November 21, 2017

Viewpoints: Rising Medicare Premiums Pinching Budgets; GOP Needs Alternative To Individual Mandate

Source:: Kaiser

November 21, 2017

Viewpoints: Rising Medicare Premiums Pinching Budgets; GOP Needs Alternative To Individual Mandate

Source:: Kaiser

November 21, 2017

State Highlights: Minn. AG Adds Cancer Claims To Lawsuit Against Post-It Maker; Mayo Clinic Posts Strong Third Quarter

Source:: Kaiser

November 21, 2017

State Highlights: Minn. AG Adds Cancer Claims To Lawsuit Against Post-It Maker; Mayo Clinic Posts Strong Third Quarter

Source:: Kaiser

November 21, 2017

Mayor Acknowledges NYC’s ‘Troubling’ Lapses Over Public Housing’s Lead Inspections

Source:: Kaiser

November 21, 2017

Hot New Immunotherapy Field Continues To Deliver Miraculous Results

Source:: Kaiser

November 21, 2017

Purity, Potency Of Illegal Drugs Have Reached New Levels, Worrying Health Officials

Source:: Kaiser

November 21, 2017

Years Before Heading Offshore, Herpes Researcher Experimented On People In U.S.

Source:: Kaiser

November 21, 2017

Years Before Heading Offshore, Herpes Researcher Experimented On People In U.S.

Source:: Kaiser

November 21, 2017

First Edition: November 21, 2017

Source:: Kaiser

November 21, 2017

First Edition: November 21, 2017

Source:: Kaiser

November 21, 2017

Puertorriqueños desplazados enfrentan obstáculos para tener seguro médico

Source:: Kaiser

November 21, 2017

Puertorriqueños desplazados enfrentan obstáculos para tener seguro médico

Source:: Kaiser

November 21, 2017

Doctor’s Rx For A Stiff Knee: A Prescription For 90 Percocet Pills

Source:: Kaiser

November 21, 2017

Massachusetts Grabs Spotlight By Proposing New Twist On Medicaid Drug Coverage

Source:: Kaiser

November 21, 2017

Displaced Puerto Ricans Face Obstacles Getting Health Care

Source:: Kaiser

November 20, 2017

Viewpoints: Dangerous Roads; Cracking Down On Stem Cell Clinics, Half-Hearted Fight Against Hep A

Source:: Kaiser

November 20, 2017

Viewpoints: Dangerous Roads; Cracking Down On Stem Cell Clinics, Half-Hearted Fight Against Hep A

Source:: Kaiser

November 20, 2017

Perspectives On Obamacare: Mandate Repeal Is Not A Tax Increase; Who Wins If Mandate Is Gone

Source:: Kaiser

November 20, 2017

Perspectives On Obamacare: Mandate Repeal Is Not A Tax Increase; Who Wins If Mandate Is Gone

Source:: Kaiser

November 20, 2017

State Highlights: NYC Submitted False Lead-Paint Inspections Claims; Fla. Scrubs Its Website Of Information On Troubled Nursing Homes

Source:: Kaiser

November 20, 2017

State Highlights: NYC Submitted False Lead-Paint Inspections Claims; Fla. Scrubs Its Website Of Information On Troubled Nursing Homes

Source:: Kaiser

November 20, 2017

Surprise Medical Bills And Balance Billing: ‘It’s A System Totally Rigged Against Patients’

Source:: Kaiser

November 20, 2017

Asia’s Bird Flu Putting Global Health Officials On High Alert

Source:: Kaiser

November 20, 2017

First Edition: November 20, 2017

Source:: Kaiser

November 20, 2017

Shingles: Don’t Let It Get You The Way It Got Me

Source:: Kaiser

November 20, 2017

FDA Raids Florida Stores That Consumers Use To Buy Drugs From Canada

Source:: Kaiser

November 20, 2017

Canadians Root For An Underdog U.S. Health Policy Idea

Source:: Kaiser

November 17, 2017

Health Giant Sutter Destroys Evidence In Crucial Antitrust Case Over High Prices

Source:: Kaiser

November 17, 2017

Podcast: ‘What The Health?’ Tax Bill Or Health Bill?

Source:: Kaiser

November 17, 2017

Viewpoints: Using Emergency Authority To Fight Opioids; Knowing If Alzheimer’s Is In Your Future…

Source:: Kaiser

November 17, 2017

Viewpoints: Using Emergency Authority To Fight Opioids; Knowing If Alzheimer’s Is In Your Future…

Source:: Kaiser

November 17, 2017

Perspectives: A New Front For An Old Obamacare War; How Tax Reform Tees Up Medicare Cuts

Source:: Kaiser

November 17, 2017

Perspectives: A New Front For An Old Obamacare War; How Tax Reform Tees Up Medicare Cuts

Source:: Kaiser

November 17, 2017

Research Roundup: Noncompliant Plans; Older Americans; Bare Counties; And The Uninsured

Source:: Kaiser

November 17, 2017

State Highlights: Calif. Officials Continue To Search For Source Of Legionnaires’ Cases; Texas Lawmakers Fund Anti-Abortion Program

Source:: Kaiser

November 17, 2017

Putting A Dollar Value On An Epidemic: Opioid Crisis Has Cost Economy $95B In 2016 Alone

Source:: Kaiser

November 17, 2017

First Edition: November 17, 2017

Source:: Kaiser

November 17, 2017

First Edition: November 17, 2017

Source:: Kaiser

November 17, 2017

Despite ACA Cost Protections, Most Adolescents Skip Regular Checkups

Source:: Kaiser

November 17, 2017

Despite ACA Cost Protections, Most Adolescents Skip Regular Checkups

Source:: Kaiser

November 17, 2017

About A Third Of Americans Unaware Of Obamacare Open Enrollment

Source:: Kaiser

November 17, 2017

Medicaid Expansion Takes A Bite Out Of Medical Debt

Source:: Kaiser

November 17, 2017

Medicare Seeks Comment On Ways To Cut Costs Of Part D Drugs

Source:: Kaiser

June 25, 2015

Supreme Court Upholds Affordable Care Act Subsidies

Supreme_Court

SUMMARY: The U.S. Supreme Court on June 25 issued its opinion turning back the most recent—and most likely final—attack on the Affordable Care Act. The decision had six justices in favor—Chief Justice Roberts, who wrote the opinion, was joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan. The three dissenting justices were Scalia, Thomas, and Alito. The opinion is available at http://www.supremecourt.gov/opinions/14pdf/14-114_qol1.pdf.

