small their employer is, but who choose to buy through the exchange instead. Recently, the government has begun calling the exchanges the “health insurance marketplace.”
Each state will choose its own “essential health benefits” package, although all insurance provided to individuals and small groups (generally, those with 100 or fewer employees) must provide certain types of “essential” coverage. (Self-funded and large employers are not required to provide the “essential health benefits.” Instead, these plans will need to cover “core” benefits (hospital and emergency care, physician and mid-level practitioner care, pharmacy, and laboratory and imaging) at a 60 percent actuarial value to avoid employer penalties.)
For additional information on each state’s EHB, go here: Additional Information on Proposed State Essential Health Benefits Benchmark Plans | cciio.cms.gov
Employers should understand that even if they offer coverage to their employees, they will have some interaction with the exchanges. If any employee chooses to purchase coverage through the exchange and requests a premium subsidy, the exchange will need information about the coverage offered to employees from the employer.
Currently there is debate about whether people in a federally-facilitated exchange will be eligible for the premium tax subsidy. The federal government’s position is that these people will be eligible for the subsidy, as it was not Congress’ intent to treat people differently based upon where they live. Employers hoping to avoid the play or pay penalty have an interest in this question because penalties are triggered by the employee’s receipt of a premium tax subsidy through the exchange. If subsidies are not available through the federally facilitated exchanges, employers in those states would not be subject to penalties. This issue likely will be settled by the courts (Oklahoma has filed a lawsuit), but in the meantime, employers in states that will have FFEs should not assume the penalties will not apply to them. Also, note that those who obtain coverage through private exchanges will not be eligible for the premium tax subsidies.
Whether a state runs its own exchange is a year by year decision, so, for example, a state that has an FFE or a partnership exchange for 2014 could run its own exchange in 2015.
Click Map to See results for your state
The States: Where They Stand
| State | Type of Exchange | Medicaid Expansion |
| Alabama | Federal | No |
| Alaska | Federal | Undecided |
| Arizona | Federal | Yes |
| Arkansas | Partnership | Yes |
| California | State | Yes |
| Colorado | State | Yes |
| Connecticut | State | Yes |
| Delaware | Partnership | Yes |
| Florida | State | Yes |
| Georgia | Federal | Undecided |
| Hawaii | Federal | No |
| Idaho | State | Yes |
| Illinois | State | No |
| Indiana | Federal | Undecided |
| Iowa | Partnership | Undecided |
| Kansas | Federal | Undecided |
| Kentucky | State | Undecided |
| Louisiana | Federal | No |
| Maine | Federal | No |
| Maryland | State | Yes |
| Massachusetts | State | Yes |
| Michigan | Partnership | Undecided |
| Minnesota | State | Yes |
| Mississippi | Federal | No |
| Missouri | Federal | Yes |
| Montana | Federal | Yes |
| Nebraska | Federal | Undecided |
| Nevada | State | Yes |
| New Hampshire | Federal | Undecided |
| New Jersey | Federal | Undecided |
| New Mexico | State | Yes |
| New York | State | Undecided |
| North Carolina | Federal | No |
| North Dakota | Federal | Undecided |
| Ohio | Federal | Yes |
| Oklahoma | Federal | No |
| Oregon | State | Undecided |
| Pennsylvania | Federal | Undecided |
| Rhode Island | State | Yes |
| South Carolina | Federal | No |
| South Dakota | Federal | No |
| Tennessee | Federal | Undecided |
| Texas | Federal | No |
| Utah | State | Undecided |
| Vermont | State | Yes |
| Virginia | Federal | Undecided |
| Washington | State | Yes |
| West Virginia | Partnership | Undecided |
| Wisconsin | Federal | Undecided |
| Wyoming | Federal | Undecided |
Source for exchange elections: Kaiser Family Foundation
Source for Medicaid expansion: The Advisory Board Co.
Top 5 issues facing physicians, patients in 2013
Source: https://www.benefitspro.com
By Kathryn Mayer
As health reform continues to changes the landscape of our country’s health system, what’s to watch in this new year? A lot, industry insiders say.
Lou Goodman, president of The Physicians Foundation and CEO of the Texas Medical Association, says 2013 will be “a watershed year” for the U.S. health care system. Most of those changes will have a big impact on both patients and the physicians caring for them.
“It’s clear that lawmakers need to work closely with physicians to ensure we're well prepared to meet the demands of 30 million new patients in the health care system and to effectively address the impending doctor shortage and growing patient access crisis.”
The Physicians Foundation identified five issues that are likely to have a significant impact on patients and physicians in 2013.
1. Ongoing uncertainty over PPACA
Despite the Supreme Court decision upholding most of the provisions in the Patient Protection and Affordable Care Act and the re-election of President Obama, considerable uncertainty persists among patients and physicians regarding actual implementation of the act. Much of the law has yet to be fully defined and a number of key areas within PPACA—including accountable care organizations, health insurance exchanges, Medicare physician fee schedule and the independent payment advisory board—remain nebulous, the foundation says. Their research found that uncertainty surrounding health reform was among the key factors contributing to 77 percent of physicians being pessimistic about the future of medicine. In 2013, physicians will need to closely monitor developments around the implementation of these critical provisions, to understand how they will directly affect their patients and ability to practice medicine.
