Employer Issues

Did You Receive an MLR Rebate Check from Your Insurance Carrier?

Wondering What to Do With It?

To comply with provisions of healthcare reform, insurance carriers and health plans have to provide rebates to policyholders if their medical loss ratio – the percentage of premiums spent on reimbursement for medical services and related health care quality activities – does not meet the minimum standards for a given plan year as defined in the Affordable Care Act.

Some employers will be receiving checks this month. If you receive a check and are wondering what to do with it, refer to our primer summarizing key points that may help guide you.

Example Rebate Check

Example Rebate Check

For those of you who want to drill into more technical details go to: http://www.dol.gov/ebsa/pdf/tr11-04.pdf

The IRS guidance on tax implications of the rebates can be found at: http://www.irs.gov/uac/Medical-Loss-Ratio-(MLR)-FAQs

Swedish Retail Giant IKEA – Raising the Bar for US Retailers?

According to an article in The Huffington Post today, Ikea plans to increase the minimum wage for all employees of its US stores, and in doing so, will likely raise the bar for other American retailers.

Well known for their “ready-to-assemble furniture and home goods” Ikea plans to tie wages to MIT’s “Living Wage Calculator.” The calculator tool estimates the base salary a worker needs to make in order to live in a particular geographic area.

The article says that this move by Ikea will boost the average minimum wage to $10.76, a 17% increase, and also means about half of the store’s 13,650 employees will be getting a raise. Rob Olson, Chief Financial Officer and acting president of Ikea US says the rates will go into effect Jan 1, 2015. Olson also told The Huffington Post, “It’s all centered around the Ikea vision, which is to create a better everyday life for the many people.”

Using a living wage calculator to determine salaries based on geographic location seems to be a first for major American retailers. The new minimum wage will vary from $9 to just over $13 among Ikea’s 38 retail stores, plus several distribution and service centers and one manufacturing plant based here in the US.

Olson says the new wage structure is part of Ikea’s effort to attract employees by making its pay and benefits plan more appealing. The company recently expanded its benefits package by increasing the employer match on its 401k plan and launching a separate retirement account for employees that have been with the company for at least five years.

IKEA GIVES HALF ITS US WORKERS A 17% RAISE

The company has decided to focus solely on the co-worker, rather than follow the lead of the competition – other US retailers. Bold move. The article goes on to point out, however, that Ikea is not the only retailer to raise wages across the board for its employees. Gap Inc. announced earlier this year that it would raise wages affecting more than two thirds of its 90,000 workers.

As the article points out, this will undoubtedly become a talking point as the national debate heats up over increasing the federal minimum wage, currently $7.25 per hour. It hasn’t been raised since 2009. Olson asserts that Ikea’s decision should not be read as an endorsement of any legislative proposals regarding minimum wage.

Read the full article, Ikea To Raise Minimum Wage For U.S. Workers With Tie To Living Wage Calculator

Wondering How Long You Can Keep Your Pre-2014 Plan?

The answer: Probably at least through 2017. The time table for small employers still offering a health plan issued prior to 2014 (and technically doesn’t comply with all the provisions of the Affordable Care Act) could extend well into 2017.

In March, the Obama administration released guidance extending the renewal of health insurance policies that don’t meet all the ACA standards through October 1, 2016. This means that health policies that exist today, but do not comply with ACA provisions that went into effect in 2014, can be maintained through 2017.

It’s up to the individual states and respective insurance companies to adopt the extension.  Those states (all but a handful) that have chosen to allow carriers to renew non-compliant policies for policy years starting after January 1 of this year are likely to adopt the extension.

To read more about this extension go to The Extended “Fix” for Cancelled Health Insurance Policies: Latest State Action on the The Commonwealth Fund Blog.

June 12 Post - Map

Getting ahead of ACA Strategies

The IRS is trying to keep employers in the group health market. The new ruling is somewhat complicated. What a big surprise, huh?

The IRS is saying that the ACA requires that plan sponsors ensure that there are no limits on the mandatory essential health benefits ACA requires, also known as “lifetime maximums.” If a group plan does not guarantee that the insured has all the essential health benefits required by ACA, then the plan is not qualified.

This article seems to be based on a premise that the plan sponsor, in this case, the employer, has no idea what the insured actually has. Therefore, if a benefit is issued, but th member does not have the ACA essential health benefits, then the plan does not qualify and is subject to tax.

But, if the plan sponsor does guarantee that the insured does possess the ACA minimum benefits, then the group sponsor is compliant.

The administration does not want employers simply giving money to employees to pay claims. This will get them further, rather than closer, to achieving their goal that Americans have coverage that will not run out due to lifetime limits.

To read the entire article, read IRS Bars Employers From Dumping Workers Into Health Exchanges.

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