• Phone: (415) 507-1440

IRS Confirms Delay of Nondiscrimination Rules for Fully Insured Health Plans

Click to read full article: IRS Confirms Delay of Nondiscrimination Rules for Fully Insured Health Plans

The Affordable Care Act (ACA) requires non-grandfathered fully insured health plans to satisfy nondiscrimination rules regarding eligibility to participate in the plan and eligibility for benefits. This requirement was originally set to take effect for plan years beginning on or after Sept. 23, 2010. However, in late 2010, the IRS announced that the nondiscrimination requirement for non-grandfathered fully insured plans is delayed indefinitely, pending the issuance of regulations (or other administrative guidance) on how to comply with the requirement.

The IRS has still not issued regulations (or other administrative guidance) on the ACA’s nondiscrimination requirement for non-grandfathered fully insured plans. Because the nondiscrimination requirement has been delayed indefinitely pending the issuance of regulations, IRS officials have confirmed that the requirement will not be enforced this year.

Nondiscrimination Requirement

The ACA requires non-grandfathered fully insured plans to follow many of the same nondiscrimination rules that currently apply to self-funded plans.

Specifically, non-grandfathered fully insured plans will have to satisfy rules similar to those of Internal Revenue Code section 105(h)(2), which prohibits discrimination in favor of highly compensated individuals. This section generally provides that plans must pass two separate nondiscrimination tests—the eligibility test and the benefits test.

When the ACA’s nondiscrimination requirement for fully insured plans takes effect, certain plan designs will likely be prohibited, such as plans that only provide coverage to management or executive employees.

Also, after the effective date, employers that violate the ACA’s nondiscrimination requirement may face penalties of up to $100 per day for each affected individual.

Effective Date Delayed Indefinitely

The ACA’s nondiscrimination requirement for non-grandfathered fully insured plans was originally scheduled to take effect for plan years beginning on or after Sept. 23, 2010.

However, on Dec. 22, 2010, the IRS released Notice 2011-1, which delays the effective date until after the IRS issues regulations.

Click to read full article: IRS Confirms Delay of Nondiscrimination Rules for Fully Insured Health Plans

DOL Audits

DOL AUDITS ON THE RISE

The Department of Labor (DOL) has broad authority to investigate or audit an employee benefit plan’s compliance with the Employee Retirement Income Security Act (ERISA). Audits are performed by the DOL’s Employee Benefits Security Administration (EBSA). To perform these audits, EBSA employs over 400 investigators working out of field offices, many of whom are lawyers or CPAs or have advanced degrees in business and finance.
Did you know that the Department of Labor (DOL) can audit an employee benefit plan’s compliance with the Employee Retirement Income Security Act (ERISA) and the Affordable Care Act (ACA)? Now that the DOL has started enforcing compliance with the ACA, health plan audits are on the rise.

Do you know how to minimize the risk of your organization being selected for an audit and are you providing all the required disclosures to your plan participants?

Robert C Placak & Associates has created a DOL Audit Guide for Employee Benefit Plans to assist employers in preparing for an audit.
If you are interested in learning more about what we have to offer please contact our benefit specialists today. (415) 507-1440 or [email protected].

White House Announces Transition Policy for Canceled Health Plans

Quick Facts
• Many key ACA reforms will take effect in 2014 and require health plan changes.
• Due to these reforms, health insurance issuers have been sending cancelation notices to consumers.
• Responding to pressure from consumers and Congress, the White House announced a transition policy for 2014, which may allow individuals and small businesses to keep their coverage for another year.

The Affordable Care Act (ACA) includes key reforms that create new coverage standards for health insurance policies, beginning in 2014. For example, effective for 2014 plan years, the ACA imposes new modified community rating standards and requires individual and small group policies to cover a comprehensive set of benefits.