2. More consolidation
Consolidation means bigger, but is bigger better? Large hospital systems and medical groups continue to acquire smaller/solo private practices at a steady rate. According to the foundation's report pertaining to the future of U.S. medical practices, many physicians are seeking employment with hospital systems for income security and relief from administrative burdens. But increased consolidation may potentially lead to monopolistic concerns, raise cost of care, and reduce the viability and competitiveness of solo/private practice. As the trend toward greater medical consolidation continues across 2013, it will be vital to monitor for possible unintended consequences related to patient access and overall cost of care.
3. A scramble to fix the doctor shortage
In 2014, PPACA will introduce more than 30 million new patients to the U.S. health care system, a provision that has considerable implications relative to patient access to care and physician shortages. According to the Foundation’s Biennial Physician Survey, Americans are likely to experience significant challenges in accessing care if current physician practice patterns continue. If physicians continue to work fewer hours, more than 47,000 full-time-equivalent physicians will be lost from the workforce in the next four years. Moreover, 52 percent of physicians have limited the access of Medicare patients to their practices or are planning to do so. As the 12-month countdown to 30 million continues across 2013, physicians and policy makers will need to identify measures to help ensure a sufficient number of doctors are available to treat these millions of new patients – while also ensuring the quality of care provided to all patients is in no way compromised.
4. Erosion of physician autonomy
The Physicians Foundation believes that physician autonomy – particularly related to a doctor’s ability to exercise independent medical judgments without non-clinical personnel interfering with these decisions – is markedly deteriorating. Many of the factors contributing to a loss of physician autonomy include problematic and decreasing reimbursements, liability/defensive medicine pressures and an increasingly burdensome regulatory environment. In 2013, physicians will need to identify ways to streamline these processes and challenges, to help maintain the autonomy required to make the clinical decisions that are best for their patients.
5. Growing administrative burdens
Increasing administrative and government regulations were cited as one of the chief factors contributing to pervasive physician discontentment, according to the Foundation’s 2012 Biennial Physician Survey. Excessive “red tape” regulations are forcing many physicians to decrease their time spent with patients in order to deal with non-clinical paper work and other administrative burdens. In 2013, physicians and policy makers will need to work closely together to determine steps that will effectively reduce gratuitous regulations that negatively affect physician–patient relationships. According to a recent Foundation report, the creation of a Federal Commission for Administrative Simplification in Medicine could help reduce these regulations by evaluating and reducing cumbersome physician reporting requirements that do not result in cost savings or measurable reductions in patient risk.
Additional proposed regulations addressing open issues under PPACA
The Department of Health and Human Services (HHS), the Internal Revenue Service (IRS) and the Department of Labor (DOL) have recently issued more FAQs and proposed rules that address several employer obligations under the Patient Protection and Affordable Care Act (PPACA).
Notice of Exchange Has Been Delayed
On Jan. 24, 2013, the DOL issued a FAQ that delays the due date for providing employees with a notice about the affordable health exchanges. The notice had been due March 1, 2013 but the due date has been delayed until late summer or early fall of 2013. The delay will result in the notice being provided closer to the start of open enrollment for the exchanges, which will begin Oct. 1, 2013, for a Jan. 1, 2014, effective date.
To read the FAQ, click here: https://www.dol.gov/ebsa/faqs/faq-aca11.html
HRA Restrictions
Because PPACA prohibits annual dollar limits on essential health benefits, HRAs that are not integrated with other group health coverage (usually a major medical plan) will not be permitted after Jan. 1, 2014.
The Jan. 24, 2013, DOL FAQ also addresses HRAs, and states that an employer-provided HRA will not be considered integrated (and therefore will not be allowed) if it:
- Provides coverage through individual policies or individual market coverage; or
- Credits amounts to an individual when the individual is not enrolled in the other, major medical coverage
Existing HRAs that cannot meet the 2014 requirements generally will be allowed to reimburse expenses incurred after 2014, in accordance with the terms of the plan.
Premium Tax Credit/Subsidy
On Feb. 1, 2013, the IRS issued a final regulation that provides the long awaited answer of whether family members of an employee who has access to affordable self-only coverage are eligible for a premium tax credit/subsidy. The answer is that they are not – if the employee has access to affordable self-only coverage, the spouse and children are also considered to have access to affordable employer-sponsored coverage, and therefore the spouse and children are not eligible for premium tax credits/subsidies. To read the final IRS rule, click here:
https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02136.pdf
Minimum Essential Coverage
On Feb. 1, 2013, HHS and the IRS issued two proposed regulations that provide details on the individual shared responsibility requirement.
PPACA requires that non-exempt individuals obtain “minimum essential coverage” or pay a penalty. Minimum essential coverage includes individual insurance, Medicare, Medicaid, CHIP, TRICARE, VA and similar government programs, and employer-sponsored coverage. The proposed IRS rule defines minimum essential “employer-sponsored” coverage as an insured or self-funded governmental or ERISA welfare benefit plan that provides medical care directly or through insurance or reimbursement. (An HMO is considered an insured plan.)
