Author Archives: sharitasc

Court’s DOMA decision may affect your FlexSystem Plan

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For a limited time only, a same-sex legally married spouse may make a change of election in his/her flexible spending plan.

Calling it an unconstitutional violation of the Fifth Amendment, the U.S. Supreme Court has struck down a federal law defining marriage as between one man and one woman. Same-sex couples who wed in states where allowed* now must be treated as spouses under the Internal Revenue Code (IRC), the Employee Retirement Income Security Act (ERISA), and more than 1,000 other federal laws.  

What does this mean for FlexSystem Flexible Spending Accounts (FSA)?

For federal purposes, including employee FSA benefits, the change became effective on June 26, 2013. Going forward, a same sex couple that is married under state law has the same right to use a spouse’s FSA as does a heterosexual married couple. This is applicable to individuals residing in one of the states below and if the marriage is lawful within the state. Therefore, TASC will administer FlexSystem for same sex couples meeting this criteria exactly as for opposite sex couples. This change does not affect domestic partner coverage you may currently have in place, as it does not address nor grant rights to domestic partners.

What do you need to do?

Begin by informing your employees** that the DOMA ruling is viewed as a qualifying event for FlexSystem. This means they may change their current year annual election, up to a maximum of $2,500. You may also wish to communicate to employees who did not previously elect FlexSystem and allow them to now consider enrolling.

Enter a change of election or new enrollment for any Participant who is in a same-sex legal marriage and wishes to adjust his/her annual benefits contribution.

Customarily, Participants are allowed 30 days in which to make a change of election due to a qualifying event. TASC has extended this time limit and asks that you enter all DOMA-affected changes of election and new enrollments by August 31, 2013.

To make a change of election due to DOMA as a qualifying event:

  1. Login to your MyTASC account at www.tasconline.com. (Please note: if Participant eligibility changes are sent on electronic file feeds, send as a change on the file only and disregard 2-10 below.)
  2. From the Client Manager, click Participant List.
  3. Select the appropriate plan from the drop down menu.
  4. Locate the Participant with the change in status and click Account.
  5. On the Participant’s Account Summary, click the Contributions tab.
  6. Click on the Change link next to the un-posted Payroll Contribution for the applicable benefit.
  7. Deselect the auto adjust option on the bottom left of the page. (If you instead continue with the auto adjust option selected, all remaining contributions will be automatically updated to equal the current annual election amount.)
  8. Enter the new contribution amount for each remaining pay period contribution. Select the Next button when complete.
  9. Continue to follow the prompts and select the qualifying event “Dependent satisfies or ceases to satisfy eligibility requirements.”
  10. Repeat steps for each benefits contribution that needs to be changed. 

DOMA helps you and your employees benefit even more from FlexSystem. The more Participants in your FlexSystem Plan and the more funds they run through their Plan, the more you save in taxes! Plus, the more pre-tax dollars Participants put in an FSA, the more they save in taxes, too. It’s a win-win!

*Legal same-sex marriages are recognized in California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and Washington DC.

2013 Transportation Plan Limits Announced

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The Internal Revenue Service recently announced the annual inflation adjustments for tax year 2013, including the limits for Section 132 transportation plans and other changes from the recently passed American Taxpayer Relief Act (ATRA) of 2012.  

For tax year 2013, the monthly fringe benefits exclusion for transit passes and transportation in a commuter highway vehicle (i.e. vanpool) is $245, up from $240 for tax year 2012. And because the ATRA provides transit parity throughout 2013, the monthly parking limit will be raised to $245 as well.

Normally, transportation plan limits are announced in October or November of the prior year. This year, however, the announcement was delayed by the “fiscal cliff” debate. 

Details on this particular inflation adjustment—and others—are contained in IRS Revenue Procedure 2013-15.

Exchange Deadline Extended

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Originally, states were to submit their “blueprints” by November 16.

In acknowledging the fact that many governors and legislatures across the nation delayed planning until after the presidential election, the Obama administration will extend the deadline by which states must submit the initial framework of their health insurance exchanges.