Over the last few months, millions of Americans have received notices informing them that that their health insurance plans are being canceled because they do not comply with the ACA’s reforms. President Obama has received criticism that these cancelations go against his assurances that if consumers have a plan that they like, they can keep it. Both Republican and Democrat members of Congress have been advocating changes to the ACA to resolve the cancelation issue.

Responding to pressure from consumers and Congress, on Nov. 14, 2013, President Obama announced a new transition policy for 2014. Under the new policy, individuals and small businesses whose coverage has been canceled (or would be canceled) because it does not meet the ACA’s standards may be able to re-enroll or stay on their coverage for an additional year.

However, this one-year reprieve may not be available to all consumers. Because the insurance market is primarily regulated at the state level, state governors or insurance commissioners will have to allow for the transition relief. Also, health insurance issuers are not required to follow the transition relief and renew plans, and have expressed concern that the change could disrupt the new risk pool under the federal and state Health Insurance Marketplaces.

Transition Relief Policy

The Department of Health and Human Services (HHS) outlined the transition policy in a letter to state insurance commissioners.

For 2014, health insurance issuers may choose to continue coverage that would otherwise be terminated or canceled due to the ACA’s reforms, and affected individuals and small business may choose to re-enroll in the coverage.

Under this transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between Jan. 1, 2014, and Oct. 1, 2014 (and associated group health plans of small businesses), will not be considered to be out of compliance with specified ACA reforms if certain conditions are met.

According to HHS, it will consider the impact of the transition relief in assessing whether to extend it beyond the specified timeframe.

The transitional relief is not available to grandfathered plans because these plans are not subject to most of the ACA’s market reforms. According to President Obama, the transition relief is an extension of the grandfathered plan rules to additional health insurance policies.

Specified ACA Reforms

The specified ACA reforms subject to the transition relief are the following reforms that are scheduled to take effect for plan years starting on or after Jan. 1, 2014:

  • Modified community rating standards;
  • Guaranteed availability and renewability of coverage;
  • Prohibition of pre-existing condition exclusions or other discrimination based on health status, except with respect to group coverage;
  • Nondiscrimination in health care;
  • Coverage for clinical trial participants; and
  • Coverage of the essential health benefits package.

Requirements for Transition Relief

The transition relief only applies with respect to individuals and small businesses with coverage that was in effect on Oct. 1, 2013. It does not apply with respect to individuals and small businesses that obtain new coverage after Oct. 1, 2013. All new plans must comply with the full set of ACA reforms.

Also, the health insurance issuer must send a notice to all individuals and small businesses that received a cancelation or termination notice with respect to the coverage (or to all individuals and small businesses that would otherwise receive a cancelation or termination notice with respect to the coverage).

Notice Requirements

The notice to individuals and small businesses must provide the following information:

  • Any changes in the options that are available to them;
  • Which of the specified ACA reforms would not be reflected in any coverage that continues;
  • Their potential right to enroll in a qualified health plan offered through a Marketplace and possibly qualify for financial assistance;
  • How to access such coverage through a Marketplace; and
  • Their right to enroll in health insurance coverage outside of a Marketplace that complies with the specified market reforms.

Where individuals or small businesses have already received a cancelation or termination notice, the issuer must send this notice as soon as reasonably possible.

Where individuals or small business would otherwise receive a cancelation or termination notice, the issuer must send this notice by the time that it would otherwise send the cancelation or termination notice.

IRS Clarifies Transition Relief for Cafeteria Plan Elections

Notice 2013-71 clarifies that transition relief is available to an employer with a cafeteria plan that has a non-calendar plan year beginning in 2013, whether or not the employer is an applicable large employer.

Quick Facts:

  • Relief is available to employers with a cafeteria plan that have a non-calendar plan year beginning in 2013, regardless of the size of the employer.
  • On Oct. 31, 2013, the IRS released Notice 2013-71 to clarify a transition rule allowing amendments to a cafeteria plan to permit certain changes in salary reduction elections.