DETAILS: The Chief Justice’s 21-page opinion began by laying out the background for the case and observed that the ACA arose out of a long history of failed health insurance reform. In the 1990’s, he noted, states tried to expand access to coverage by changing the regulation of health insurance: requiring “guaranteed issue”, which prohibited carriers from denying coverage due to an insured’s health, and “community rating”, which, he wrote, bars insurers from charging more for the same reason. This had the effect of creating what Roberts called an “economic death spiral”: premiums rose and the number of people buying insurance declined.

Massachusetts, in 2006, remedied this, per the history recited by the Chief Justice, by adding a requirement that all people buy health insurance and providing tax credits for those who couldn’t afford the premiums. This enabled Massachusetts to drastically reduce its uninsured rate, he reported.

The ACA included these three reforms, including a fine for failing to purchase insurance, unless the premiums were more than 8% of income. The law also mandated “exchanges”, or public marketplaces, in every state for individuals to purchase insurance. In those states unwilling to set them up, the Federal government was authorized to establish exchanges. The law also provided that lower-income individuals could get a subsidy in the form of a tax credit or premium reduction, if they purchased insurance from a state-based exchange. The administration, however, went further and also offered subsidies to people who purchased their insurance from Federally established exchanges.

Four individuals in Virginia, which did not set up its own exchange, did not want to purchase insurance. It would have cost more than 8% of their income if they were not subsidized, but less than 8% if they were. They brought suit, saying that it was illegal for the Federal exchange to give them a subsidy (which would put them in the position of being required to purchase insurance), because, they maintained, subsidies could only be offered to those purchasing from state-based exchanges.

Lower courts threw out the case for varying reasons and the Supreme Court heard arguments on the case. In the final analysis, the court found the ACA’s language was indeed ambiguous; but in that situation, the court must seek to find a meaning for the phrase that would produce “a substantive effect that is compatible with the rest of the law.” Taking a step back, the court found that using the interpretation recommended by the Virginians, would result in the very “death spiral” that it was designed to avoid. On the other hand, interpreting the language the way the administration had done, would enable the law to work as intended.

While acknowledging that the Virginians “plain-meaning” arguments were strong, the Chief Justice stated that the ACA’s “context and structure compel[led]” the conclusion that subsidies were available in both state-created and federally-created exchanges. With that, the Supreme Court’s majority has fended off the second major attack on the ACA.

April 20, 2015

EEOC Issues Proposed Wellness Program Amendments to ADA Regulations

On April 16, 2015, the U.S. Equal Employment Opportunity Commission (EEOC) issued a proposed rule to help alleviate the perplexity over using financial incentives in worksite wellness programs.

The proposal addressed how the Americans with Disabilities Act (ADA) applies to worksite wellness programs – amending regulations that implement equal employment provisions to address the interaction between Title I of the ADA and financial incentives as part of wellness programs offered through employer group health benefits. It aims to simplify what does and does not constitute a lawful wellness program in light of the ADA’s protections. EEOC chair Jenny Yang states, “The EEOC worked closely with the Departments of Labor, Health and Human Services, and Treasury in developing this NPRM to harmonize the ADA’s requirement that medical inquiries and exams that are part of an employee health program must be voluntary, and (the Health Insurance Portability and Accountability Act’s) goal of allowing incentives to encourage participation in wellness programs.”

Employers have been increasingly turning to wellness programs as a way to not only control health care costs but to improve the health of their workers. Many companies offer “participation only” wellness programs, in which employees participate in periodic wellness seminars or complete health risk assessment questionnaires to obtain a reward from the employer. Employers also offer “outcome-based” wellness programs, which condition the reward on the employee meeting a certain health-related benchmark, such as an appropriate body mass index (BMI) or blood cholesterol level, or remaining tobacco-free. Biometric screenings are a common part of these wellness and health promotion programs.

The ADA limits the circumstances in which employers may inquire employees about their health or require them to undergo medical examinations. It grants such inquiries and exams if they are voluntary and comprised of an employee wellness program. However, an employer cannot require an employee to engage in such a program and may not take any other adverse action against employees who refuse to participate in the wellness program or are unsuccessful in achieving a certain health outcome.

In addition, the ADA requires that wellness programs provide a sound alternative or waiver for achieving the incentive if an individual cannot participate or achieve goals due to a medical condition or disability. The EEOC’s proposal rules that wellness programs are permitted under the ADA, but they may not be used to discriminate based on a medical condition or disability.

The EEOC is launching a 60-day public comment period regarding these proposed regulations on April 20, 2015.

November 5, 2014

Honeywell Fends Off EEOC Bid to Bar Wellness Penalty

The EEOC has filed at least three cases—two in WI, one in MN—arguing that surcharging employees who refuse to partake in wellness-program biometric screening is discriminatory. Interesting situation. Two dueling Federal policies: (1) healthcare reform’s openness to wellness programs with bite and (2) antidiscrimination law opposition to discrimination based on an employee’s health condition. The judge in the MN case, yesterday, let the surcharging continue…for now at least.  read more

November 5, 2014

Group Health Plans that Fail to Cover In-Patient Hospitalization Services

IRS announces so-called “skinny” health plans, plans that fail to provide substantial coverage for in-patient services, do not comply with the ACA minimum value standard. read more

 

October 9, 2014

The Ebola Exposure: U.S. Workplace Considerations

 

The World Health Organization (WHO) has declared that the Ebola outbreak in West Africa has reached the proportions of an international health emergency. While it is too early to assert that Ebola will be a major health issue among the U.S. population, employers in the United States should prepare for the wide range of decisions that may arise.  read more

September 30, 2014

Permitted Plan Opt-outs Expanded for Two Healthcare Reform Situations – Employer’s Plan Must be Amended to Use Them

The IRS created two new cafeteria-plan opt-out options to resolve some healthcare reform issues. To be effective, however, the employer needs to amend its plan to include them. The two new opt-outs are the following:

  1. If an employee falls below 30 hours and the change does not affect the employee’s coverage under the employer’s plan, an employee may opt out to get coverage from a public marketplace. This will happen if an employee is a variable employee who was a full-time employee during a measurement period and changed to part-time status during the ensuing stability period. In that situation, the employee would still be included in the group plan, but may no longer be able to pay for participation in the plan. So this opt-out would enable them to switch to the marketplace.
  1. If an employer’s plan has a non-calendar, fiscal year. Without this opt-out, an employee who wants to move to the public marketplace would either have a coverage gap or double coverage as a result of the difference year ends of the employer’s plan and public marketplace.

