IRS ISSUES 2014 HSA LIMITS
The IRS has issued the 2014 limits for health savings accounts. PPACA requires that this out-of-pocket limit be the maximum out-of-pocket for all health plans in 2014. The minimum deductible only applies to high deductible health plans integrated with an HSA. The limits are:
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Limit
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2014
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2013
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Maximum Out-of-Pocket
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$6,350 single/$12,700 family
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$6,250 single/$12,500 family
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Minimum Deductible
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$1,250 single/$2,500 family (unchanged)
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$1,250 single/$2,500 family
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Maximum Contribution
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$3,300 single/$6,550 family
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$3,250 single/$6,450 family
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Maximum catch-up contribution - for individuals age 55 or older
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$1,000 (unchanged)
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$1,000
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The out-of-pocket includes the deductible, coinsurance and co-pays, but not premiums.
Our access to PPACA Advisor resources can help you clear up PPACA questions and better craft your company's benefit strategy for the future.
WELLNESS INCENTIVES AND THE PLAY OR PAY REQUIREMENT, AN UPDATED SUMMARY OF BENEFITS AND COVERAGE FORM AND ANNUAL LIMITS WAIVERS
The Departments of Labor, Health and Human Services and the Treasury have issued several updates that affect employer-sponsored group health plans.
Wellness Incentives, HRAs, Minimum Value and Affordability
The IRS has released proposed regulations that address how wellness incentives or penalties are applied to premium affordability (for purposes of the employer shared responsibility/play or pay requirements) and to minimum value.
The proposed regulations provide that when deciding if the employee’s share of the premium is affordable (less than 9.5% of the employee’s safe harbor income), the employer may not consider wellness incentives or surcharges except for a non-smoking incentive. In other words, the premium for non-smokers will be used to determine affordability (even for smokers). Any other type of wellness incentive must be disregarded, except for a special rule for 2014.
Example: Acme has a wellness program that reduces premiums by $300 for employees who do not use tobacco products or who complete a smoking cessation course. Premiums are reduced by $200 if an employee completes cholesterol screening during the plan year. The annual employee premium is $4,000. Employee B does not use tobacco and completed the cholesterol screen so the cost of his actual premiums is $3,500 [$4,000 – 300 – 200]. Employee C uses tobacco and does not do the cholesterol screen, so the cost of her actual premiums is $4,000. For purposes of affordability, Acme will use $3,700 as the cost of coverage for both Employee B and Employee C [$4,000 less the available $300 non-smoker discount].
For the 2014 plan year only, employers who had a wellness program in place on May 3, 2013 may also take the wellness incentives for targets other than non-use of tobacco into account when determining premium affordability. So, for 2014 only, using the example, Acme would use $3,500 as Employee B’s and Employee C’s cost of coverage (since the employer can assume all available incentives were earned).
If an employer makes HRA contributions that the employee may use to pay premiums, the employer may reduce the employee’s cost of coverage by the HRA contribution for the current year when determining affordability.
When calculating minimum value, if incentives for nonuse of tobacco may be used to reduce cost-sharing (i.e., the deductible or out-of-pocket costs), those incentives may be taken into account when determining minimum value. (Other types of wellness incentives that affect cost-sharing may be considered for 2014 if the employer had a wellness program that provided cost-sharing incentives on May 3, 2013; they may not be considered after 2014.) Current year contributions to an integrated HRA that may only be used for cost sharing (and not to pay premiums) or to an HSA may be considered first dollar benefits when calculating minimum value.
The proposed regulation also includes three proposed “safe harbor” plan designs that would meet the 60% minimum value threshold. (The safe harbor designs could be used instead of testing the plan through the calculator supplied by HHS; the safe harbor is just a convenience and not a limit on permitted plan designs.) The IRS says that these designs meet minimum value:
- A plan with a $3,500 integrated medical and drug deductible, 80 percent cost-sharing, and a $5,000 maximum out-of-pocket limit;
- A plan with a $4,500 integrated medical and drug deductible, 70 percent cost sharing, a $6,400 maximum out-of-pocket limit, and a $500 employer contribution to an HSA; or
- A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent medical cost sharing, a $10/$20/$50 copay tiered drug plan, and a 75 percent coinsurance for specialty drugs.
It is possible that more safe harbor designs will be provided later.
