This is the Private Health Care Exchange category of the Broad REach Benefits blog. At Broad Reach Benefits, we focus on employers that have between 30 and 500 benefit eligible employees. We’re employee benefit specialists, not a big box brokerage firm or payroll company with a sales force peddling policies.
On April 7, 2021, the U.S. Department of Labor (DOL) released a link to its webpage dedicated to the COBRA premium assistance authorized under the American Rescue Plan Act, 2021 (ARPA), the third COVID-19 stimulus bill. The webpage includes model notices, frequently asked questions, and related information. With the exception of the model notices, the guidance appears targeted towards impacted workers, leaving many employer-related questions unanswered. This alert summarizes the recent guidance and model notices.
What does ARPA Provide and Who is an Assistance Eligible Individual?
Among other things, the ARPA provides a 100% subsidy for COBRA premiums for group health plans (other than health FSAs) from April 1, 2021 through September 30, 2021 for assistance eligible individuals (AEIs). AEIs are employees and their family members who are:
- eligible for, and enroll in, COBRA (or state mini-COBRA) due to a reduction in hours or involuntary termination of employment;
- not eligible for other group health plan coverage or Medicare; and
- still within their maximum COBRA continuation coverage period (generally, 18 months).
AEIs include individuals newly eligible for COBRA between April 1, 2021 and September 30, 2021, individuals who were in their COBRA election period as of April 1, 2021, and individuals who would be AEIs but whose COBRA coverage lapsed due to non-payment prior to April 1, 2021. AEIs also include any qualified beneficiaries, such as family members, who did not elect COBRA continuation coverage when first eligible. Generally, this means an employee (and their qualified beneficiaries) with a COBRA start date on or after November 1, 2019, would have one or more months of eligibility for the COBRA subsidy. Therefore, employers should identify any employees involuntarily terminated or whose hours were reduced on or after […]
Some employers may want to be selective and treat employees differently for purposes of group health plan benefits. For example, employers may consider implementing the following plan designs:
-A health plan “carve-out” that insures only select groups of employees (for example, a management carve-out);
– Different levels of benefits for groups of employees; or
– Varied employer contribution rates based on employee group.
In general, employers may treat employees differently, as long as they are not violating federal rules that prohibit discrimination in favor of highly compensated employees. These rules currently apply to self-insured health plans and arrangements that allow employees to pay their premiums on a pre-tax basis. The nondiscrimination requirements for fully insured health plans have been delayed indefinitely.
Employers should also confirm that any health plan rules do not violate other federal laws that prohibit discrimination. In addition, employers with insured plans should confirm that carve-out designs comply with any minimum participation rules imposed by the carrier.
Health Plan Design—General Rules
In general, a health plan will not have problems passing any applicable nondiscrimination test when the employer treats all of its employees the same for purposes of health plan coverage (for example, all employees are eligible for the health plan, and the plan’s eligibility rules and benefits are the same for all employees). However, treating employees differently may make it more difficult for a health plan to pass the applicable nondiscrimination tests. Examples of plan designs that may cause problems with nondiscrimination testing include:
- Only certain groups of employees are eligible to participate in the health plan (for example, only salaried or management employees);
- The health plan has different employment requirements for plan eligibility (for example, […]
The Department of Labor (DOL) has released Notice 2021-01, which clarifies the end date for the relief provided in April 2020 under Notice 2020-01. Per the latest guidance, individuals (and plans) are granted relief based on their own fact-specific timeframes and, therefore, may still take advantage of the relief beyond February 28, 2021 until the earlier of (a) 1 year from the date they were first eligible for relief, or (b) 60 days after the announced end of the COVID-19 National Emergency.
As background, in April 2020 the DOL announced that certain deadlines under ERISA were suspended starting March 1, 2020 until 60 days after the announced end of the COVID-19 National Emergency or such other date determined by the agencies (the “Outbreak Period”). The following deadlines applicable to participants and beneficiaries are tolled (paused) during the Outbreak Period:
- The 30-day period (or 60-day period, if applicable) to request a HIPAA special enrollment;
- The 60-day period for electing COBRA continuation coverage;
- The date/deadline for making COBRA premium payments;
- The deadline for individuals to notify the plan of a COBRA qualifying event or determination of disability;
- The deadline within which employees can file a benefit claim, or a claimant can appeal an adverse benefit determination, under the group health plan or disability plan claims procedures described in the plan;
- The deadline for claimants to file a request for an external review after receipt of an adverse benefit determination or final internal adverse benefit determination; and
- The deadline for a claimant to file information to perfect a request for external review upon finding that the request was not complete.
