Posts Tagged ‘ACA’

Two Considerations For The Marketplace Open Enrollment Period

Tuesday, December 20th, 2016

The post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

The Affordable Care Act provides the ability for individuals to buy coverage regardless of any underlying medical condition.  This guaranteed issue provision has provided millions of Americans the access to health care that was not there before.  Many who had access to group coverage have also shifted either themselves or dependents to individual plans when their group plans were too expensive or did not provide the coverage they needed.

This year’s annual Open Enrollment Period for the Marketplace has opened and we are seeing, on average, a 25% increase to the cost of individual plans.  This cost increase is forcing many who are enrolled there to re-evaluate if an individual plan is still the best option for them when other group coverage is available through an employer.  When making this decision around where to be covered, there are two important items that should be understood about moving onto or coming off of an employer-sponsored health plan.

First, the annual Open Enrollment Period for the Marketplace is not considered a qualifying event under the IRS guidelines to allow someone to drop their individual policy and enroll in an employer-sponsored group plan.  There seems to be a common misconception around this with both employers and employees.  As the costs for individual plans continue to rise, many are looking for ways to move back to an employer’s plan.  The only instance in which someone could leave their individual plan and move onto their employer’s group plan is if the group plan is in an open enrollment period.

Another thing to consider is that the Marketplace Open Enrollment Period is not a qualifying event that will allow someone to drop a spouse or dependent from their group plan (unless the group plan’s annual open enrollment period coincides.)  So those who may be considering moving a dependent to an individual plan would not have the ability to do so at that time.  However, a special provision in the rules does allow an employee the ability to make a mid-year revocation of their group plan (outside of the group’s open enrollment) and enroll in Marketplace coverage.  In order for an employee to move a spouse or dependent to an individual plan during the Marketplace Open Enrollment Period, the employee must also drop coverage for him or herself too.

Given the rising costs of individual plans it seems unlikely that many will want to shift away from the group coverage.  It is important for employers to know the rules around allowing employees to come on and off of their plans outside of their annual open enrollment period.  Employees should understand the potential pitfalls of shifting away their group plan as that could create the opposite impact of what they are trying to achieve.

What Employers Should Know About Section 1411 Certifications

Tuesday, May 24th, 2016

The post below is a guest blog from Jay Lowe who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

The Employer Mandate is perhaps one of the most nerve-wracking parts of the Affordable Care Act (ACA) for large employers: those employing morehcw than 50 full-time equivalent employees, or FTEs. (What’s an FTE? Find out here!) Many large employers understand that they can be fined with a tax penalty if they don’t provide coverage that meets the minimum requirements or is deemed unaffordable for their employees. In the event that coverage does not meet these requirements and is not affordable, employees may be eligible for a premium subsidy when purchasing individual coverage through the government’s healthcare marketplace (the Exchange). This subsidy eligibility is what triggers the penalty back to the employer.

Section 1411 of the ACA establishes the procedures for determining an individual’s eligibility for subsidies from the Exchange. A Section 1411 Certification is the notice to an employer that an employee has enrolled in a qualified health plan through the Exchange and been provided a subsidy. If you are an Applicable Large Employer (more than 50 full-time equivalent employees) that receives one or more of these notices, this could mean that you are facing a penalty from the IRS as part of the Employer Mandate provision of the ACA.

Employers should be prepared to see these certifications and have a plan of action in place once they do. For more details on the Section 1411 Certification, see here.

Dealing, Appealing, and Other Important Things to Know About 1411 Certifications

First, remember that these certifications are not penalty notifications from the IRS. They are simply informational, letting you know that an employee has received a tax credit and named you as the employer as part of their application process. You can expect a formal penalty notice from the IRS to follow; however, the notice will give you the ability to appeal if your health plan does meet all of the Employer Mandate requirements. By appealing, you can potentially stop the penalty process from the IRS.

It is important to educate the employees who will be handling these notices within your organization. This is a new form and something that most will not be familiar with. They need to know what to look out for and be prepared for what to do. If your health plan does meet minimum essential ACA requirements, make sure the employees in question understand that they will need to act quickly to appeal these notices; you will only have 90 days from the date of the notice to file your appeal.

In the event that your plan is not meeting all of the requirements of the Employer Mandate, look out! You’ll probably have to pay a fine. The Section 1411 Certification will alert you to your penalty liability. Only employees who receive a subsidy in the Exchange can trigger a penalty for you, and these notices will tell you exactly who those people are. As a best practice, employers should keep track of what their total exposure could be prior to receiving the notices. Their final liability could be less than what they are expecting.

With the delay of the Employer Mandate reporting requirements, it is likely that employers will not begin to see Section 1411 Certifications until late 3rd quarter or 4th quarter of 2016. That gives you plenty of time to educate your people, prepare an action plan, and learn all about 1411 Certifications!