Many employers offer health plans to employees through salary reduction under a section 125 cafeteria plan. Generally, cafeteria plan elections must be made before the start of the plan year and are irrevocable during the plan year (except for a narrow set of circumstances).

In December 2012, the Internal Revenue Service (IRS) issued proposed regulations that included a transition rule for health plan coverage elected under a cafeteria plan with a non-calendar year plan year. Under the transition rule, an applicable large employer could amend its cafeteria plan to permit certain mid-year changes in salary reduction elections.

On Oct. 31, 2013, the IRS released Notice 2013-71 (Notice), which clarifies the scope of the transition rule. The Notice clarifies that relief is available to an employer with a cafeteria plan that has a non-calendar plan year beginning in 2013, whether or not the employer is an applicable large employer or applicable large employer member.

The clarifications apply beginning on or after Dec. 28, 2012 (the date on which the proposed regulations were issued).

Cafeteria Plan Elections

Generally, cafeteria plan elections must be made before the start of the plan year and are irrevocable during the plan year, with limited exceptions, including certain changes in status. However, the availability of health plan coverage through an Affordable Insurance Exchange beginning with calendar year 2014 does not constitute such a change in status.

The individual mandate and the availability of coverage through an Exchange are both effective as of Jan. 1, 2014. This date may raise issues for plans that do not have a Jan. 1 plan year, which the IRS calls “fiscal year plans.”

An employee who is eligible to enroll in an employer’s plan, but did not do so, may wish to enroll in the employer’s plan in the middle of the plan year to meet the individual mandate requirements. (On June 26, 2013, the IRS issued Notice 2013-42 to provide transition relief from the individual mandate for certain months in 2014 to individuals who are eligible to enroll in employer-sponsored fiscal year plans.)

An employee who is already covered under a fiscal year plan might wish to discontinue coverage under that plan and enroll in an Exchange plan in the middle of the plan year.

The Transition Rule

Under the proposed regulations, an applicable large employer may choose to amend its cafeteria plan to permit either (or both) of the following changes in salary reduction elections, which apply regardless of whether employees experience a change of status event under the cafeteria plan regulations:

  • An employee who made a salary reduction election through his or her employer’s cafeteria plan for health plan coverage with a fiscal year beginning in 2013 can prospectively revoke or change his election regarding the plan during that plan year.
  • An employee who did not make a salary reduction election under his employer’s cafeteria plan for health plan coverage with a fiscal deadline beginning in 2013 (before the applicable deadline under the cafeteria plan regulations) can make a prospective salary reduction for coverage on or after the first day of the cafeteria plan’s 2013 plan year.

These changes are permitted only once during the plan year, and only with respect to accident and health plan coverage offered under a fiscal year plan.

Clarification

The Notice clarifies the scope of a transition rule under the employer mandate “pay or play” provision for health plan coverage elected under a section 125 cafeteria plan.

Although the transition rule refers specifically to applicable large employer members, the Notice clarifies that relief is available to an employer with a cafeteria plan with a non-calendar plan year beginning in 2013, whether or not the employer is an applicable large employer or applicable large employer member.

The Notice also states that any cafeteria plan amendment adopted under this transition rule may be more restrictive than the amendments described in the rule, but may not be less restrictive. For example, an employer may amend its cafeteria plan to allow an employee to prospectively revoke or change his or her election once during a limited period (for example, the first month of 2014 only, rather than the entire plan year), regardless of whether the employee experienced a change in status event under the cafeteria plan rules.

Other Issues in the Notice

The Notice also relaxes the “use-or-lose” rule for health FSAs. Under the relaxed rule, an employer, at its option, is permitted to amend its section 125 cafeteria plan document to allow up to $500 of unused funds remaining at the end of a plan year in a health FSA to be paid or reimbursed to plan participants for qualified medical expenses incurred during the following plan year. The plan may specify a lower amount as the permissible maximum (and has the option of not permitting any carryover at all).