The ability to revoke an employer plan election for these reasons does not extend to FSA elections.

If an employer intends to incorporate these new election revocation options, the group’s plan documents must be amended to incorporate the changes.

The revocations only work one way. An employee may revoke his or her employer-plan election to go with a marketplace; but an employee may not revoke marketplace coverage to elect an employer plan.

The notice took effect on September 18, 2014.

Resources:

September 26, 2014

Courts Remind Employers That Notice is Crucial for FMLA Compliance

Now is as good a time as any for employers to review their FMLA certification and notice documents and procedures to ensure that they not only include all of the necessary instructions to employees, but also are calculated to provide proof that the documents actually were provided to the employee. read more

September 25, 2014

Top Ten Mistakes in Documenting Employee Performance

Designed to help you think through what, when, and how to document employee performance. read more

employee-performance-appraisals-259

September 5, 2014

NLRB Continues Aggressive Crackdown on Social Media Policies

NLRB decisions on social media continue to put employers in difficult situations. read more

August 22, 2014

Employees’ Wearable Devices Challenge Data Security & Privacy

Corporate human resources and IT policies are not ready for this flood of devices in the workplace.  read  more

 

August 20, 2014

New Jersey Bans the Box for Private Employers

On August, 11, 2013, New Jersey Governor Chris Christie signed the “Opportunity to Compete Act” into law. The Act becomes effective March 1, 2015 and limits the ability of both private and public New Jersey employers to inquire into a job applicant’s criminal record. It is the latest state to join a broader movement that has picked up steam nationally.

Key Provisions

New Jersey’s version of the “ban the box” law applies to any employer that has 15 or more employees over 20 calendar weeks. Under the Act, an employer may not require an applicant to complete an employment application that makes any inquiries regarding an applicant’s criminal record during the “initial employment application process.” The initial hiring steps are as follows:

  • an interview has been conducted
  • made a determination that the applicant is qualified for the position
  • selected the applicant as its first choice to fill the position

An employer also may not make any oral or written inquiry regarding an applicant’s criminal record during the initial employment application process, or post any advertisement stating that it will not consider an applicant with a past arrest or conviction.

Exceptions to the law include the following:

  • positions sought in law enforcement, corrections, the judiciary, homeland security or emergency management,
  • where the employer is required to run a criminal background check by law, rule, or regulation,
  • where an arrest or conviction would serve as a bar to employment under any law, rule, or regulation, or
  • where any law, rule, or regulation  restricts an employer’s ability to engage in specified business activities based on the criminal records of its employees.

The Act also permits an employer to inquire into an applicant’s criminal history during the initial employment application process:

  • where the applicant voluntarily discloses a criminal record, or
  • as part of a program or systematic effort designed predominantly or exclusively to encourage the employment of persons with criminal histories

Unlike similar laws in other jurisdictions, however, New Jersey employers may make criminal background inquiries prior to making a formal offer.

Penalties for violations of the Act include civil penalties of $1,000 for first violations, $5,000 for second violations, and $10,000 for subsequent violations.  However, the Act does not allow for lawsuits in court.

New Jersey employers are well advised to have their employment applications and hiring processes reviewed by their employment lawyers. Your MBL consultant has a list of excellent employment lawyers available upon request.

Resources:

September 10, 2013

Benefits Update – More on October 1 Marketplace Notice to Employees (Employer Action Required by October 1, 2013)

Executive Summary

We received many questions on the notice about state-based health insurance marketplaces. This update is to make answers to those questions generally available. 1

Who Must Receive Notice?

  • Notices must be sent to all employees, including part-time employees.
  • Notices need not be sent to former employees, including employees on COBRA.

What employers must comply?

  • All employers covered by the federal Fair Labor Standards Act (FLSA) must send out the notice.
  • The FLSA sets out the Federal minimum wage. If you are required to pay the Federal minimum wage, you need to send out the notice.
  • Employers engaged in interstate commerce are subject to the FLSA. Generally, employers with one or more employees and more than $500,000 in revenue are covered by the FLSA.2 Some types of businesses – hospitals and schools are two examples – must comply with the FLSA regardless of revenue.

Timing

  • The notice must be distributed to existing employees on or before October 1, 2013.
  • Going forward, new employees must receive the notice within 14 days of the start of employment.

MBL Benefits Consulting Observation: Many employers are anxious to get these notices out now! We advise holding off until closer to the deadline. The notice is not due until October 1. Healthcare reform guidance is so fluid that additional guidance may become available before the deadline.

Our advice: line up the list of people to receive the notice, decide on the delivery method and prepare a draft notice; but hold off giving final notice until September 20 or so.

Delivery

  • The notice must be delivered by personal delivery, first class mail or email, provided certain requirements mentioned below are met.3
  • Although not required, if in-hand delivery is used, it is a best practice to have the employee sign acknowledging receipt. If the employee refuses, another can sign as a witness to the delivery.
  • The requirements that must be met for using email delivery are available at 29 CFR 2520.104b-1(c).4 Seriously oversimplified, employers need to be reasonably confident that email would be effective to deliver the notice and get the employee’s consent for electronic delivery.

Completing the Model Notice

Two U.S. Department of Labor model notices are available in both English and Spanish at: www.dol.gov/ebsa/healthreform.

  • One notice is for employers who do not offer a health plan and
  • The other is for employers who do offer a health plan to some or all employees.

The model notices are in fillable PDF format.