Summer Interns and The ACA

Tuesday, June 16th, 2015

The post below is a guest blog from Rob Kreig who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

summer intern and acaSchool is almost out for summer, and that means many employers are getting ready to start hiring summer interns. However this year, in addition to determining which students will be the best fit for your organization, you also need to consider how the Affordable Care Act may require you to offer benefits to the interns who you hire.

I’ve been asked numerous times in the last month whether interns who work 30+ hours a week must be offered health benefits on the same schedule as a full-time employee. The answer to this question is generally “yes”. An intern who works more 30 hours a week should be offered benefits under ACA if they are going to be employed for longer than an employer’s eligibility period (can be up to 90 days) if the employer wishes to avoid potential ACA penalties.

However, employers should be aware that there is a possible exception for seasonal workers where some employers are finding that interns may fit.  To qualify, the individuals who fill a particular position will work less than 6 months, and are hired at the same time every year.  For these individuals an employer can apply the look back measurement method to determine benefit eligibility rather than make the employees eligible at the expiration of a health plan waiting period.

For more information on seasonal employees, the 4th paragraph of question #54 in this IRS document has some additional information including the definition under ACA.

If you have questions about your specific intern situation, check out our free, on-demand presentation: “Temporary Employees and the ACA.”

In An Environment Of Uncertainty, Prepare To Comply With The ACA

Thursday, August 14th, 2014

The post below is a guest blog from Mike Beck who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw 8 14In the last few weeks, there’s been multiple Affordable Care Act (ACA) developments, ultimately impacting large employers with 50 or more employees. How and when will they occur is another story, and it is easy to see why some employers are perplexed. Predicating what the ACA will look like a year from now is very difficult with some saying the employer mandate may be delayed again. Let’s review the recent events and how they are contradictory in many ways.

On July 22, the United States Court of Appeals for the District of Columbia Circuit concluded that PPACA’s subsidies should only be available to individuals purchasing health insurance in exchanges operated by a state – calling into question all the subsidies that have been obtained to date through the Federal exchange. Hours later in Richmond, Va., the United States Court of Appeals for the Fourth Circuit decided that legislative intent was to make tax subsidies available to individuals purchasing health insurance through a federally funded exchange or a state-based exchange if the state failed to create one. These two conflicting rulings are likely to go to the Supreme Court. For now, subsidies/tax credits will continue to be granted on the Federal Exchange. If the D.C. Circuit’s decision is upheld, it could strike a serious blow to the employer mandate since receiving a subsidy is a primary trigger of the employer mandate.

On July 24, the IRS published draft forms for the Code 6056 employer Minimum Essential Coverage reporting and disclosure requirement to the IRS and to individuals. This reporting requirement has multiple purposes as it allows the IRS to enforce the employer mandate, enforce the individual mandate, and confirm eligibility for premium tax credits for coverage purchased through an Exchange. This reporting along with the associated forms take effect in 2015 and are due in January 2016.

So in the same week, we witnessed a decision by an appeals court that called into question the viability of the Employer Mandate and suggested a possible delay, and then actions by the IRS which seem to indicate the Employer Mandate is moving forward as scheduled.

Regardless, large employers need to be prepared to comply with the employer mandate in 2015 and the associated reporting requirements. This should include a review of current payroll and HRIS systems to ensure they will be able to meet the new reporting requirements. The safe play is to assume that the employer mandate will go into effect without another delay, and if a delay occurs, organizations will have more breathing room to implement.

Plans Are Adding Older Spouses – Working Spouse Surcharge Needed

Thursday, May 15th, 2014

The post below is a guest blog from Tom Vertich, who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner Hill, Chesson & Woody.

hcw 5 15Here’s another surprise for some employers – courtesy of the Affordable Care Act (ACA). They will see an increase in enrollment of working spouses who are dis-enrolling from their employers’ medical plans. As if that wasn’t perturbing enough to plan sponsors, those spouses are generally on the older side (>50), and that will increase overall plan risk and employer costs. If your plan does not require a working spouse surcharge for spouses who can get coverage from their employers, your plan may be vulnerable as well.

So why is this happening?

Beginning in January of this year, small group employers (those with less than 50 full-time equivalent employees) who renewed their fully-insured plans found that their premiums changed in a dramatic way. Rates are (for the most part) different for every employee and are now based upon the employee’s age. That means older employees will be paying quite a bit more at renewal time if their small group employer contributes for medical coverage in one of two ways.

If the employer provides a defined contribution (DC), older employees’ costs could dramatically escalate. Under a DC approach, each employee receives a flat amount by the employer to help pay for their coverage under the employer’s medical plan. Much more common is for employers to pay a set percentage of premiums for their employees. This won’t result in as dramatic of an increase, but it can still be a shock to an older employee.