This modification applies only if the plan does not also incorporate the grace period rule.

More Information

Please contact Robert C Placak & Associates Insurance Services for more information on the transition relief for cafeteria plans or the “use-or-lose” rule for health FSAs.

Transition Policy for Canceled Health Plans

Click here for full article.

The Affordable Care Act (ACA) includes key reforms that create new coverage standards for health insurance policies, beginning in 2014. For example, effective for 2014 plan years, the ACA imposes modified community rating standards and requires individual and small group policies to cover a comprehensive set of benefits.

Millions of Americans received notices in late 2013 informing them that their health insurance plans were being canceled because they did not comply with the ACA’s reforms. President Obama was criticized that these cancelations went against his assurances that if consumers had a plan that they liked, they could keep it.

Responding to pressure from consumers and Congress, on Nov. 14, 2013, President Obama announced a transition relief policy for 2014 for non-grandfathered coverage in the small group and individual health insurance markets. If permitted by their states, the transition policy gives health insurance issuers the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms for 2014.

Dental Insurance: What You Need to Know

Aside from protecting your smile, dental care ensures good oral and overall health. Several studies suggest that oral diseases, such as periodontitis (gum disease), can affect other areas of your body—including your heart. Understanding and choosing dental coverage will help protect you and your family from the high cost of dental disease and surgery.

What Is Dental Coverage?

Dental coverage is similar to regular medical insurance and is one of the voluntary benefit options commonly offered through employers. When you have dental insurance, you pay a premium and then your insurance will cover part or all of the cost for many dental services.

Like medical insurance, dental coverage is offered in several types of plans:

  • Dental health maintenance organization (DHMO) – Coverage is only provided when you visit dentists who are in-network with the insurance plan.
  • Dental preferred provider organization (DPPO) – Coverage is provided with in- or out-of-network dental care providers, but you will typically pay less with an in-network dentist.
  • Dental indemnity plan – Coverage is provided for any dentist you choose, with no difference in cost.
  • Discount dental plan – This type of plan is a common option for reducing dental costs without regular insurance coverage; with this plan, you pay for all your dental care at an agreed-upon discounted rate.

Why Should I Have Dental Insurance?

Professional dental care can diagnose or help prevent common dental problems including toothache, inflamed gums, tooth decay, bad breath and dry mouth. If conditions like these remain untreated, they can worsen into painful and expensive problems such as gum disease or even tooth loss. According to the American Dental Association, more than 16 million children in the United States suffer from untreated tooth decay, which is the most common chronic childhood disease. Regular dental exams can not only treat dental problems but can also identify other serious health concerns, including some types of cancer. Dental coverage will allow you to inexpensively receive preventive and diagnostic care.

What Dental Services Are Typically Covered?

Dental coverage focuses on preventive and diagnostic procedures in an effort to avoid more expensive services associated with dental disease and surgery. The type of service or procedure received determines the amount of coverage for each visit. Each type of service fits into a class of services according to complexity and cost. Services are generally broken up into the following classes:

  • Class I – diagnostic and preventive care (cleanings, exams, X-rays)
  • Class II – basic care and procedures (fillings, root canals)
  • Class III – major care and procedures (crowns, bridges, dentures)
  • Class IV – orthodontia (braces)

Because dental coverage typically focuses on preventive care, Class I services are covered at the highest percentage. Class II services are then covered at a slightly lower percentage, followed by Class III services, which are covered at the lowest level. For example, if a plan follows an “100-80-50” structure, Class I services are covered at 100 percent, Class II at 80 percent and Class III at 50 percent.

Class IV services are frequently covered under a separate lifetime maximum (instead of the annual maximum) and often limit coverage to children under the age of 19.