Certain deadlines impacting employers/plan sponsors were also extended, such as the deadline to provide a COBRA election […]
Due to COVID-19 and state and local stay-at-home orders, utilization of group medical and dental insurance benefits is down. As a result, some carriers recently notified employers that they will be issued premium credits. When asking how these premium credits should be treated by the employer, we often compare then to the ACA’s medical loss ratio (MLR) rebates. While these premium credits are not MLR rebates, a similar decision must be made to determine whether they, like MLR rebates, are ERISA plan assets.
As background, the Affordable Care Act’s MLR rule requires health insurers to spend a certain percentage of premium dollars on claims or activities that improve health care quality, otherwise they must provide a rebate to employers. At the same time the U.S. Department of Health and Human Services issued the MLR rule, the U.S. Department of Labor (DOL) issued Technical Release 2011-04 (TR 2011-04), which clarifies how rebates should be treated under ERISA. Under ERISA, anyone who has control over plan assets, such as the plan sponsor, has fiduciary obligations and must act accordingly.
Clearly, the premium credits we are seeing are not subject to the MLR rule; however, a similar analysis applies. TR 2011-04 clarified that insurers must provide any MLR rebates to the policyholder of an ERISA plan. However, while the DOL’s analysis was focused on MLR rebates, it recognized that distributions from carriers can take a variety of forms, such as “refunds, dividends, excess surplus distributions, and premium rebates.” Regardless of the form or how the carrier describes them, to the extent that a carrier credit, rebate, dividend, or distribution is provided to a plan governed by ERISA, then the employer must always consider whether it is a “plan […]
IRS Releases Draft 2019 ACA Reporting Forms and Instructions
The IRS has released draft forms and instructions for the 2019 B-Series and C-Series reporting forms (Forms 1094-B, 1095-B, 1094-C and 1095-C) used by employers and coverage providers to report certain information to full-time employees and the Internal Revenue Service (IRS).
As background, the Affordable Care Act (ACA) added Sections 6055 and 6056 to the Internal Revenue Code. These sections require employers, plans, and health insurance issuers to report health coverage information to the IRS and to participants annually. Section 6055 reporting requirements apply to insurers, employers that sponsor self-insured group health plans, and other entities that provide minimum essential coverage (such as multiemployer plans). Section 6056 reporting requirements apply to “applicable large employers” or “ALEs” (generally, employers with 50 or more full-time employees) and require reporting of health care coverage provided to the employer’s full-time employees.
Reporting under Sections 6055 and 6056 involves two sets of forms: the “B-Series” (Forms 1094-B and 1095-B); and the “C-Series” (Forms 1094-C and 1095-C). Each includes a transmittal form (Form 1094-B or 1094-C), which serves as a cover page and provides aggregate information, and an individualized form (Form 1095-B or 1095-C) for each employee for whom the employer is required to report.
The forms for calendar year 2019 are due to employees by January 31, 2020. Forms are due to the IRS by February 28, 2020 if filing by paper and by March 31, 2020 if filing electronically. The forms that must be filed and distributed depend on whether the employer is an ALE and the type of coverage provided. Employers filing 250 or more of a particular form are required to file with the IRS electronically. The following table summarizes the […]
The Internal Revenue Service (IRS) has released Notice 2018-94, extending the deadline for furnishing 2018 Forms 1095-B and 1095-C to individuals from January 31, 2019 to March 4, 2019, as well as penalty relief for good-faith reporting errors.
The due date for filing the forms with the IRS was not extended and remains February 28, 2019 (April 1, 2019 if filed electronically). Despite the repeal of the “individual mandate” beginning in 2019 as part of the Tax Cuts and Jobs Act, the ACA’s information reporting requirements remain in effect, as the IRS uses the reporting to administer the employer mandate and premium tax credit program. The IRS is studying whether and how the reporting requirements under section 6055 (relating to insurance companies and self-insured plans) should change, if at all, for future years.
The instructions to Forms 1094-C and 1095-C allow employers to request a 30-day extension to furnish statements to individuals by sending a letter to the IRS with certain information, including the reason for delay. However, because the Notice’s extension of time to furnish the forms is as generous as the 30-day extension contained in the instructions, the IRS will not formally respond to requests for an extension of time to furnish 2018 Forms 1095-B or 1095-C to individuals.