The proposed regulation is here: Minimum Value - Proposed Rule
Summary of Benefits and Coverage
The agencies have released an updated Summary of Benefits and Coverage (SBC) template that plans will need to use for 2014. The updated template has very few changes from the version used for 2013.
The primary change is that the 2014 SBC must state whether or not the plan provides “minimum essential” and “minimum value” coverage. The template is designed to include the minimum essential and minimum value information on page 4 of the SBC. If an employer or insurer has already begun preparing its 2014 SBC and including this information on page 4 would be difficult, the needed information can be included in an attachment or cover letter.
Beginning in 2014, plans may not have annual dollar limits on essential health benefits. Plans may address this change by either:
- Deleting the row that asks about annual limits; or
- Completing the question with “no” and stating in the “Why It Matters” column: “The chart starting on page 2 describes any limits on what the plan will pay for specific covered services, such as office visits.”
There are no changes to the examples that must be completed in the SBC (including the stated cost of care), to the glossary that must accompany the SBC or to the SBC calculator.
Employers and carriers should continue to use the current version of the SBC template for any coverage that begins in 2013.
UBA has updated its Highlights and Frequently Asked Questions about the SBC; the updated pieces are HERE and HERE. For additional information on minimum essential and minimum value coverage, go HERE.
Links to the revised SBC template, sample completed template and FAQ that was issued with the updated template are here:
http://www.dol.gov/ebsa/correctedsbctemplate2.doc
http://www.dol.gov/ebsa/pdf/CorrectedSampleCompletedSBC2.pdf
Frequently Asked Questions - The Affordable Care Act Implementation Part XIV
Annual Limit Waivers
The agencies have issued a FAQ that responds to questions about whether a change in plan or policy year would extend the waiver period for a plan that received a temporary waiver of the annual limit requirement. (The waiver primarily affects mini-med plans.) The FAQ states that the plan or policy year in effect when the waiver was issued determines the date the waiver will expire. The FAQ is here:
Frequently Asked Questions - The Affordable Care Act Implementation Part XV
Our access to PPACA Advisor resources can help you clear up PPACA questions and better craft your company's benefit strategy for the future.
Thursday, May 9, 2013 - 2 p.m. ET / 11 a.m. PT
Protecting Your Organization by Preparing Your Employees
Indiana and Kentucky have experienced more than their fair share of natural disasters in the past few years - tornadoes, floods, ice storms - you name it, we've had it here!
Without question, most businesses will admit their most important assets are their employees. However, most businesses take very little action to help their employees and their families prepare for, and recover from, disasters. While data recovery and business continuity may form the backbone of a corporate disaster recovery strategy, if employees are unable or unwilling to report to work, having your systems back on line may prove worthless.
Join Agility Recovery as we dive into the strategies and best practices for helping your employees prepare themselves and their families for a crisis. Without exaggeration, this information could literally change the future of your company, even protecting it from failure.
Detailed discussions will focus on the following areas:
- The importance of employee preparedness
- Ways to directly assist employees
- Tools to help any organization prepare
PRESENTER
Bob Boyd
President and CEO
Agility Recovery
Bob is a proven and dedicated leader and the soul behind the Agility mentality - when the heart cares enough to get things done, the mind finds a way. Bob holds an MBA from the McColl School of Business, a B.S. from Davidson College, was Controller at SunCom Group and Vice President at NationsBank. Most recently, Bob was the Vice President and General Manager at Muzak. During this time, Bob was instrumental in re-branding Muzak's services portfolio, and contributed in large part to the company's dramatic growth. Bob is leading Agility's growth and the transformation of the disaster recovery industry.
This program is conducted in partnership with Agility Recovery, a former division of GE with 23 years disaster recovery and business continuity experience and a respected UBA Strategic Partner. While you will note a charge for attendance, by using our Priority Code UBA 313, you will gain complimentary access. This webinar event has been sent for approval by the Human Resource Certification Institute to qualify for 1.25 recertification credit hours.
Interested in related topics? To access past visual presentations, see our Webinar Archives.
This series is brought to you by Schwartz Insurance Group, a Partner Firm of United Benefit Advisors, the nation's leading independent employee benefits advisory organization with more than 140 firms throughout the U.S., Canada and Europe and Agility Recovery, a respected UBA Strategic Partner.