In addition to the class of service, coverage also depends on other factors. Several common services are limited by frequency. For example, most plans will only cover two cleanings and exams per year. For more complicated procedures or surgeries, coverage is often limited to a maximum dollar amount, such as $1,500 per year. Age is yet another factor that determines coverage. For example, fluoride treatments are typically covered for children, but not adults. Cosmetic procedures, such as teeth-whitening, are rarely covered.

How Does Dental Insurance Work?

Dental coverage works similarly to a medical insurance plan. You pay premiums, and then the insurance will cover dental costs according to the benefits listed in the plan. The routine exams and cleanings are usually covered at 100 percent, but other services are often subject to a deductible and copay. The deductible is the amount you must pay before your insurance will pay. After you meet your deductible, you may be responsible for a copayment or coinsurance, which is the percentage of the treatment cost that you pay. For example, if the insurance covers a filling at 80 percent and you have already met your deductible, you would only have to pay the other 20 percent of the charge. Every plan is different, so you will need to read your benefit information carefully to understand your coverage.

Some dental plans, usually individual plans, enforce a waiting period. This waiting period means you will not have coverage for certain services (usually Class III procedures) until you have had the plan for a designated amount of time, such as six months. Waiting periods prevent a person from purchasing insurance shortly before major dental surgery and then dropping coverage as soon as the policy expires.

How Has Health Care Reform Affected Dental Coverage?

Under the Affordable Care Act (ACA), dental services are an essential health benefit for children under the age of 19, although individual states can choose to extend the age limit beyond this baseline. Declaring pediatric dental care an essential health benefit means that, beginning in 2014, all non-grandfathered medical health plans must offer dental benefits for children unless certified stand-alone coverage is available. Non-medically necessary orthodontia is not included in the essential health benefits definition.

The essential health benefit status for dental coverage does not apply to adults. In addition, unlike medical insurance, you do not have to obtain dental coverage to avoid penalties.

Employer Mandate Final Rules

Click here to read full article

 

Final Employer Shared Responsibility Regulations Issued

Provided by Robert C Placak & Associates Insurance Services

The Affordable Care Act (ACA) imposes a penalty on large employers that do not offer minimum essential coverage to full-time employees and their dependents. Large employers that offer this coverage may still be liable for a penalty if the coverage is unaffordable or does not provide minimum value. The ACA’s employer mandate provision is often referred to as the “employer shared responsibility” or “pay or play” rules.

On Feb. 10, 2014, the U.S. Treasury Department released final regulations implementing the employer shared responsibility provisions of the ACA. The regulations are effective upon publication in the Federal Register.

Why Promote Wellness?

whypromotewellnessWorkplace Wellness: Why Promote Wellness?

What is Workplace Wellness?

Workplace wellness refers to the education and activities that a worksite may do to promote healthy lifestyles for employees and their families. Examples of wellness initiatives include such things as health education classes, subsidized use of fitness facilities, internal policies that promote healthy behavior, and any other activities, policies or environmental changes that affect the health of employees.

Why Workplace Wellness?

It affects your company’s bottom line in many ways. Namely, workplace wellness can lower health care costs, increase productivity, decrease absenteeism and raise employee morale. Because employees spend many of their waking hours at work, the workplace is an ideal setting to address health and wellness issues.

Wellness programs help control costs. Health care costs are a significant portion of a company’s budget, so strategically targeting this expense can significantly benefit an employer’s bottom line. An investment in your employees’ health may lower health care costs or slow the cost increases. Employees with more health risk factors, including being overweight, smoking and having diabetes, cost more to insure and pay more for health care than people with fewer risk factors. A wellness program can help employees with high risk factors make lifestyle changes to improve their quality of life and lower costs, while also helping employees with fewer risk factors remain healthy.

Healthier employees are more productive. Research shows that workplaces with wellness programs have employees who are more productive at work.

Healthier employees miss less work. Healthier employees mean fewer sick days, which is another benefit companies generally achieve through wellness programs. Plus, employees’ healthier behavior may translate into better family choices, so employees may also miss less work caring for ill family members. Reduced absenteeism can yield significant cost savings and return on your wellness investment.