While this Friday remains the deadline by which all states must tell federal regulators how they plan to proceed, ultimately states have until Dec. 14 to submit plans for the state-based online markets, according to a letter from HHS Secretary Kathleen Sebelius. What’s more, states wanting to partner with the federal government on this venture will have an additional two months…until Feb. 15.

The exchanges are a key element of Healthcare Reform. The provision reflects dual intentions: to make it easier to find an affordable plan, and to help people determine whether they qualify for new federal subsidies. It’s estimated that between 12-25 million people will obtain coverage through the exchanges starting in 2014. Under the law, the federal government will set up exchanges if states don’t.

Back in August, HHS issued a “blueprint” for the approval of state-based and state-partnership insurance exchanges. It grants states three implementation options:

  1. A state-based exchange, wherein the state operates all exchange activities (but may partner with the federal government regarding the premium tax credit, etc.);
  2. A state partnership exchange, wherein the state’s primary role is limited to plan management, consumer assistance, etc.; or
  3. A federally-facilitated exchange wherein the federal government runs everything.

Along with a declaration letter, state submissions must include an exchange application which requires completion or progress in 13 different categories.

HHS will approve a state-based exchange once the state has demonstrated the ability to satisfactorily perform all required exchange activities. “Conditional” approval will be granted to a state-based exchange that does not meet all requirements but is making significant progress and intends to be operationally ready for the initial open enrollment period (beginning on Oct. 1, 2013). To be operationally ready, a state must be able to provide consumer support for coverage decisions, facilitate eligible determinations for individuals, provide enrollment in Qualified Health Plans (QHPs), certify health plans as QHPs, and operate a Small Business Health Options Program (SHOP) exchange.

For a current look at where the 50 states (and the District of Columbia) stand on the creation of health insurance exchanges, click here.  

 

90-Day Waiting Period

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Regulators define how it applies to enrollment in employee benefit plans

The federal agencies tasked with implementing healthcare reform have issued additional guidance that employers and their advisors need to be aware of. In this latest version, the Internal Revenue Service (IRS), Dept. of Labor (DOL), and Dept. of Health and Human Services (HHS) attempt to communicate what is considered compliant (at least initially) as it relates to “excessive” waiting periods for coverage. This “temporary” guidance will remain in effect at least through the end of 2014.

IRS Notice 2012-59 states that a “waiting period is the period of time that must pass before coverage for an employee—or dependent—who is otherwise eligible to enroll under the terms of the plan can become effective.” Being eligible for coverage means the employee or dependent has met all of the plan’s eligibility conditions.

In general, the intent is to prohibit a group health plan or health insurance issuer from imposing a waiting period beyond 90 days for coverage. Thus, eligibility based solely on the lapse of time is permissible only if the time period does not exceed 90 days. Other conditions are also generally acceptable as long as they do not undermine the 90-day rule. (Example: If an employee chooses to wait longer than 90 days before electing coverage, the employer will not be considered non-compliant.)

The guidance also addresses the circumstance in which a group health plan bases eligibility on a specified number of hours worked per week/pay period, specifically when it cannot be determined at the date of hire whether an employee will work sufficient hours to be covered. For this purpose, the guidance conforms to the applicable large employer rules under the “pay or play”[i] penalty. Generally, plans are allowed a reasonable period of time (up to 12 months) in which to determine if the employee meets the hourly requirement. The time period in which to determine whether the employee meets the plan’s eligibility condition will not be considered to violate the 90-day rule if coverage is made effective no later than 13 months from the employee’s start date. 

This guidance is certainly welcome, and will be useful for plans implementing design changes to comply by 2014 with the new waiting period rules. Meanwhile, some important questions remain unanswered. For instance, lacks clarity is lacking regarding how hours of service are counted, or whether a plan may use equivalencies.

[i] The Patient Protection & Affordable Care Act (PPACA) employer mandate/pay-or-play provisions require large and midsize employers to choose between providing health coverage for full-time employees or paying a penalty. Whether full-time, part-time, or variable, all employees (of large and midsize employers) who are not offered the opportunity to enroll in health insurance by their employer will be eligible for premium tax credits and cost-sharing reductions for Exchange coverage.