Here is a step-by-step guide to complete the notice:

  1. Part A, page 1. Insert the employer contact’s name in the “How to Get More Information?” section.
  2. Part B, page 2. Complete lines 3 through 12, which cover various pieces information about the employer. The numbering starts with “3”, by the way, so that it corresponds to the application forms being used by the health insurance marketplaces.
  3. Check the appropriate boxes on the bottom half of the page to indicate whether you offer
    • Health coverage to all or just some employees and
    • Coverage for dependents. If you do offer dependent coverage, you need to describe who qualifies as a dependent.
  4. Check the final box on page 2 if your plan
    • Is at least a bronze-level plan, which means that it meets “minimum value” requirements, and
    • The cost of the coverage is intended to be “affordable”.
  5. Page 3, questions 13 through 16. At this time, the questions on page 3 are optional. It collects information designed to assist employees with purchasing coverage on the marketplace. We anticipate that most employers will not be completing this section until the government provides more guidance and plans designed to meet post-2013 requirements have begun to be offered.

MBL Benefits Consulting Observation: This question about minimum value and affordability is the one that creates the most angst among our clients.

We anticipate that the plans we obtain for our clients will meet the minimum value requirements, so long as they offer drug coverage. Affordability, however, can vary from plan to plan.

Your MBL Benefits consultant is prepared to help you determine if this final box on page 2 can be checked.

For more information on these Marketplace Employee Notices, or on Health Care Reform generally, please contact your MBL Benefits Consulting, via your benefits consultant or by calling (212) 578-9667.

 

1The primary resource for information on the notices is DOL Technical Release No. 2013-02 http://www.dol.gov/ebsa/newsroom/tr13-02.html
2http://www.dol.gov/compliance/guide/minwage.htm#who
3http://www.law.cornell.edu/cfr/text/29/2520.104b-1
429 CFR 2520.104b-1(c) is also available at the link for endnote 2.

This update does not constitute legal or tax advice. Please consult with your legal, tax, and accounting advisers before applying this information to your fact-specific situation.

August 1, 2013

Benefits Update – What to do with Your Health Insurance Carrier’s MLR Rebate

Executive Summary

This update is designed for the vast majority of MBL Benefits Consulting group health insurance clients. Please contact your MBL Consultant if your plan is one of the following as the recommendations here may not apply to you:

  • Self-insured plans
  • Church plan
  • Government plan
  • Non-ERISA plans

Many employers who sponsor group health plans will be receiving rebates from their insurance carriers before August 1. These rebates result from a provision in the healthcare reform law which requires insurance carriers to spend at least a certain percentage of their premium income on medical costs. If less than that percentage is spent, the carrier must rebate the difference and the sponsoring employer typically needs to allocate the rebate among itself and those employees who participate in their health plan.

The portion allocated to the employees must be distributed to them within 90 days. The distribution may be in cash or may be used to reduce insurance premiums. MBL Benefits Consulting will assist you in determining the allocations.

Background

Under healthcare reform’s medical loss ratio (MLRs) rules, any health insurer whose expenditures on clinical services and quality improvements fall short of 80% for small plans or 85% for large plans must pay rebates, with the distributions to be made by Aug. 1 each year. (There are circumstances where these percentages may vary among the states. For instance, the small-group percentage in New York is 82%.) The cutoff between large and small groups at the present time is 50 employees. For group coverage, both the policyholder (typically an employer) and individual subscribers (usually employees) will receive notices of any MLR rebate owed by the carrier. In most cases, however, only the group policyholder will receive the actual rebate check. Employers in turn must determine (a) how much of the rebate to apply for the benefit of employees and others enrolled in the group plan and (b) how to deliver the rebate.

MBL Benefits Consulting Recommendation: Contact your MBL Consultant for assistance thinking through your next steps.

More on MLRs

Insurers that fail to meet the applicable MLR in any calendar year must send rebate notices and payments by the next Aug. 1. The notice you will be receiving should state that the insurer must send the rebate to the group policyholder; describe how employers and other group policyholders must handle the rebates; and direct participants to contact the employer or plan administrator for more information.

While employers and employees alike will receive notices, insurers will typically pay the rebate only to the employer or apply the rebate to future premiums.

Plan Asset or Employer Property?

Employer-provided group health insurance is a “welfare benefit” plan regulated under ERISA.

Even though employers and other group policyholders will receive MLR rebates, they likely will have to share these funds in some fashion with group health plan enrollees. The key question is whether—or how much of—any MLR rebate on the one hand is a plan asset which must benefit employees or, on the other hand, belongs to the employer.

If the insurance policy and relevant plan documents address how to treat rebates or other distributions, those documents will control how much of an MLR rebate is a plan asset or belongs to the employer. However, if the policy and plan documents are silent or unclear, then the treatment of MLR rebates depends on who is the “policyholder”, the plan (or related trust, if any) or the employer.

MBL Benefits Consulting Recommendation: Consult legal counsel about whether to revise insurance policies and related plan documents to specify how MLR rebates will be handled in the future.

Under ERISA rules, if some or all of a rebate is a plan asset, it needs to be handled in one of two ways:

  • Apply rebates toward premiums or refund to participants within three months. If refunded to participants or applied to pay premiums within 90 days of receipt, MLR rebates do not have to be placed in trust as plan assets.
  • Apply rebates toward future premium payments (premiums after three months) or enhanced benefits. Plan sponsors may direct insurers to hold MLR rebates, such as in a premium stabilization reserve, to offset participants’ share of future premiums or to pay for benefit enhancements.

MBL Benefits Consulting Recommendation: Apply or refund rebates within 90 days to avoid the complexity of setting up trust arrangement to hold the rebate for longer periods.

Fiduciary Requirements

Employers are fiduciaries under ERISA with respect to plan assets and generally can use plan assets only to pay plan benefits and expenses. Fiduciaries must act prudently with respect to a plan’s administration and operation.

Tax Consequences

Per the IRS, if employees made pretax contributions for health coverage, rebates used to reduce premiums or paid to them in cash will be subject to income and employment taxes. Those making after-tax contributions generally would not be taxed on rebates paid directly to them or used to reduce premiums.

MBL Benefits Consulting Recommendation: Your allocation of rebates to employees must be reasonable. MBL Consulting, at no additional charge to clients, is happy to assist in designing a reasonable allocation method.

