ACA Prescribed Limits Are Still on Track for Most Plans in 2014
Out-of-Pocket (OOP) maximums of $6,350 for individuals and $12,700 for families will still apply for most customary fully-insured health insurance plans in 2014 (coinciding with renewal/anniversary dates; new plan year effective dates). Many publications and other news sources have created some confusion by reporting that the Affordable Care Act provision limiting maximum out of pocket costs has been delayed until 2015. The delay only impacts those plans that carve out certain benefits (e.g. pharmacy, mental health benefits) for administration by separate third-party providers. In those cases, a health plan’s medical benefits and its carved out benefit(s) may apply toward separate out-of-pocket maximums in 2014. This appears to be a one year exception for carve-outs and all plans are expected to aggregate out-of-pocket maximums beginning in 2015.
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- Tom Barrett
- September 18, 2013
- ACA, affordable, carve-outs, confused, confusion, mandate, maximum, OOP, out, pocket
- 0 Comments
DOL Update Confirms No Penalties for Non-Compliance
As part of the implementation of the Affordable Care Act, Health and Human Services (HHS) is requiring that all employers distribute to their employees basic information related to the new Federally Facilitated Healthcare Exchange or Marketplace that is scheduled to be introduced on October 1, 2013. While the details of the exchanges still have yet to be released, the requirement for employers to notify their employees remains in effect.
Official rules defining compliance have not been issued. HHS, however, has issued guidelines. Here’s a net of those guidelines:
- Applies to employers that employ one or more employees and generate annual revenue of $500,000 or more.
- Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status (if applicable) or of part-time or full-time status.
- The notice must include information regarding the existence of a new Marketplace and contact information and description of the services provided by a Marketplace. It must inform the employee that he/she may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace; and inform the employee that if the employee purchases a plan via the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer; and, that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
- Employers are required to provide the notice to ALL current employees not later than October 1, 2013. In 2014, any new employees are to be provided a notice within 14 days of an employee’s start date. It may be provided electronically.
- Model language is available on the DOL’s website. Employers may use it or a modified version, provided the notice meets the content requirements described above.
Complete details can be found on the DOL website http://www.dol.gov/ebsa/newsroom/tr13-02.html
Our take on the bottom line is this: Even though details of the exchanges have not yet been released, HHS is requiring all employers to distribute by October 1, 2013 an announcement to all employees regarding the upcoming open enrollment for the Federally Facilitated Healthcare Exchange or Marketplace – regardless of each employee’s employment or plan enrollment status. However, and contrary to some of the fear mongering opportunists kicking up dust in and around the market, in a recently released FAQ the DOL clarified that while employers should provide a written notice to all employees about the Health Insurance Marketplace by October 1, 2013, there is no fine or penalty under the law for failing to provide the notice .
We will try and keep you posted on any new developments.
We’re often asked by clients and colleagues about how their health coverage (and related costs) stacks up against the averages. Kaiser Family Foundation (KFF) recently released the results of their Annual Employer Health Benefits Survey. Among the findings:
- Employer-sponsored insurance covers about 149 million nonelderly people.
- In 2013, the average annual premiums for employer-sponsored health insurance are $5,884 for single coverage and $16,351 for family coverage.
- There is significant variation around the average single and family premiums, resulting from differences in benefits, cost sharing, covered populations, and geographical location.
- 21% of covered workers are in plans with an annual total premium for family coverage of at least $19,622 (120% of the average family premium).
- 21% of covered workers are in plans where the family premium is less than $13,081 (80% of the average family premium).
- Over the last 10 years, the average premium for family coverage has increased 80%.
- 57% of firms offer health benefits to their workers.
- 45% of employers with 3 to 9 workers offer coverage, but virtually all employers with 1,000 or more workers offer coverage to at least some of their employees.
The complete results and analysis of KFF’s Employer Health Benefit Survey can be found at http://kff.org/private-insurance/report/2013-employer-health-benefits/
This month certain employers may be receiving rebate checks from their insurance carriers. Some may have received checks last year and know what to do. Others may be receiving the checks for the first time and scratching their heads on what to do with the rebates. Here’s a primer summarizing key points that may help guide you.
What is it? Medical Loss Ratio Rebates (MLR) are a provision of the Affordable Care Act requiring insurance companies to issue a refund if they do not spend at least 80% (small group and individual; 85% large group) of premium on healthcare related services with no more than 20% going toward administrative costs.
What to do with the check? Rebates are considered plan assets to be used for providing benefits to enrollees and defraying plan costs. Employers are entitled to keep a portion of the rebate commensurate with the company’s percentage contribution to total premium. The remainder must be allocated to the benefit of those enrolled in the plan(s). Employers have some flexibility in terms of how to distribute the rebate. At a high level, the options include:
- Reduce employees’ portion of premium for the next policy year.
- Provide a cash refund to those employees covered under the health plan(s) associated with the rebate.
Allotment of the rebate needs only to include current employees. Employers are not required to track down or include former employees in the distribution or apportionment of rebates (any Cobra enrollees being the exception).
To drill into the technical details go to http://www.dol.gov/ebsa/pdf/tr11-04.pdf. IRS guidance on tax implications of the rebates can be found at http://www.irs.gov/uac/Medical-Loss-Ratio-(MLR)-FAQs.