Again this month, Schwartz Insurance Group selected one peer-nominated associate to receive a Core Value award. The winner is chosen because they "lived” one of our agency’s core values … typically an event or accomplishment above and beyond the call of duty in servicing our customers. This month, Jackie Cordle was selected – here’s Jackie's story:
It’s always nice to receive a compliment. It’s even better when that compliment is truly heartfelt.
A personal lines client recently took time to write a thank you note about one of our service associates. She detailed a longstanding relationship and all the reasons that she had come to “appreciate and trust” someone who embodies “TRUE customer service.”
She closed with: “Thank you all for caring about me and my family!” In essence, this defines our mission to cultivate trusted relationships and simply confirms that Jackie Cordle “fits” by Building on a Legacy.
Congratulations Jackie! Here's a little bit more about Jackie in her own words.
What does “Building on a Legacy” mean to you?
Building on a legacy means always striving to do the right thing ... taking care of others with honesty and integrity ... treating others with respect and with a commitment to their needs ... striving to do things more efficiently to provide the best service possible. Our agency has been here well over 50 years - I am proud to be recognized for doing what I enjoy doing.
Do you consider the culture at Schwartz Insurance unique?
Schwartz Insurance Group is the most unique place that I have ever worked. Everyone at the agency is very kind and considerate to others. All of us - the associates - are made to feel special ... and that carries over to our customers. Plus, at Schwartz Insurance Group, we are always involved with different charities and that makes me feel good.
Describe your ideal vacation?
My favorite vacation is going to Lake Cumberland. We love to stay at Alligator 2 dock and we always rent the same cabin. We take our boat out on the water and fish for striped bass. So far, the biggest one that I have caught is 26 pounds.
How do you stay current with the changes in insurance?
As an independent agency, we must stay current with all types of insurance. This means not only keeping up with changes in the state (or the general market), but also all updates from the different companies. With the many changes that have occurred - and with so many "large" losses, premiums seem to keep creeping up. It is my personal goal to provide our customers with the right coverage at the best possible price. We work hard to do that.
What’s your favorite thing about living in Louisville?
In Louisville, I love that we have big city living with southern hospitality.
We're proud of all the associates at Schwartz Insurance Group - a great group of professionals who are committed to serve. Collectively, they've helped create a very unique and rewarding culture. Because of each of them and the teamwork we enjoy, you'll find it easy to do business with Schwartz!
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Important Transition Relief for Non-Calendar Year Plans
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Date: 4/12/2013
The January 1, 2014 effective date of the Pay-or-Play requirements under health care reform presents special issues for employers with non-calendar year plans. Prior to the release of the proposed regulations under the shared responsibility rules, employers with non-calendar year plans would either need to comply with the Pay-or-Play requirements at the beginning of the 2013 plan year or change the terms and conditions of the plan mid-year in order to comply. Recognizing that compliance as of January 1, 2014 caused a special hardship for non-calendar year plans, the proposed regulations, provide special transition relief. Employers with non-calendar year plans in existence on December 27, 2012 can avoid the Pay-or-Play penalties for months preceding the first day of the 2014 plan year (the plan year beginning in 2014) for any employee who was eligible to participate in the non-calendar year plan as of December 27, 2012 (whether or not they actually enrolled). Under this relief, the employer would not be subject to Pay-or-Play penalties for any such employees until the first day of the plan year beginning in 2014, provided they are offered coverage that is affordable and provides minimum value as of the first day of the 2014 plan year.
The relief also provides an employer maintaining a non-calendar year plan with additional time to expand the plan's eligibility provisions and offer coverage to employees who were not eligible to participate under the plan's terms as of December 27, 2012. If the employer had at least one-quarter of its employees (full and part-time) covered under a non-calendar year plan, or offered coverage under a non-calendar year plan to one-third or more of its employees (full and part-time) during the most recent open enrollment period prior to December 27, 2012, it will not be subject to Pay-or-Play penalties for any of its employees until the first day of the plan year beginning in 2014. For purposes of determining whether the plan covers at least one-third (or one-quarter) of the employer's employees, an employer can look at any day between October 31, 2012 and December 27, 2012. Again, this transition relief is dependent upon the plan offering affordable, minimum value coverage to these employees no later than the first day of the 2014 plan year.