 

Feds validate TASC’s FSA position

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Aggressive pro-Client / pro-Provider stance helps set public policy

The wait is finally over! On Wednesday, May 30, the IRS issued final guidance regarding the $2,500 limit for health Flexible Spending Accounts (FSAs).

Specifically, IRS Notice 2012-40 (http://www.irs.gov/pub/irs-drop/n-12-40.pdf) provides the following highlights:

  • Because employees make salary reduction contribution elections for health FSAs only on a plan year basis, the term “taxable year” refers to the plan year of the plan. Accordingly, the $2,500 limit on health FSA salary reduction contributions applies on a plan year basis. Therefore, the rule will not affect any plans beginning prior to January 1, 2013. 
  • The $2,500 limit on salary reduction contributions to a health FSA applies on an employee-by-employee basis; meaning that each spouse may elect to make salary reduction contributions of up to $2,500, even if both participate in the same health FSA sponsored by the same employer.

Please note that the statutory $2,500 limit applies only to salary reduction contributions under a health FSA, and does NOT apply to employer contributions.

And that’s not all – here’s another very favorable development…the notice also solicits comments focusing on the “use or lose” requirement. This appears to signal that the administration is seriously considering modification (or perhaps even elimination) of this outdated and ineffective provision.

All of the above is great news, especially for non-calendar year plans and plan sponsors.

Score one for TASC!

BREAKING NEWS: HHS Releases Final Exchange Regulations

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Under the long-awaited final rules released this week, and in an apparent effort to generate interest and spread the word, insurance brokers and third-party administrators (TPAs) (a) will be allowed to direct people to state insurance exchanges and (b) will be allowed to check to see whether the individual is qualified for tax credits.

That means a possible new business model for brokers and other companies looking to set up an access point to the exchanges. What’s more, the federal government will not regulate how these entities guide people into the exchanges’ charge-and-collect fees, as those relationships are regulated at the state level. Note: At least two states–Virginia and Pennsylvania–were already contemplating such arrangements.

States are essentially expected to build their exchanges from scratch, and have been eagerly anticipating (even clamoring) for these “rules of the road” before investing heavily in any type of infrastructure. 

HHS’s latest publication lays out several functions, which include: certifying qualified health plans;[1] operating a website for comparing plans; running a toll-free hotline for consumer support; providing grants to “navigators”[2] for consumer assistance; determining eligibility of consumers for enrollment; calculating how much government aid (if any) for which each household is eligible; etc. The rule also outlines the eligibility standards employers must meet to participate in the Small Business Health Options Program (SHOP).[3] 

The administration was quick to point out that the final rule differed slightly from its interim guidance. Most notably, insurers and other industry representatives will now get to fill as many as half of the seats on the governing boards, a move likely to seriously disappoint consumer advocates.

If a state is not ready to implement an exchange by the Jan. 1, 2014 start date, the law requires the federal government to step in. (Meanwhile, this round of instructions fails to explain exactly how it would do so.) The Obama administration’s request for $800 million to operate the federal exchange has received a frosty reception from congressional Republicans. 

Due to the mere fact that insurance companies will soon be vying for business on a level playing field, it’s assumed that the increased competition will drive down costs and give individuals and small businesses the same purchasing power already enjoyed by big business today.

TASC Governmental Affairs will continue to scan the 644 page document in order to fully understand its impact on our services and our customers. Rest assured, once potential opportunities and/or threats are identified, we will report back in depth. Stay tuned!

[1] State exchanges will determine the number and type of plans that are made available, as well as the minimum standards that health insurers must meet to participate in an exchange.
[2] Navigators are entities charged to assist individuals and small businesses in finding coverage, conducting outreach, providing education, etc.  States can choose at least two navigator organizations, one of which must be a community or consumer focused nonprofit.
[3] Starting in 2014, small employers purchasing coverage through a SHOP Exchange may be eligible for a tax credit of up to 50% if they have 25 or fewer employees, pay an average annual wage of less than $50,000, offer coverage, and pay at least 50% of the premium.  States can set the size of the small group market at either 1 to 50 or 1 to 100 employees.

Summary of Benefits and Coverage (SBC) Update

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NOTE: This is a follow-up to a previous Capital Connection entry (Much more than a “summary”) dated Dec. 22, 2011. The post below discusses the recent release of the final rule.

