Most of the major rules that affect 2014 and 2015 requirements under the Patient Protection and Affordable Care Act (PPACA) have been issued, so the regulatory agencies have begun addressing some of the details that need additional clarification. A number of notices were released during the month of May that address a wide range of open items that affect group health plans.
COBRA and CHIP Notices
The Department of Labor (DOL) has updated the model General Consolidated Omnibus Budget Reconciliation Act (COBRA) Notice, the model COBRA Election Notice and the model Children’s Health Insurance Program (CHIP) Notice to include information about the Marketplace (also called the exchange). The DOL has not included a deadline to begin using the new notices, but employers should begin using the updated notices as soon as they reasonably can. Read a summary of the updated notices requirement.
Marketplace Special Enrollment for COBRA Participants
A person who has a COBRA qualifying event may enroll in a Marketplace as a special enrollee (and apply for a premium subsidy) when the person first becomes eligible for COBRA. A qualified beneficiary also may enroll mid-year as a special enrollee (and apply for a premium subsidy) when COBRA expires. However, the qualified beneficiary may not drop COBRA part way through the coverage period to enroll in Marketplace coverage unless he does so during open enrollment. The regulatory agencies were concerned that qualified beneficiaries did not understand these rules (which are very similar to the Health Insurance Portability and Accountability Act (HIPAA) special enrollment rules), and therefore the federally-facilitated Marketplaces are offering a special enrollment period for COBRA beneficiaries until July 1, 2014. During this special enrollment period, qualified beneficiaries may drop COBRA and enroll in the federal Marketplace. (State-run Marketplaces may, but are not required to, offer this special enrollment period.) Employers are not required to notify qualified beneficiaries of this special, extended enrollment period, but they may wish to do so.
Preventive Care and Smoking Cessation
All non-grandfathered plans are required to provide first dollar coverage for preventive services. Preventive care includes counseling and treatment related to smoking cessation. The Department of Health and Human Services (HHS) has now issued Frequently Asked Questions that explains what types of coverage will be considered sufficient to meet this requirement. Read a summary of the smoking cessation FAQ.
Summary of Benefits and Coverage (SBC)
The regulatory agencies have stated that plans should use the 2014 SBC template for 2015. There are no changes to the template itself, the related glossary, or the instructions. Plans with multiple vendors may continue to provide a separate, partial SBC for each vendor, or they may combine the two partial SBCs into one SBC. The glossary and instructions, as well as model templates in several languages, are available at Other Resources – Centers for Medicare & Medicaid Services under Summary of Benefits and Coverage and Uniform Glossary.
Out-of-Pocket Maximums
The regulatory agencies have previously said that out-of-network charges do not need to be applied to the out-of-pocket maximum. The new FAQ includes additional details on the plan’s options in various situations. Read a summary of the new information on out-of-pocket maximum options.
Filing PCORI Fees and TRF Fees
Virtually all plans will need to file and pay Patient-Centered Outcomes Research Institute (PCORI) fees by July 31, 2014. The insurer will file for insured plans, while the plan sponsor (usually this is the employer) will file for self-funded group health plans. A health reimbursement arrangement (HRA) is considered a self-funded plan, so employers with an HRA that is bundled with a fully insured medical plan will generally need to file for the HRA, even though the insurer is filing for the medical plan. The fee is reported on IRS Form 720. The current (April 2014) version of the IRS Form 720 should be used for this filing, since it accommodates the differing amounts that must be paid based on the plan’s year.
The Transitional Reinsurance Fee (TRF) reporting is first due November 15, 2014, (although the fee itself is not due until 2015). On May 22, 2014, HHS released an FAQ that provides basic information on how the reporting will work. Essentially, the insurer or self-funded plan sponsor (or a third-party administrator filing on behalf of the self-funded plan) will go to www.pay.gov and complete a form that includes basic company and contact information and the applicable head count for the current year. The form will automatically calculate the amount due. The reporting entity will also submit payment information and schedule a payment date through this site. HHS expects to post the form and begin to offer training on this process in late June.
Health FSA Carryover and Qualifying as an Excepted Benefit
To meet PPACA requirements, beginning in 2014 health flexible spending accounts (FSAs) must qualify as an “excepted benefit.” To be an “excepted benefit,” a health FSA must:
- Be offered only to employees who also are eligible for group medical coverage through the employer, and
- Limit the employer’s contribution to two times the employee’s health FSA contribution, plus $500
The new FAQ makes it clear that if the health FSA allows participants to carry over unused contributions to the following year, the unused carryover dollars do not need to be counted toward the employer contribution limit.
Waiting Periods for EHBs
HHS has issued a new FAQ that prohibits health insurers from imposing benefit-specific waiting periods in policies that must include essential health benefits (EHBs) (that is, individual and small fully insured plans), unless the waiting period is for pediatric orthodontia. For example, a waiting period for transplant coverage will not be allowed. Plans that currently include benefit-specific waiting periods must discontinue them within a “reasonable” period of time.
Reimbursing Premiums for Individual Medical Policies
Last September, the agencies issued a notice that stated that beginning with the 2014 plan year employers could not reimburse active employees for the amounts they pay for individual medical coverage, regardless of whether the coverage is purchased through or outside the Marketplace. The IRS has issued an FAQ on Employer Health Care Arrangements that reiterates this ban, and also warns that it intends to apply the $100 per employee per day excise tax on employers that offer these types of arrangements. Employers should be aware that offering reimbursements after-tax also appears to be prohibited — an employer may give a pay increase to all employees, but it may not provide a bonus or other compensation only to those who buy coverage.
SHOP Marketplace Coverage
The annual open enrollment periods for both the individual and Small Business Health Options Program (SHOP) Marketplace will begin on the same date in the federally-facilitated Marketplaces. Open enrollment will begin for the federally-facilitated Marketplaces on November 15, 2014, for a January 1, 2015, effective date. State Marketplaces may, but are not required to, synchronize the start date for their open enrollment periods.
HHS also will permit SHOP Marketplaces to delay employee choice in the SHOP until 2016 if the State Insurance Commissioner demonstrates that limiting the SHOP choice to an employer election of a single plan for the entire group to be in the best interest of consumers for 2015.
Self-Funded Health Plans Must Obtain a Health Plan Identifier
To meet federal requirements large health plans must obtain a national health plan identifier number (HPID) by November 5, 2014. For this requirement, a large health plan is one with more than $5 million in annual receipts. Small health plans have until November 5, 2015, to obtain an HPID.
Although this requirement applies to all health plans, as a practical matter the insurer will obtain the identifier number for fully insured plans. All self-funded plans will need to obtain the number, even if they use a third-party administrator (TPA) to pay claims. Read a summary of the requirement to obtain an HPID.
Question of the Month
Q: Must a plan still provide notices of creditable coverage to terminating participants?
A: Plans must still provide notices of creditable coverage until December 31, 2014. This is because pre-existing condition limitations will not be totally eliminated for non-calendar year plans until the start of their 2014 plan year.