Wellness programs can reduce workers’ compensation and disability costs. Employees who make healthy changes and lower health risk factors often have a lower chance of a workplace injury or illness or a disability. In both cases, this can save the employer money, not just on insurance premiums and benefits paid out, but also the replacement cost of recruiting and training a new worker to replace one out of work for health reasons.

Wellness can yield higher morale and improve recruiting. A company that cares about its employees’ health is often seen as a better place to work and wellness programs can attract top talent in a competitive market. In addition, expressing a commitment to your employees’ health can improve employee morale and strengthen retention. Employees can experience many potential benefits after joining a wellness program, including:

  • Increased well-being, self-image and self-esteem
  • Improved coping skills with stress or other health factors
  • Reduced risk for developing chronic or life threatening conditions
  • Easier access to health improvement programs and convenience can increase motivation to improve health
  • Improved overall health
  • Lower costs for health care (fewer doctor visits, perhaps lower premiums, less need for expensive care, etc.)
  • Access to needed social support, as coworkers strive toward healthier lifestyles as well
  • Improved job satisfactions
  • Safer and more productive work environment

Employees who experience these positive changes and benefits will often feel more loyalty to the company and grateful for the company’s commitment to their health.

Medicare Prescription Drug Improvement & Modernization Act

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) created a voluntary prescription drug program for Medicare Part D eligible individuals.

Under the MMA, group health plans — or entities that offer prescription drug coverage on a group basis to active and retired employees and to Medicare Part D eligible individuals — must provide, or arrange to provide, a notice of creditable or non-creditable prescription drug coverage.

This notify MUST be provided to those eligible individuals no later than OCTOBER 14, 2011.  For more information and a sample Creditable Coverage Disclosure Letter please click here.

Verification of eligibility for exchange coverage subsidies delayed

The Affordable Care Act (ACA) requires each state to have a competitive marketplace, known as an Affordable Health Insurance Exchange (Exchange), for individuals and small businesses to purchase private health insurance. All Exchanges will launch open enrollment in October 2013 with coverage becoming effective as early as Jan. 1, 2014.
On July 5, 2013, the Department of Health and Human Services (HHS) released a final rule addressing verification of eligibility for Exchange coverage subsidies. In the final rule, HHS announced that Exchanges will not be required to perform comprehensive verifications of income or eligibility for employer-sponsored coverage. Instead, the rules provide that:
• Exchanges can verify income eligibility on a random basis in 2014; and
• State-based Exchanges will not be required to perform random verification of employer-sponsored coverage until 2015.

BACKGROUND

States have a few options available to them with respect to the establishment of their Exchanges. A state may:
• Create and operate its own state-based Exchange;
• Have HHS operate the federally-facilitated Exchange (FFE) for its residents; or
• Partner with HHS so that the state is involved with the operation of the FFE.
For 2014, 17 states and the District of Columbia have been cond itionally approved to operate their own state-based Exchanges, seven states have been conditionally approved for partnership Exchanges, and 26 states have opted to have HHS run the Exchange in their state. See the chart on Page 3 for information on each state’s Ex-change decision.

Health Insurance Subsidies

Beginning in 2014, federal subsidies will be available to help individuals purchase health insurance through an Exchange. The subsidies are designed to make coverage through an Exchange more affordable by reducing out-of-pocket health care costs. There are two federal health insurance subsidies available: premium tax credits and cost-sharing reductions. Premium tax credits are available for individuals with income of between 100 percent and 400 percent of the federal poverty line (FPL). Reduced cost-sharing is available for individuals with lower incomes (up to 250 percent of FPL).
To be eligible for the subsidies, a taxpayer:
• Must have household income for the year within the limits described above;
• May not be claimed as a tax dependent of another taxpayer; and
• Must file a joint return, if married.