Employers may still obtain an automatic 30-day extension for filing with the IRS by filing Form 8809 on or before the forms’ due date. An additional 30-day extension is available under certain hardship conditions. The Notice encourages employers who cannot meet the extended due dates to furnish and file as soon as possible and advises that the IRS will take such furnishing and filing into consideration when determining whether to abate penalties […]
On December 22, 2017, President Trump signed what is popularly known as the Tax Cuts and Jobs Act (H.R. 1) (the “Bill”), overhauling America’s tax code for both individuals and corporations and providing the most sweeping changes to the U.S. Tax Code since 1986. The House and Senate Conference Committee provided a Policy Highlights of the major provisions of the Bill, and the Joint Committee on Taxation provided a lengthy explanation of the Bill.
Compared to initial proposals, the final Bill generally does not make significant changes to employee benefits. The chart that follows highlights certain broad-based health and welfare, fringe and retirement plan benefit provisions of the Bill (comparing them to current law). Notable changes include:
- Repeal of the Individual Mandate penalty beginning in 2019;
- Elimination/changes of employer deductions for certain fringe benefits, including qualified transportation fringes, moving expenses, and meals/entertainment;
- New tax credit for employers that pay qualifying employee while on family and medical leave, as described by the Family Medical Leave Act;
- Extended rollover periods for deemed distributions of retirement plan loans; and
- Tax relief for retirement plan distributions to relieve 2016 major disasters.
In addition, the Bill makes certain narrowly-tailored changes (which we did not include in the chart that follows) impacting only certain types of employers or compensation. For instance, the Bill:
- modifies the $1 million compensation deduction limitation under Code Section 162(m) for publicly traded companies (expanding the type of compensation which will be applied against the limitation, the individuals who will be considered covered employees, and the type of employers that will be subject to the limitation), with transition relief for certain performance-based compensation arrangements pursuant to “written binding contracts” in effect as of November 2, […]
On August 1, 2017, Massachusetts Governor Charlie Baker signed H.3822, which increases the existing Employer Medical Assistance Contribution (EMAC) and imposes an additional fee (EMAC Supplement) on employers with employees covered under MassHealth (Medicaid) or who receive subsidized coverage through ConnectorCare (certain plans offered through Massachusetts’ Marketplace). The increased EMAC and the EMAC Supplement are effective for 2018 and 2019 and are intended to sunset after 2019.
On November 6, 2017, the Massachusetts Department of Unemployment Assistance (DUA) released proposed regulations on the EMAC. Also on November 6, Governor Baker signed H.4008, which includes a provision that requires Massachusetts employers to submit a health insurance responsibility disclosure (HIRD) form annually.
The increased EMAC and the EMAC supplement are intended to be offset by a reduction in the increase of unemployment insurance rates in 2018 and 2019. The unemployment insurance relief is estimated to save employers $334 million over the next two years.
The EMAC itself is relatively new, having been created in 2014 after the repeal of Massachusetts’ “fair share” employer contribution. The EMAC applies to employers with six or more employees working in Massachusetts and applies regardless of whether the employer offers health coverage to its employees. Currently, the EMAC is .34% of wages up to $15,000, which caps out at $51 per employee per year. For 2018 and 2019, it will increase to .51%, or $77 per employee per year. In 2018, the EMAC and EMAC Supplement are expected to raise $75 million and $125 million in revenue, respectively.
Proposed Regulations on EMAC Supplement
The EMAC Supplement applies to employers with 6 or more employees in Massachusetts. Under the EMAC Supplement, employers must pay 5% of annual wages up to the annual wage cap […]
About 30 million people – or one in every five Americans – will use a health insurance exchange by 2017 under the Patient Protection and Affordable Care Act (PPACA) or Obamacare. This is according to a research by global management consulting, technology services and outsourcing firm Accenture, which forecasts that such phenomenon will radically transform the country’s health insurance landscape.
More overwhelming than the number of individuals projected to use health insurance exchanges to cater to their medical and wellness needs, however, is the apparent lack of awareness and preparedness of many Americans. The study shows that the lack of awareness applies to all demographics and to both public and private exchange concepts, as shown by its survey of 20,000 consumers.