Although the health system overhaul continues to divide the public, a poll conducted by the Kaiser Family Foundation found that an overwhelming majority of Americans (84%) support insurance summaries. With that near consensus in mind, officials from three federal agencies have determined that starting later this year health plans will have to do exactly that…provide consumers with nationally standardized coverage descriptions. 

The requirement takes effect Sept. 23, 2012, applies to ALL private insurance (including employer coverage and plans purchased individually), and must be delivered at important points in the enrollment process, such as upon application and at renewal. It is estimated that this provision will affect between approximately 150 and 180 million Americans.

But the bottom line—a policy’s price—is missing. Although an estimated premium price was included in the draft rules, it has been dropped and won’t be required on the form. Another provision that was abandoned in the final rule is the mandate that insurers provide all of the required information in only four pages. The new guidance issued last week apparently will allow more lengthy disclosures (up to six pages) if absolutely necessary. Further, any “fine print” will be unacceptable, and all information must be printed in 12-point type, a size larger than the typical newspaper font.    

The forms will also include estimated out-of-pocket costs for two basic examples of care: pregnancy and Type 2 diabetes care. This too is a change from the earlier rule, as it reduces the number of coverage scenarios from three down to two (had previously included breast cancer).

How will the SBC be provided?  Last year’s proposed regulations would have required that plans/issuers provide the SBC as a stand-alone document only. As now modified in the final rule, group plans may provide the SBC together with the summary plan description if prominently displayed at the beginning of the document, such as immediately after the table of contents. This is not the case for non-group plans, which must continue to provide the SBC as a separate document.

Another popular query concerned whether the SBC may be provided electronically, as insurers and employers had complained about the huge expense of providing paper copies. The administration’s final rule appears to provide flexibility, while still addressing the information needs of consumers. Assuming certain “consumer safeguards”[1] are met, the rule ensure that in the vast majority of cases, the SBC may be provided electronically, thereby allowing it to be posted online or delivered via email. 

For additional guidance related to specific SBC documents (i.e. template, instructions, samples, the uniform glossary, etc.), please visit: http://www.dol.gov/ebsa/healthreform or http://www.cciio.cms.gov/programs/consumer/summaryandglossary/index.html.

[1] These requirements include written notice of availability to be sent via mail or emailed together, as well as the right to request a paper copy at any time.

Feds “Punt” Essential Benefits to States

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Definition is among the most important steps in PPACA implementation

The Obama administration is in the process of rolling out the health benefits framework for millions of Americans, and has established that states get to decide the specifics. This recent announcement is the first formal indication of the route the Dept. of Health & Human Services (HHS) will take on the “essential benefits package.”

The Patient Protection & Affordable Care Act (PPACA) aimed to provide the American people with access to quality, affordable health insurance. To achieve this goal, the law ensures that health plans offered in the individual/small group markets, both in and outside of the Exchanges, offer a comprehensive package of items and services known as “essential health benefits” beginning in 2014. This package must include items and services within at least the following 10 categories:

  • Ambulatory
  • Emergency
  • Hospitalization
  • Maternity & newborn care
  • Mental health & substance abuse
  • Prescription drugs
  • Rehabilitative
  • Laboratory
  • Preventive & wellness
  • Pediatric

Many states already set minimum standards in regulating insurers. Idaho, for instance, mandates insurers to cover 13 types of health services, while Rhode Island requires coverage of 69.

Under the HHS intended approach, states would have the flexibility to select a benchmark plan that reflects the scope of services offered by a “typical employer plan.” This approach would allow states flexibility when selecting plans to best meet the needs of their citizens.

States would choose one of the following benchmark insurance plans:

  1. One of the three largest (by enrollment) small group plans in the state;
  2. One of the three largest (by enrollment) state employee health plans;
  3. One of the three largest (by enrollment) federal employee health plans; OR
  4. The largest (by enrollment) HMO plan offered in the state’s commercial market.

Ultimately, the benefits and services included in the elected plan would be the essential health benefits package for that particular state. Plans could modify coverage within a benefit category, but only if doing so would not reduce the value of coverage. If a state opts not to choose a benchmark, HHS will then set Option #1 (above) as the default.