 

Allocating rebates when insurance policy and ERISA plan documents are silent

If group policyholder is:Then rebate treatment is:
Plan or trustRebate is plan asset
EmployerCost-sharing arrangement determines rebate treatment
  • 100% employer-paid premiums
  • 100% of rebate belongs to employer
  •  100% participant-paid premiums
  •  100% of rebate is plan asset 
  •  Employer and participants each paid fixed percentage of premiums 
  •  Same percentage determines how much of rebate is plan asset and how much belongs to employer 
  •  Employer paid a fixed sum and participants paid rest of premiums 
  •  Rebate is plan asset, except any amount exceeding participants’ total contributions during MLR reporting year belongs to employer 
  •  Employees paid a fixed amount and employer paid rest of premiums 
  •  Rebate belongs to employer, except any amount exceeding employer’s total contributions during MLR reporting year is plan asset

 

This update does not constitute legal or tax advice. Please consult with your legal, tax, and accounting advisors before applying this information to your fact-specific situation.

June 27, 2013

Effect of DOMA Elimination on Employee Benefits

by James A. Woehlke, Esq., CPA

On June 26, the Supreme Court in a 5-4 decision declared the Defense of Marriage Act to be unconstitutional. DOMA required the U.S. government to recognize only heterosexual marriages when applying references in federal statutes and regulations to “marriage” and “spouse”. This meant that same-sex married couples could not, among many other things,

  • use the tax return filing statuses of “Married Filing Jointly” or “Married Filing Separately”,
  • have the benefit of estate or gift tax spousal deductions, and
  • set up “spousal IRAs”.

In the benefits area, the elimination of DOMA will include the following:

  • Same-sex, married individuals employed by the government will now be able to take advantage of employee benefits offered to spouses.
  • Previously, employer contributions benefitting the spouses of employees in same-sex marriages – employer funding of health insurance premiums in the “employee and spouse” or “family” insurance tiers – were not exempt from tax. This meant that these contributions resulted in taxable income to the extent they benefitted the same-sex spouse. Going forward, these contributions will be tax-exempt, as is the case for heterosexual couples.
  • Similarly, flexible spending account payments on behalf of same-sex spouses were not qualifying expenditures; but will become so.
  • For Medicaid purposes, it is a mixed bag, causing some couples to no longer qualify while other features of Medicaid available to spouses would become available.
  • For Social Security, same-sex spouses will now be able to qualify for survivor benefits.

For more information on the impact of the DOMA repeal on benefits, see the Kaiser Health News account at http://www.kaiserhealthnews.org/Daily-Reports/2013/June/27/doma-decision.aspx.

 

What the Rejection of DOMA is NOT

The Supreme Court did not go so far as to declare same-sex marriages to be a Federally guaranteed right. It did not toss out any state’s rejection of same-sex marriages. At present, twelve states plus the District of Columbia recognize same-sex marriage; 35 states explicitly reject same-sex marriage.

Also on June 26, the Supreme Court tossed out a case about the voter-approved California same-sex marriage ban. But that case did not take a stand on the ban itself. The court merely held that the person who brought the appeal to defend the California same-sex marriage ban did not have “standing” to bring the case. In other words, the ban was defended by a person who had no right to be in court on that issue.

Sorting out these issues will require further litigation.

May 15, 2013

Employee Notice Regarding State-Based Marketplaces (Action required by October 1, 2013)

On May 8, 2013, the US Department of Labor released guidance and model notices to inform employees about the state-based health marketplaces (previously called “exchanges”).

Providing Notice to Employees
Employers must provide a notice of coverage options to each employee, regardless of plan enrollment status or of part-time or full-time status. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but are not employees.

Form and Content of the Notice
The notice must include information regarding the existence of the new Marketplace as well as contact information and description of the services provided by the Marketplace. The notice must also inform employees that

  1. If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace.
  2. If the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any employer-sponsored health benefits plan and any tax benefit the employee could receive resulting from the employer’s contribution.

Timing and Delivery of Notice
Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the DOL will consider a notice to be timely provided within 14 days of his or her start date.

With respect to current employees, employers must provide the notice no later than October 1, 2013.

The notice must be provided in writing in a manner calculated to be understood by the average employee. The notice may be provided by first-class mail, or in the alternative, electronically if the DOL’s requirements for electronic disclosure are met.

Model Notice
Model language is available at: www.dol.gov/ebsa/healthreform. There is one model for employers who do not offer a health plan and another for employers who offer a health plan to some or all employees. Employers may use the applicable one of these models, or a modified version, provided the notice meets the content requirements described in the technical release.

April 10, 2013

Understanding Employer Penalties

According to recent surveys, American employers are still confused as to how they will be affected if they decide to bypass the required law of offering health coverage to their employees. Here at MBL, we want to help each of our current and prospective clients understand which category they fall into and the penalty they would have to pay.

There are two employer penalties:

1)    “No Coverage” Penalty a/k/a “Pay or Play” Penalty.

2)    “Unaffordable Coverage” Penalty a/k/a “Free Rider” Penalty

An employer is penalized ONLY if they are considered to be a large employer – more than fifty full-time employees (FT = 30 hours or more weekly).  Part-timers are deemed to be full-time employees if they work at least 120 hours per month. In this first instance, if an employer is defined as a “large” employer and does not offer health insurance, they must pay the “No Coverage” Penalty, which is NOT tax deductible.

The second penalty comes takes place if an employer is defined as a large employer AND at least one employee has a household income that is below 400% of the federal poverty level (In 2013 . . . $11,490 x 400%, or $45,960 for a single), AND receives a Premium Credit, that is, a subsidy to buy health insurance from a state exchange. The employer in this case is required to pay the “Unaffordable Coverage” Penalty. Employers must also pay this penalty if insurance offered has insufficient coverage. Again, this penalty is NOT tax deductible to the employer.

Calculations for each of the two penalties are as follows:

1)    “No Coverage” Penalty—Computation
Monthly penalty = 1/12 of $2000 times, the total number of full-time employees that month minus 30.

X = Monthly Penalty
Y = Total number of full-time employees that month

X = $2000 (Y-30) / 12

2)     “Unaffordable Coverage” Penalty—Computation
(
Monthly penalty = the lesser of the following two calculations)

a)    The  “No coverage penalty”
X = Monthly Penalty
Y = Total number of full-time employees that month

Or

b)    1/12 of $3,000 times the total number of full-time employees receiving the assistance.
X = Monthly Penalty
Y = Total number of full-time employees receiving assistance

  1. a.    [X = $2,000 (Y-30) / 12]   OR   b.   [X = $3,000 (Y) / 12]                             Whichever is LESS            

Question: How does an employer know an employee’s “Household Income”?