This important transition rule raises the question of what is considered to be a plan's plan year. If a plan is not required to file an Annual Report, Form 5500, as is the case with a fully insured plan with fewer than 100 participants, or the plan has failed to prepare a summary plan description that designates a plan year, the plan year generally will be the policy year, presuming that the plan is administered based on that policy year. If a policy renews on January 1 and any annual open enrollment changes take effect January 1, the plan year likely will be deemed to start January 1. If the policy renews on July 1, however, and open enrollment changes become effective on January 1 of each year, the lack of a summary plan description leaves the plan year determination open to question. The employer in this situation may want the plan year to start on July 1 in order to delay the date on which the plan has to comply with the requirements under health care reform. If the plan is administered on a calendar-year basis, however, the government could reasonably argue that the plan year is the calendar year. Employers should be taking steps now to identify the plan year for their group health plan(s) in order to ensure that they are timely complying with the applicable requirements under health care reform.
If the employer has prepared and distributed a summary plan description for its group health plan or the plan files an Annual Report, Form 5500, the plan year has already been identified. If the employer has not complied with the ERISA disclosure and/or reporting requirements, then additional analysis of the 12-month period over which the plan is administered and operated is needed to identify the plan year. That analysis should take place now and not when an auditor asks the question.
For employers in this situation, it would be advisable to adopt a plan document to address this issue. Since insurance companies are not directly subject to ERISA, their policies may not contain all of the provisions necessary to meet ERISA's disclosure requirements. An insurance policy typically does not contain certain desired provisions describing the relationship between the employer and plan participants. Such provisions might include the employer's indemnification of its employees who perform plan functions, the employer's right to amend the plan, a description of the plan's enrollment process, and the allocation of the cost of coverage between the employer and participants. A wrap plan can address these issues, as well as enable an employer to aggregate all its welfare benefits under a single plan so that a consolidated Annual Report, Form 5500 may be filed for all ERISA welfare benefit plans subject to annual reporting obligations.
This update is brought to you by Schwartz Insurance Group, a Partner Firm of United Benefit Advisors, the nation’s leading independent employee benefits advisory organization with more than 200 Partner offices in 45 states, Canada and the United Kingdom and Jackson Lewis, one of the fastest-growing workplace law firms in the U.S., with more than 700 attorneys practicing in 49 locations nationwide.
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Thursday, May 16, 2013 - 2 p.m. ET / 11 a.m. PT
Are You My Employee?
In recent years, both lawsuits and state and federal agency audits have increased over worker classification issues. PPACA's requirement that large and mid-size employers offer health coverage to their full-time employees or pay penalties will give employers another reason to make sure workers are classified correctly. Misclassifying workers can lead to awards of large dollars of back pay, penalties for under-withholding and fines under PPACA. Employers throughout Indiana and Kentucky - especially those with different classes of employees must be especially vigilant in order to avoid these liabilities.
Unfortunately, it's not always simple to decide if a worker is an "employee." Join us for this 90 minute intermediate level webinar and learn what to look at when deciding if a worker is a "common law" employee, tools available from the government to help you do this, and all the consequences to consider when making this decision.
The presentation slides will be posted at www.ubabenefits.com the day before the webinar.
Since this program is conducted in partnership with a leading national law firm, you will note a charge for attendance. So, two options - to view at your location, make sure to use our Priority Code UBA 313 for discounted access. OR, you may RSVP directly to us and watch from our offices at no charge - please let us know by Friday, May 10, 2013 if you plan to join us. This webinar event has been submitted to the Human Resource Certification Institute to qualify for 1.5 recertification credit hours.
Interested in related topics? To access past visual presentations, see our Webinar Archives.
PRESENTERS
Kathleen R. Barrow, Partner - Jackson Lewis LLP
Kathleen has designed welfare benefit plans and executive compensation arrangements and has counseled sponsors and administrators of these types of plans for 15 years. She has appeared on behalf of clients before the national offices of the U.S. Treasury and the Department of Labor Employee Benefit Security Administration and has assisted employers in defending plan audits. Kathleen is a member of the Jackson Lewis Health Care Reform Task Force.