PPACA distinguishes between a health plan’s covered services and the plan’s cost-sharing features, such as deductibles, copayments and coinsurance. Those cost sharing features will be addressed by separate rules (presented in future bulletins), and will determine the actuarial value of the plan (i.e. bronze-level = 60%, silver-level = 70%, gold-level = 80% and platinum = 90%). Although final regulations are still months away, we in the TASC Governmental Affairs shop are watching closely. We know the federal government’s decision is likely to set the new national standard for health insurance.

NOTE – Grandfathered plans, self-insured group health plans, and health insurance coverage offered in the large group market are not required to offer essential health benefits. Nevertheless, the definition of said “essential health benefits” is of concern to employers, advisors, and insurers, since—beginning in 2017—states may allow large employers to obtain coverage through an Exchange and, thus, will be obliged to provide the essential benefits package.

This process could be especially burdensome to multi-state plans, since these would be exposed to 50 different essential health benefits definitions. In addition, while ERISA usually preempts state law with respect to self-funded plans, this is a federal mandate, so ERISA’s preemption provisions may not apply.

Happy New Year! IRS Rings in 2012 with W-2 News

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The mandate to report the cost of employer-sponsored group health plan coverage has been revised by IRS Notice 2012-9, issued just this week.

As many will recall, last summer the agency solicited public comment on various aspects of this requirement. This week’s revisions are in direct response to that feedback, and makes changes that may be of interest to TASC Providers/Clients regarding the following:

  • A reprieve from the reporting requirement for employers who file fewer than 250 W-2s for the preceding calendar year. 
  • The cost of coverage included/excluded in the aggregate reportable cost (HINT: HRAs appear to be OUT, at least for the time being).

Beginning with 2012 W-2s (those reported by the end of January 2013), this “interim” guidance is applicable until further instructions are issued. Any future guidance will apply prospectively only and will not apply to any calendar year starting within six months of the release date.

The call-outs above are only two of 40 provisions addressed in this most recent notice. Rest assured that TASC Governmental Affairs staff is currently analyzing the entire document and will report further, as pertinent.

Much more than a “summary”

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PPACA’s uniform explanation of benefits and coverage delayed

While employers had been mandated to comply early next year with proposed Summary of Benefits and Coverage (SBC) rules, a recent Frequently Asked Questions (FAQ) document related to the Patient Protection & Affordable Care Act (PPACA) has rescinded the interim requirement. Indeed, the Departments of Health & Human Services, Labor, and the Treasury (the Departments) have been inundated with comments on the interim regulations, Consequently, their “final” guidance will intend to incorporate that stakeholder feedback, and many expect to see a reasonable effective date that will allow group health plans and health insurance issuers sufficient time to implement…think 2013.

Previously, the Departments and other federal agencies involved had stated that the SBC requirements were to apply “beginning March 23, 2012.”

Background

As currently constituted, the SBC requires individual and group health plans alike to provide a uniform explanation of benefits and coverage to all applicants and enrollees. The intent is twofold: to help consumers compare health insurance coverage options before they enroll, and to facilitate their understanding of coverage after they enroll. The provision applies to all self-insured and fully-insured health plans, regardless of whether they are “grandfathered.”

As mandated, the SBC document must not exceed four double-sided pages, must use only words that are understandable to the average consumer, and must be presented in a culturally and linguistically appropriate manner (i.e. it cannot contain “fine print”). Its content must detail the plan’s premium, coverage features such as exclusions/limits, patient cost-sharing for each essential benefits category, and rules regarding the use of network providers. Finally, the SBC should indicate whether the plan meets standards for minimum coverage. 

AND IN CASE YOU MISSED IT: On Tuesday, December 20, the Supreme Court announced plans to hear oral arguments related to President Obama’s healthcare law. To occur over a three-day span in late March 2012, this pronouncement further confirms expectation that the high court will issue a ruling during the height of the battle for the White House. (Schedule below.)

Monday, March 26: Anti-Injunction Act, 1 hour allotted
Tuesday, March 27: Individual Mandate, 2 hours allotted
Wednesday, March 28: Severability/Medicaid, 2 hours allotted