The IRS provides a “safe harbor”. The employer can treat the employee’s income reported in Box 1 of their W-2 as his or her household income. Otherwise, the employer would need to obtain other information from the employee to determine household income.

Download an easy to read flow chart regarding employer penalties here: www.kff.org

Read More:
Bringing You Up to Speed on Healthcare Reform

 

 

 

April 10, 2013

Bringing You Up to Speed on Healthcare Reform

2014 is a watershed year for healthcare reform. A number of key provisions – most importantly, the individual mandate and employer penalties – become effective. The majority of American business owners and human resources professionals are overwhelmed by these changes and uncertain what the best approach should be to continue to attract and retain employees, while watching their bottom line.

We advise our current and prospective clients to plan now for 2014. We are collaborating with our clients and proposing winning strategies to navigate through the end of this year and seamlessly transition into 2014.

In 2010, Congress passed and President Obama signed the Patient Protection Affordable Care Act (PPACA). Since then, confusion has reigned regarding which mandates are merely proposed, effective, repealed, or delayed.

The purpose of reform was to expand health coverage within our healthcare system while saving money long-term. Preventive care is one focal point to identify patients at risk, and treat chronic illnesses in early stages – allowing treatments to be less expensive and create healthier communities. Electronic health records and Accountable Care Organizations (ACOs) are set to roll out within the coming years. One of the major goals of healthcare reform is to extend affordable healthcare coverage to more Americans. An additional 30 million uninsured citizens are expected to have health insurance next year through the expanded Medicaid program, and state-based health insurance exchanges.

Already in Effect

  • —Coverage for children up to age 26
  • —No pre-existing conditions for children under age 19
  • —No lifetime caps
  • —Prohibit annual caps for “essential health benefits” (phased in)
  • —Medical Loss Ratios
  • —No cost sharing for preventive health care (Non-grandfathered plans only)
  • —FSA Maximum of $2,500

Delayed or Eliminated

  • — Internal Revenue Code section 105(h) nondiscrimination rules apply to healthcare plans (delayed indefinitely)
  • — Reporting cost of healthcare plans on employee W-2s (250+ currently must report, < 250 not mandatory yet)
  • — CLASS long-term care program (administratively eliminated)
  • — “Free Choice” Vouchers (Repealed)

Effective in the future

  •   State-based insurance exchanges (2014)
  • — Employer penalties (2014)
  • — No pre-existing conditions for anyone (2014)
  • — Waiting periods may not exceed 90 days (2014)
  • — Increased wellness plan incentives permitted (2014)
  • —“Bronze” coverage new minimum (2014)
  • — Automatic enrollment for employers with over 200 employees (when regulations are issued)
  • — “Cadillac” Plan excise tax (2018)
  • — Health Insurance Premium Tax (2014)

Read More:
Understanding Employer Penalties

March 30, 2012

Re-cap of U.S. Supreme Court Health Care Reform Hearings

Wednesday, March 28, the U. S. Supreme Court completed its three-day oral hearing of arguments on the constitutionality of the 2010 Affordable Care Act (“ACA”) that seeks to reform the way Americans will pay for their health care. The Court’s decision is expected to be released in June. The highly dramatic proceedings were divided as follows:

  • Monday, the court heard arguments on whether it had the power to determine constitutionality at this time. A 19th Century law called the Anti-Injunction Act precludes the court from deciding the constitutionality of a tax before it is paid. And the lawyers argued Monday about whether the penalties built into the ACA are indeed “taxes.” The consensus of those listening in on Monday was that the Anti-Injunction Act would not bar the court from proceeding. For a New York Times recap of the first day, see http://www.nytimes.com/2012/03/27/us/health-law-hearings-open-in-supreme-court.html?scp=5&sq=health%20care%20hearings&st=cse.
  • Tuesday, the Court focused on the constitutionality of the individual mandate. The ACA requires nearly everyone in the country to have health insurance. If an individual doesn’t have health insurance provided by her employer, she must either purchase it herself or pay a penalty, unless she falls into one of the exceptions outlined in the law. This provision was included in the law to make it actuarially sound, that is, so that there would be enough premium income to support all the medical claims that would result from mandates included in the law. Pundits are less prone to predict the court’s decision on this issue. For a New York Times recap of the second day, see http://www.nytimes.com/2012/03/28/us/hard-questions-from-conservative-justices-over-insurance-mandate.html?scp=24&sq=health%20care%20hearings&st=cse.
  • Wednesday, the court took up two issues: whether if it found that the ACA’s individual mandate or the Medicaid expansion were unconstitutional the remainder of the ACA could stand, or in other words, whether these controversial provisions could be “severed” from the law and (2) whether the ACA’s expansion of Medicaid, which was opposed by 26 states was unconstitutional. On the issue of severability, the discussion swayed in both directions, leaving the judicial tea-leaf readers somewhat perplexed. On the Medicaid argument, the court appeared skeptical that the states’ argument held water. For a NY Times recap of the third day, see http://www.nytimes.com/2012/03/29/us/justices-ask-if-health-law-is-viable-without-mandate.html?scp=1&sq=day%20of%20what%20ifs&st=cse.html

For further background on the court’s task, see the Kaiser Family Foundation in its report available at KFF report .

For questions or comments, please contact jwoehlke@mblbc.com.

July 28, 2011

2011 Interest Assessment Surcharge

Important Notice to Employers from the NYS Department of Labor

Over the past several weeks employers have received a bill from the NYS Department of Labor Unemployment Insurance Division. The notice is a bill for interest, which may at first strike the reader as strange. Here’s the story.

The recent national recession led to record high levels of unemployed workers receiving unemployment insurance benefits. As a result, since 2009 New York State has borrowed over $3 billion from the federal Unemployment Insurance (UI) Trust Fund. The American Recovery and Reinvestment Act (also known as the Recovery Act) provided interest-free loans to New York and other states with insolvent Trust Funds during calendar years 2009 and 2010. Thus far, Congress has not extended the interest-free loan provisions into 2011. As it stands now, New York must pay approximately $95 million in interest on these loans to the federal government by September 30, 2011.

To pay the interest due for 2011 on these federal loans, New York State is required by state law to assess a temporary charge on employers, called an Interest Assessment Surcharge (IAS). If Congress extends the interest-free loan provision, the DOL will either credit employer accounts or refund the money paid.