In trying to offset higher costs from the new ACA mandates, small group employers are starting to catch on that they may be able to get older employees to migrate to other health insurance coverage.  Because of the quirky rules that determines what is “Affordable” coverage, the older married employees will likely find their spouses’ employer-sponsored plans a much better choice than the exchange since they probably won’t qualify for a tax credit.

How do you know if your plan has a problem? Take a look to see if you’re having an increase in mid plan-year spousal enrollments. If you see this or start to see this happening, check whether there is diversity in these spouses’ ages. If there isn’t, and they are in older age groups, your plan is probably being affected.

Even though it’s not the norm, employers may want to take a closer look at requiring a surcharge for working spouses who qualify for their employers’ health plans. According to their most recent survey on purchasing value in health care, the National Business Group on Health found that only about 20% of employer participants require working spouses to pay $100 per month. Making this kind of change though, will discourage the dumping of other employees into your plan.

The full effect from this employee dumping won’t be here until the last quarter of this year. Much of that will come from the onslaught employers who changed the start of their plan year to December in 2013 in order to delay the new mandates that went into effect this year. After that, the employers who got to keep their old plans this year will begin to move to the new pricing methodology.

That’s at least some good news since the ACA now requires employers to provide at least 60-days notice before making a “significant plan change”; so you have some time to weigh your options. Also, to minimize the employee relations issues, you may still want to offer a real choice. If so, your plan only needs a surcharge big enough to make your plan slightly less attractive than what other employers charge for employee-only coverage. To find the right surcharge amount for your plan, contact Hill, Chesson & Woody for a benchmark analysis.

Shifting Sands in the Small Group Market Under the Affordable Care Act

Thursday, April 24th, 2014

The post below is a guest blog from Steve Byrd who serves as Principal, Health & Welfare Consultant  for CAI’s employee benefits partner Hill, Chesson & Woody.

 hcw april picMany questions have arisen from the ever changing Affordable Care Act (ACA), specifically amongst the small group employers. Many feel as though they have been left out in the cold with more questions than answers when it comes to the changing regulations.

“Should I renew early and what happens if I do? How do I handle the new small group age rates? How do I communicate the new benefit changes concerning, smoker rates, out-of-pocket maximums, age-rated premium schedules, metallic levels, pharmacy MAC pricing changes, pediatric dental/ vision changes, and deductible limit requirements?”

With new regulations published every week and a variety of health-care related bills moving through Congress every day, it is difficult for a large company much less a small employer, to keep up with the changes.

One bill recently passed through Congress and signed by the President (Protecting Access to Medicare Act of 2014)) is worthy of special attention by small employers. This bill, known as the “doc fix” bill, includes a section that ends the limitations on deductibles for small group employer-sponsored health plans that was previously imposed by the Affordable Care Act.

Prior to passage of this bill, deductible levels of no more than $2,000 for individuals and $4,000 for families were required in the small group market. This deductible cap made it extremely difficult for small group carriers to offer a wide range of plan designs within their small group plan offerings.

Small group carriers struggled to design plans that met the deductible requirements while also meeting the required Actuarial Value (AV) bands. The ACA requires small group carriers to offer plans at four specific AV levels (called Metallic Levels): Platinum (90%), Gold (80%), Silver (70%), and Bronze (60%). Deviations of no more than 2% are allowed. To operate within these Metallic Levels, many small group carriers made changes that resulted in higher per occurrence copays and increased costs for non-generic medications.

The passage of the Protecting Access to Medicare Act of 2014 allows carriers designing plans for the small group market to move beyond the $2,000/$4,000 deductible level and still meet the required Metallic Levels. It also allows small employers to remain creative in their plan designs, especially those that have focused benefits strategies around Consumer Driven Health Plans. To find out more about this recent change to the ACA, continue on to Robb Mandelbaum’s coverage on the “doc fix” bill.

4 Questions to Answer Before Tackling the Affordable Care Act

Thursday, August 8th, 2013

In today’s video blog, CAI’s CEO, Bruce Clarke, offers employers advice for the Affordable Care Act (ACA). He suggests that your next few group health benefit renewals should be less about rates and more about fundamental decisions and choices.

Bruce says renewal meetings should be more like strategy meetings. Some tips for conducting productive meetings include asking these four questions:

  • Has the ACA dramatically affected your company or workforce?
  • Are your satisfied with your current plan design as it is?
  • Does the act open new options to you that would improve your plan?
  • Are you getting a specialist’s advice on all of your options?

CAI is here to help you navigate through the changes and opportunities that health care reform will bring. Please call a member of the Advice and Counsel Team at 919-878-9222 or 336-668-7746 with any questions.