Randal M. Limbeck, Partner - Jackson Lewis LLP
Randal M. Limbeck is a partner in the Omaha office of Jackson Lewis LLP. He specializes in representation of clients in the areas of ERISA, employee benefits, and executive compensation. Mr. Limbeck has represented clients in a broad range of industries and size, with respect to design, document drafting, employee communications, litigation and assistance in dealings with the IRS and Department of Labor. Mr. Limbeck is admitted to practice in Nebraska.
This series is brought to you by Schwartz Insurance Group, a Partner Firm of United Benefit Advisors, the nation’s leading independent employee benefits advisory organization with more than 200 Partner offices in 45 states, Canada and the United Kingdom and Jackson Lewis, one of the fastest-growing workplace law firms in the U.S., with more than 700 attorneys practicing in 49 locations nationwide.
ESSENTIAL HEALTH BENEFITS, MINIMUM ESSENTIAL COVERAGE, MINIMUM VALUE COVERAGE - WHAT'S THE DIFFERENCE?
The Patient Protection and Affordable Care Act (PPACA) uses terms that sound alike for three very different things. We know from conversations with HR professionals across Kentucky and Indiana that confusion exists about these very details. Here's a closer look at these terms, and when they're used.
Essential Health Benefits
Significantly affects individuals and small employers with a fully insured plan. Has a limited impact on self-funded and large insured plans.
Beginning in 2014, policies in the individual and small group markets* will be required to provide coverage for each of the 10 "essential health benefits" regardless whether the policy is purchased through or outside the exchange. Self-funded plans (regardless of size), large group plans, and grandfathered plans (regardless of size) do not have to cover all 10 essential health benefits, but they will not be allowed to put lifetime or annual dollar limits on an essential health benefit.
Each state will have its own "benchmark" essential health benefits package. The essential health benefit categories are ambulatory/outpatient, emergency, hospitalization, maternity and newborn care, mental health and substance use, prescription drugs, rehabilitative and habilitative services and devices (for example, speech, physical and occupational therapy), laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including pediatric dental and vision care.
Minimum Essential Coverage
Affects most individuals and all employers with 50 or more employees (regardless whether its plan is self-funded or fully insured).
Beginning in 2014, most Americans will be required to have "minimum essential coverage" or pay a penalty with their tax return. (In 2014, the penalty will be the greater of 1 percent of income or $95.) A person will have minimum essential coverage if he or she is covered under an eligible employer-sponsored plan, an individual policy (through or outside the exchange), or a government plan (Medicare, Medicaid, CHIP, TRICARE, VA, etc.).
Also beginning in 2014, employers with 50 or more full-time or full-time equivalent employees will be required to offer minimum essential coverage to nearly all of their employees who work 30 or more hours a week, or pay a penalty. (If minimum essential coverage isn't offered to at least 95 percent of full-time employees and their dependent children, a penalty of $2,000 per year per full-time employee, excluding 30 full-time employees, will apply.)
A clear definition of "minimum essential coverage" for employer-provided benefits has not been provided yet, but it appears that fairly basic medical coverage will be enough. "Eligible employer-sponsored coverage" includes any plan offered in the small or large group market in a state, as well as self-funded plans, unless the plan only provides "excepted benefits." Excepted benefits are those that provide very limited medical coverage, like hospital indemnity, long-term care and cancer plans, on-site medical clinics, disability income and accident plans, and dental- and vision-only coverage. Plans with annual dollar limits on essential health benefits will not be allowed after 2014, so it is unlikely that a standalone HRA will provide minimum essential coverage.
Minimum Value Coverage
Affects employers with 50 or more employees (regardless whether its plan is self-funded or fully insured) and individuals who may be eligible for premium tax credits/subsidies.
Beginning in 2014, employers with 50 or more full-time or full-time equivalent employees that offer coverage that is less than "minimum value" will have to pay a penalty. (The penalty for not providing minimum value, affordable coverage is $3,000 for each full-time employee who obtains coverage through a public exchange and receives a premium tax credit/subsidy. Individuals will not be eligible for a subsidy if their employer offers them affordable, minimum value coverage.)