New York’s Interest Assessment Surcharge rate for 2011 is 0.25%. Each employer’s surcharge amount is determined by multiplying the total taxable wages in the most recently completed payroll year (October 1, 2009 through September 30, 2010) by the IAS rate of 0.25 percent. Therefore, the maximum amount that most employers will be assessed is $21.25 per employee.

Payment of the IAS is due by August 15, 2011.

If you have any questions, please call the Employer Accounts Adjustment Section of the NYS Department of Labor’s UI Division at 1-888-899-8810, or your MBL Benefits Consultant.

Source: http://www.labor.ny.gov/ui/employerinfo/interest-assessment-surcharge.shtm

May 2, 2011

Groups Under 250 Excused from Reporting 2012 Cost of Health Care

The administration recently released IRS Notice 2011-28 which excuses employers that issue fewer than 250 W-2’s from reporting the 2012 cost of health care coverage on employees’ 2012 W-2’s to be issued in January of 2013. (Previously, the IRS advised that this requirement would not become effective until after 2011.)

Resources:

IRS Notice 2011-28, http://www.irs.gov/irb/2011-16_IRB/ar08.html

Wells Fargo newsletter article on IRS Notice 2011-28,  https://wfis.wellsfargo.com/NewsIndustryInfo/Legislative%20Updates/Documents/040111PSb_Leg_Alert_W-2_Reporting.pdf

Law firm McDermott Will & Emery blog on IRS Notice 2011-28, http://www.employeebenefitsblog.com/2011/03/articles/health-and-welfare-plans/irs-releases-interim-guidance-on-reporting-cost-of-employersponsored-coverage-on-w2/

Business Insurance, article on IRS Notice 2011-28, http://www.businessinsurance.com/article/20110329/BENEFITS03/110329903

November 12, 2010

403(b) Plan Challenges

Nonprofits’ 403(b) plans have been coming under increased IRS and DOL scrutiny since 2007. An excellent survey of the challenges facing the 403(b) community by lawyers Michael D. Malfitano, Dana L. Thrasher, Jewell Lim Esposito, and David A. Pearson from the law firm Constangy, Brooks & Smith, LLP is available at http://ebn.benefitnews.com/eletter/profile/14/995.html?ET=ebnbenefitnews:e995:2168862a:&st=email.

If you would like to talk to an MBL Benefits Consultant about your 403(b) plan needs, please contact

or

November 11, 2010

Employer Social Media Nondisparagement Policies Coming Under NLRB Scrutiny

by James A. Woehlke, Esq., CPA, CAE
General Counsel / COO, MBL Benefits Consulting Corp.

The National Labor Relations Board has long held that employees have a right to criticize their management in conversations with one other. This is part of what the NLRB considers an employee’s right under the law to participate in concerted activity. (The right does not extend, however, to statements that are insulting, or obscene personal attacks on a supervisor, though what is insulting or obscene varies significantly based on the surrounding circumstances.) The right extends both to union and nonunion employees.

The interpretations of this right were developed when employee group communications occurred around the water cooler or during breaks or at lunch. But how do those interpretations apply in a socially networked world? That question is about to be answered. On October 27, 2010, the NLRB’s acting general counsel, Lafe Solomon, filed an action against an employer for having fired an employee after the employee complained about her supervisor on Facebook.

The employee of a Connecticut emergency response company was asked to prepare an investigative report about a customer complaint concerning the employee. She reacted via a Facebook post complaining about her supervisor, which resulted in an on-line conversation among the company’s employees. She was then terminated for violating two company policies: one that prohibited employees from making disparaging remarks when discussing the company or supervisors, and another policy that prohibited employees from depicting the company in any way over the internet without company permission.

The NLRB’s complaint asserts that the employee was wrongfully discharged and that the company’s policy unlawfully interfered with employees in the exercise of their right to engage in protected concerted activity. The NLRB’s hearing is set for January 25, 2011.

While the NLRB action and possible appeals of the resulting NLRB decision are pending, employers are advised to review their blogging policies with their legal and human resources advisors to assess the risk posed by using these policies to discipline employees.

_______________________________
Additional Resources

NLRB News Alert: “Complaint alleges Connecticut company illegally fired employee over Facebook comments” (November 2, 2010), http://www.nlrb.gov/About_Us/news_room/template_html.aspx?file=http://www.nlrb.gov/shared_files/Press Releases/2010/R-2794.htm

Law Firm Proskauer Rose Analysis: “NLRB “De-Friends” Employers in Its First Complaint Based on Employee’s Social Network Comments” (November 10, 2010) http://www.proskauer.com/publications/client-alert/nlrb-de-friends-employers-in-its-first-complaint/

Law Firm Littler Analysis: G. Appleby and P. Gordon, “NLRB Posts Frightening Message in Facebook Case”, http://www.littler.com/PressPublications/Lists/ASAPs/DispASAPs.aspx?id=1553

Venable LLP Law firm: “Does your Company’s Internet Policy Comply with Labor Law?”, http://www.venable.com/files/Publication/8457cb29-35af-4854-808f-8c9cc7e3b564/Presentation/PublicationAttachment/c43f4e63-2e8d-4733-98cd-97be5557dccc/Internet_Policy_Labor-Employment_11-10.pdf.

November 8, 2010

IRS Announces Pension Plan Limitations for 2011

http://www.irs.gov/newsroom/article/0,,id=229975,00.html

IR-2010-108, Oct. 28, 2010

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2011. In general, these limits will either remain unchanged, or the inflation adjustments for 2011 will be small. Highlights include:

  • The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500.
  • The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in  an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $169,000 and $179,000, up from $167,000 and $177,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
  • The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.

Below are details on both the unchanged and adjusted limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

The limitations that are adjusted by reference to Section 415(d) generally will remain unchanged for 2011. This is because the cost-of-living index for the quarter ended Sept. 30, 2010, while greater than the cost-of-living index for the quarter ended Sept. 30, 2009, is less than the cost-of-living index for the quarter ended Sept. 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) will be $16,500 for 2011, which is the same amount as for 2009 and 2010. This limitation affects elective deferrals to Section 401(k) plans, Section 403(b) plans, and the federal government’s Thrift Savings Plan.