A surprise announcement out of Washington concerning a major provision of Obamacare led into the 4th of July holiday and served as fireworks of sorts to large employers and those in the industry. Late on Tuesday July 2nd, the Administration announced that the Employer Mandate, a central piece of the Affordable Care Act, was delayed until 2015.
Under the Employer Mandate an employer with 50 or more employees must offer full time employees “minimum essential group health coverage” that is “affordable” or pay penalties. Employers who elect not to offer coverage would be subject to a $2,000 per employee penalty. Those employers offering coverage that doesn’t meet ACA’s minimal coverage and/or affordability standards would be subject to a $3,000 per employee fine for any employees that obtain subsidized coverage through the insurance exchanges.
In making the announcement, officials pointed to complications related to data collection, complex employer reporting requirements and other administration issues as the reasons for the delay.
So far, this delay does not affect the January 1, 2014 Individual Mandate or any of the new requirements that will impact the small group market (firms with less than 50 employees) such as the essential health benefit requirements and the rating reforms.
More information and coverage can be found at Kaiser Health News, Summaries of News Coverage, Delay In Major Health Law Provision Raises Doubts At Critical Stage Of Rollout, http://www.kaiserhealthnews.org/Daily-Reports/2013/July/02/employer-mandate.aspx
Here are the ABC’s of Healthcare Reform for Employers with Key Provisions Summarized…
Whether it’s in business meetings or in casual conversations at social gatherings, we frequently are asked “what’s healthcare reform all about” or “can you give me a simple explanation of ObamaCare“ or “ net out for us what we need to know about healthcare reform”. Those in the business who eat, drink and sleep this stuff know that it’s nearly an impossible task to simply and succinctly explain this very complex piece of legislation that’s expected to work up a full head of steam in 2014. Not wanting to back down from the challenge however, here’s our broad brush at netting out the key components for you in an understandable fashion. We focus on key pieces already implemented and 7 main provisions pertinent to employers.
Some Provisions Already in Effect (grandfathered plans notwithstanding):
7 Key Provisions of Healthcare Reform Set to Take Effect in 2014:
Eligibility/Coverage for individuals with incomes up to 133% of the Federal Poverty Level. Individual states can decide whether or not to implement. Some have rejected.
- Guaranteed Availability of Health Insurance
Coverage cannot be denied for any reason such as health status, age, gender.
- Individual Play or Pay Mandate
All individuals are required to have health insurance or be subject to a financial penalty. Some exceptions to the mandate will be granted including such things as financial hardship, religious beliefs, member of Indian tribe, etc.
- Employer Play or Pay Mandate (DELAYED UNTIL 2015)
“Applicable Large Employers” (50 or more full time equivalents) must offer full time employees (30 hours a week) with “minimum essential group health coverage” that is “affordable” or pay penalties.
- Premium Subsidies (aka Premium Tax Credits) for those whose incomes fall between 133% and 400% of the Federal Poverty Level and are without access to other coverage
- Cost-Sharing Subsidies (Out-of-Pocket Costs) for those whose incomes fall between 133% and 250% of FPL and are without access to other coverage
- Health Insurance Exchanges (HIX)
- Government sponsored (versus private exchanges sponsored by insurance companies and others and not addressed here) internet platforms that function as online marketplaces for certain individual and small group health insurance plans
- Administered in each state by either the respective State government; a joint Federal/State partnership; or, the Federal Government alone. Majority of states have left it up to the Federal Government to implement the HIX in their states.
- Offering 4 levels of ACA-compliant health plans, to individuals and small businesses (small biz version also referred to as SHOP; implementation delayed in many states)
- Individuals eligible for Premium Tax Credits (subsidies) must purchase via the HIX
Well, there you have it. Clear as mud, right?
It’s a complex law that’s generating thousands of pages of rules, regs, legalese, guidelines, FAQ’s – you name it – from the likes of Health and Human Services, the IRS, and the Department of Labor. It’ll impact most employers and their respective employees in some way, some much more profoundly than others. And, it’s expected to cause to disrupt the market.
In the weeks and months ahead we’ll be working hard to cut through the morass and succinctly provide employers and other readers with as much practical clarity as possible. We’ll be sharing what we’re doing, seeing, and hearing in the marketplace and the impact of the new healthcare law on businesses like yours and ours. If there are things you’d like us to help you understand or anecdotes you’d like to share, please drop us a line and let us know.
Health Care Reform continues to create anxiety and unsteadiness due to the lack of clarity and the still many unresolved issues. With the major provisions of the Affordable Care Act (ACA) slated to hit in 2014 columnists, commentators and reporters in the popular media are more closely tuning in and are beginning to recognize and comment on the potential for rough waters ahead.
To that end we think it’s worth calling attention to a recent column by David Brooks (New York Times, April 2013) in case you missed it. We think it’s a balanced appraisal and does a good job of discussing the major issues and fears associated with the implementation of ACA. Brooks’ assessment leans towards being ultimately optimistic. His reporting on the challenges and problems align with what we are finding in the trenches. His column is to the point and definitely worth a read.
Our major concerns remain that many details on plans, rates and implementation are still unknown and the unintended consequences that could ensue. While the law knocks down barriers to obtaining coverage, it seems to do little in terms of addressing costs and bending the cost curve.