Minimum value coverage is coverage with an actuarial value of at least 60 percent – this means that on average the plan is designed to pay at least 60 percent of covered charges. (The employee would be responsible for the other 40 percent through the deductible, copays and coinsurance.) In the self-funded and large markets, employers will be able to use a calculator provided by the government, and possibly safe harbor plan designs, to make sure their plan meets the 60 percent standard. The proposed calculator can be found here (under the "Plan Management" section, look for Feb. 20, 2013 / Minimum Value Calculator): Regulations and Guidance | cciio.cms.gov. According to HHS, 97 percent of the employer-sponsored plans they surveyed already meet the 60 percent requirement.
In the individual and small group markets, a "bronze" policy will have an actuarial value of 60 percent.
In a nutshell, then:
- Essential health benefits are the kinds of care small plans must cover
- Minimum essential coverage is what individuals must have and large employers must offer if they don’t want to pay tax penalties
- Minimum value coverage is what large employers must offer to avoid a different tax penalty
* It is still unclear what size makes a plan "large" or "small" under the essential health benefits rules. Clearly, a plan with fewer than 50 employees is "small" and a plan with more than 100 employees is "large." States have the option to consider plans below 100 as "small" until 2016, but it is not clear yet how they make that choice. (It is clear that a plan is "large" under the minimum essential and minimum value requirements if there are 50 or more full-time or full-time equivalent employees in its control group.)
As of today, we believe that under 50 will be considered "small" in both Kentucky and Indiana. See our previous post on this topic.
Our access to PPACA Advisor resources can help you clear up PPACA questions and better craft your company's benefit strategy for the future.
This information is general and is provided for educational purposes only. It reflects our understanding of the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors. (April 9, 2013)
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PPACA Compliance Just Got Easier - New tools provide straight-forward answers
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 We are pleased to announce the launch of a new compliance solutions resource center aimed at helping employers understand their obligations and opportunities under the Patient Protection and Affordable Care Act (PPACA). It is a comprehensive source which will help Kentucky businesses and Indiana businesses stay on top of changes in the law and requirements for compliance.
The PPACA Resource Center includes up-to-date information on a number of elements, including:
- Counting Employees
- Exchange eligibility/IRS Noncalendar-year plans
- Wellness Proposed Rules
- FSA and SBC Highlights
- W-2 Reporting Requirements
- Medicare Withholding Summary
- Essential Benefits/Actuarial Value
- NEW: PPACA Employer Fees
- NEW: New Rules Impacting Fully Insured and Self-Funded Plans
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Visit the PPACA Advisor Resource Center
About the Compliance Solutions program:
This resource includes an exclusive number of products and services designed to help you stay informed and manage changes in benefits compliance and labor laws.
Employers will have a number of obligations and opportunities as the heart of the Patient Protection and Affordable Care Act of 2010 (PPACA) is implemented in 2014. This law is complicated, and each employer will need to base its decisions on its particular situation. Your UBA advisor is well-prepared to assist you with your decision making.
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United Benefit Advisors® (UBA) is the nation's leading independent employee benefits advisory organization with more than 200 Partner offices in 46 states, Canada and the United Kingdom.
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Indiana and Kentucky employers continue to look for ways to improve their benefit offerings and compete for talent.
As health care exchanges go online and fewer businesses are burdened with a full health care plan, an interest in ancillary products continues to grow. United Benefit Advisors has released preliminary results from its Ancillary Products Survey, which indicates vast differences in ancillary benefits offered by employer size, region and industry, highlighting the importance of using local benchmarking data in benefits planning.
Survey highlights include:
- Nearly three-quarters of all employers responding offer dental coverage, with almost all large employers providing the benefit.
- Ninety-five percent of businesses replying with more than 500 employees offered group term life insurance, yet only 56 percent with fewer than 50 employees offered this benefit.
- An industry breakdown of short-term disability coverage shows that 37 percent of employers responding in all major industries offer the coverage.
- Only 0.5 percent of the employers in the survey offer on-site clinics; however, among employers responding to the question with more than 500 employees, the average was 7.4 percent.
Know what others in your industry or area are offering
when it comes to ancillary benefits.
Download preliminary results from the
UBA Ancillary Products Survey
About the Ancillary Products Survey Executive Summary
The UBA Ancillary Products Survey Executive Summary is a preliminary sampling of the data collected from a brief questionnaire included in UBA's 2012 Health Plan Survey of 11,711 employers throughout the country. The in-depth UBA Ancillary Products Survey -- the only one of its kind in the market today -- will provide benchmarking data broken down by size, industry and region from thousands of employers across the country. Results will be available in the late spring of 2013.
