Employer Issues

Confused About 2014 Maximum-Out-of-Pocket Costs?

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.

ACA October 1 Notice of Coverage Mandatory for Employers

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 .

www.dol.gov/ebsa/faqs/faq-noticeofcoverageoptions.html

We will try and keep you posted on any new developments.

Employer Sponsored Coverage – Just the Facts

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/

Year 2 of Medical Loss Ratio Rebates: A Refresher For Employers In Case the Check Comes

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.

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