Generally, any policy offered in the small or large group market that meets the above requirements will be minimum essential coverage. The proposed IRS regulation states that these types of coverage will not qualify as minimum essential employer-sponsored coverage:
- Accident only
- Disability income: Liability, including general, automobile, and supplemental liability;
- Workers compensation
- Automobile medical payment
- Credit only
- On-site medical clinics
- Limited scope dental or vision
- Long-term care, nursing home care, home health care, community-based care or any combination of these
- Specified diseases or illness
- Hospital indemnity or other fixed indemnity insurance
- Medicare supplement
- Similar limited coverage
Public comments are due March 18, 2013. To read the proposed IRS rule, click here: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02141.pdf
The HHS proposed rule provides details on how an individual can claim an exemption from the individual shared responsibility penalty.
Public comments on this rule also are due March 18, 2013. To read the proposed HHS rule, click here: https://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02139.pdf
Women’s Preventive Care Services
Proposed rules that would make it simpler for religious organizations and religious-affiliated not-for-profit organizations like hospitals and schools that have a religious objection to providing contraceptive services were released by the DOL on Feb. 1, 2013. These employers would notify their insurer of their objection, and the insurer automatically would be required to notify the employees that it will provide the coverage without cost sharing or other charges through separate individual health insurance policies.
For religious-affiliated workplaces that self-insure, the third party administrator would be expected to work with an insurer to arrange no-cost contraceptive coverage through separate individual health insurance policies.
The administration believes the cost of free contraceptive coverage will be offset by fewer maternity claims, but is exploring allowing an offset of the cost against federally facilitated exchange user fees.
The proposed rule offers no exemption for private employers that object to covering contraceptive services on religious or moral grounds.
The proposed rule is here: https://www.ofr.gov/OFRUpload/OFRData/2013-02420_PI.pdf
Important: Some of these rules are still in the “proposed” stage, which means that there may be changes when the final rule is issued. Employers should view the proposed rules as an indication of how plans will be regulated beginning in 2014, but need to understand that changes are entirely possible.
Health Care Reform and the Benefits Renewal Process
Source: United Benefit Advisors
By Mick Constantinou
The Supreme Court decision last June removed the remaining obstacles blocking implementation of health care reform. Prior to the ruling, many employers took a “wait and see” approach and were left scrambling to qualify and quantify how those aspects of the Patient Protection and Affordable Care Act (PPACA) of 2010 that went into effect January 2013 would impact their business and their employees.
Beginning in 2014, the requirements of PPACA will change the way employers plan and execute their benefits renewal process. The difference is that the impacts forthcoming, both financially and in terms of access to health care, will be far greater than those elements of health care reform that have been implemented to date.
Employers and employees will be left scrambling again if the age-old, “I worry about our benefits during the last three months of our plan year,” paradigm continues. There are decisions that should be made between now and 2014 because the changes are far greater in scope. Mishandling or delaying the question of health benefits now can carry a big price tag in dollars, reputation, competitiveness, retention, employee engagement or a combination of all of the above.
In its current form and implementation schedule, PPACA will forever alter how health care is purchased, delivered and funded by employers. The complexities of the law will touch all employers, regardless of their size, and all employees in a variety of ways and to varying degrees. The impact, often referred to as “play or pay” or “the mandate”, is different for groups with under 50 or more than 50 full-time employees.
Employers that currently offer group benefits or are thinking about offering group benefits, regardless of the number of full-time equivalent employees, should include the following as part of their planning process during 2013:
Minimum Value - Determine the actuarial value (AV) of their current plan design as well as calculate the AV of plans under consideration for 2013 to ensure the designs comply with the minimum requirement to cover an estimated 60 percent (the bronze standard) of covered health care expenses.
Affordability – Confirm your current employee contributions satisfy the affordability test of costing no more than 9.5 percent of an employee’s earnings.
Tax Subsidies – Identify which employees may qualify for subsidized health care through the exchanges and therefore subject you to a $3,000 annualized penalty.
Penalties – If you decide to pay the $2,000-per-employee penalty rather than continue to offer employer-sponsored group coverage, you should calculate which of your employees would be better off and which would be worse off with such a decision.
Medicaid – Quantify how the expansion of Medicaid will impact your costs and which employees will qualify under the new rules and Medicaid tables.
Eligibility – Review how your current benefits eligibility will be altered by the new regulations on eligibility.
Enforcement – Understand when and how the new rules are expected to be enforced, and be aware of the new requirements placed on employers and employees to ensure compliance with the provisions of the health care reform law.
The capabilities, expertise and analytical tools available to benefit advisors that support employers are key value-adds. Employer groups should consider these as part of their checklist when vetting the advisory firm that can best support them through 2013 in preparation for 2014 and beyond. Employers require compliance programs, solutions and services designed to help them stay informed, manage changes in benefits compliance and labor laws, and be prepared for the impacts in 2014 with sound analytics.
Employers will have a number of obligations and opportunities related to health care reform. This law is complicated, and each employer will need to base its decisions on its particular situation, which will require an advisor with the analytical tools to model a variety of scenarios specific to your company.