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United Benefit Advisors® (UBA) is the nation's leading independent employee benefits advisory organization with more than 200 Partner offices in 46 states, Canada and the United Kingdom.
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Eligibility Waiting Periods l Employee Notices l Claims Appeals
The Department of Health and Human Services (HHS), the Department of Labor (DOL) and the Internal Revenue Service (IRS) continue to issue details on the Patient Protection and Affordable Care Act (PPACA). The past 10 days has brought several changes of interest to employers:
Eligibility Waiting Periods
Affects all plans, whether fully insured, self-funded or grandfathered. Applies to all sizes of employers, as of the start of the 2014 plan year
The agencies have issued proposed regulations that state that an eligibility waiting period cannot be more than 90 days. This literally is 90 calendar days -- a plan that begins coverage as of the first of the month after 90 days of employment, or after three months of employment, will be out of compliance. If the 91st day falls on a weekend or holiday, the plan may not wait to begin coverage until the following work day -- in that situation, the plan will need to begin coverage as of the Friday before the end of the allowed waiting period.
Example: Sam starts work on July 14, 2014. His coverage must begin on or before Oct. 13, 2014. If Sam's employer is closed that day for Columbus Day and it cannot begin coverage because of the closure, his coverage must begin Friday Oct. 10.
The waiting period may be delayed until the employee meets the plan's eligibility requirements -- for example, if the plan does not cover employees who work fewer than 30 hours per week or employees in certain job categories, and an employee moves from ineligible to eligible status, the waiting period may begin as of the date the employee first moves into the eligible class. The agencies regard earnings and residual requirements under multiemployer plans as permitted types of eligibility requirements.
The proposed regulations confirm that a waiting period that is longer than 90 days is allowed for new variable hours employees while they complete their initial measurement period. The waiting period may be imposed after the measurement period is completed as long as both are completed by the first day of the month following completion of 13 months of employment.
Example: Ann is a variable hours employee because she is an on-call nurse. Ann's employer uses a 12-month initial measurement period for variable hours employees and a 60-day waiting period. Ann is hired May 10, 2014. If Ann averages 30 or more hours per week during the initial measurement period, she must be offered coverage with an effective date of July 1, 2015 or sooner.
Plans that require a certain number of hours be completed to be eligible will be allowed to use an hours of service requirement of up to 1,200 hours. A waiting period of up to 90 days may follow completion of the hours of service requirement. Plans that allow employees to buy or bank hours will be permitted.
Individuals who are part way through a waiting period as of the start of the 2014 plan year must be credited with time prior to 2014, so that their total waiting period is no more than 90 days.
Example: Ed is hired Oct. 22, 2013 to work part-time. Ed's employer has a calendar year plan and during 2013 it used a 6 month waiting period. Ed must be offered coverage with an effective date on or before Jan. 21, 2014, because that is Ed's 91st day of employment. (It does not matter that Ed works part-time -- the waiting period limit applies to both part-time and full-time employees.)
Certificates of Creditable Coverage
Affects all plans, whether fully insured, self-funded or grandfathered, and regardless of employer size, as of Jan. 1, 2015
Because pre-existing condition limitations will not be permitted after the start of the 2014 plan year, certificates of creditable coverage would not need to be provided after Dec. 31, 2014. (This date would apply regardless of plan year.)
The notice regarding pre-existing condition limitations that is provided as part of open enrollment also will become obsolete.
External Claims Appeals Requirement
Applies to all nongrandfathered plans, whether fully insured or self-funded, and to all sizes of employers
PPACA requires all nongrandfathered plans to follow detailed processes for claims appeals, including a process for external review that includes 16 consumer protections required under the NAIC model act. Due to practical difficulties meeting these requirements, interim rules were issued that only required these reviews to meet some of the consumer protections. The interim rules have now been extended, giving insurers and self-funded plans until Jan. 1, 2016 to meet the full external review requirements.
The proposed rule on eligibility waiting periods and certificates of creditable coverage is here:
Eligibility Waiting Periods - Proposed Rule
The notice extending the transition period for the external review process is here:
Technical Release No. 2013-01
This information is general and is provided for educational purposes only. It reflects our understanding of the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors. (March 21, 2013)