Effective Jan. 1, 2011, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) remains unchanged at $195,000. Pursuant to section 1.415(d)-1(a)(2)(ii) of the Income Tax Regulations, the adjustment to the limitation under a defined benefit plan under section 415(b)(1)(B) is determined using a special rule that  takes into account that the cost-of-living indexes for the quarter ended Sept. 30, 2009, and for the quarter ended Sept. 30, 2010, were both less than the cost-of-living index for the quarter ended Sept. 30, 2008, and that the cost-of-living index for the quarter ended Sept. 30, 2010, is greater than the cost-of-living index for the quarter ended Sept. 30, 2009. For a participant who separated from service before Jan. 1, 2010, the participant’s limitation under a defined benefit plan under section 415(b)(1)(B) is unchanged (i.e., the adjustment factor is 1.0000). For a participant who separated from service during 2010, the limitation under a defined benefit plan under Section 415(b)(1)(B) for 2011 is computed by multiplying the participant’s 2010 compensation limitation by 1.0118 in order to reflect changes in the cost-of-living index from the quarter ended Sept. 30, 2009, to the quarter ended Sept. 30, 2010.

The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2011 at $49,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2011 are as follows:
The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $16,500.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $160,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period remains unchanged at $985,000, while the dollar amount used to determine the lengthening of the 5 year distribution period remains unchanged at $195,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $110,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, remains unchanged at $360,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $11,500.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $16,500.

The compensation amounts under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $95,000. The compensation amount under Section 1.61 21(f)(5)(iii) remains unchanged at $195,000.

The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2011 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $33,500 to $34,000; the limitation under Section 25B(b)(1)(B) is increased from $36,000 to $36,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), is increased from $55,500 to $56,500.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $25,125 to $25,500; the limitation under Section 25B(b)(1)(B) is increased from $27,000 to $27,375; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), is increased from $41,625 to $42,375.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $16,750 to $17,000; the limitation under Section 25B(b)(1)(B) is increased from $18,000 to $18,250; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), is increased from $27,750 to $28,250.

The deductible amount under § 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,000.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $89,000 to $90,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) remains unchanged at $56,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $167,000 to $169,000.

The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $167,000 to $169,000. The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $105,000 to $107,000.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under section 430(c)(2)(D) has been made is increased from $1,000,000 to $1,014,000.

Related Item: Revenue Procedure 2010-40 contains certain inflation adjusted tax items for tax year 2011.

November 4, 2010

Effect of 2010 Mid-term Elections on Health Care Reform

by James A. Woehlke, Esq., CPA, MBL Benefits Consulting COO / General Counsel

With ballots still being counted in some districts, political analysts already declare that the Republicans, nearly all of whom ran in opposition to the Affordable Care Act, have taken control of the House of Representatives but not the Senate.

Still Senate Minority Leader Mitch McConnell promised to pass a wholesale repeal of the ACA and, if unsuccessful, to repeal the law part by part. If repeal is vetoed, McConnell indicated that health care regulatory efforts will be de-funded. For his part, at his press conference on November 3, President Obama indicated a willingness to look at ACA changes proposed by the Republicans.

Analysts have begun to scrutinize the election’s impact on health care reform. As a practical matter, outright repeal is unlikely with the Republicans having a mere majority in the House and a minority in the Senate. Even if some Senators cross the aisle in the Senate to join the Republicans on a repeal vote, neither house boasts the two-thirds supermajority needed to override a presidential veto.

The type of bill which theoretically could become law is one that both parties agree would make needed technical adjustments to the ACA and perhaps changes deemed most troublesome by the electorate.

_________________________
Additional Resources

U.S. Constitution, Article I, section 7, clause 2, http://www.house.gov/house/Constitution/Constitution.html

Text of November 3, 2010 White House Press Conference: http://www.whitehouse.gov/the-press-office/2010/11/03/press-conference-president

From ABC News: K. Carollo, “Will Health Care Overhaul Survive Republican Control of the House?”, http://abcnews.go.com/Health/Health_Care/2010-vote-elections-health-care-overhaul-survive/story?id=12045125&page=1

From CNN: “Boehner says Obama health plan on the block after GOP wins”, http://www.cnn.com/2010/POLITICS/11/03/election.main/index.html

From FOX News:  “Senate GOP Leader Takes Aim at Health Law”, http://www.foxnews.com/politics/2010/11/04/senate-gop-leader-takes-aim-health-law/ and http://video.foxnews.com/v/4402016/mitch-mcconnell-on-gop-gains-in-the-senate?playlist_id=86918

November 4, 2010

HR Directors Ready Employees for End of Bush Tax Cuts

By James A. Woehlke, Esq., CPA
COO / General Counsel, MBL Benefits Consulting Corp.

The Society of Human Resource Managers (SHRM) alerted its membership to begin preparing employees for the demise of the Bush-era tax cuts. Originally enacted in 2001 and causing revision of withholding tax tables in July of that year, these tax cuts are set to expire in 2011.

SHRM published the following chart comparing the current (Bush-era) tax brackets with those that are likely to resume on January 1 as well as the currently expected adjustments to be proposed by the Obama administration for passage later in the year.

DescriptionCurrent rates2011 Scheduled rates Obama FY2011 budget
Individual income tax rates10%, 15%, 25%, 28%, 33%, 35%15%, 28%, 31%, 36%, 39.6%36% and 39.6% top rate for high income filers*
Qualified dividends0%, 15%Taxed at individual rate (max 39.6%)20% for high-income filers*
Long-term capital gains0%, 15%20%20% for high-income filers*
Estate tax0%55% top rate, $1 million exemption45% top rate, $3.5 million exemption

* High-income filers are generally defined as taxpayers with adjusted gross income of more than $250,000 as joint filers and $200,000 for individuals. The Obama administration would retain the current tax rates for lower and middle income individuals.

SOURCE: L. Pettus and T. DiLorenzo “Here Today, Gone Tomorrow: Planning for the expiring Bush tax cuts” (October 20, 2010) http://www.shrm.org/LegalIssues/FederalResources/Pages/HereTodayGoneTomorrow.aspx.

It is possible that the lame-duck session of Congress could see continuation of the current rates, but it is prudent to prepare your workforce to enable them to begin planning for the possible shrinkage in take-home pay at the beginning of 2011.

If you are interested in more information on the change in withholding tables, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

November 1, 2010

Small Business Act Permits In-Plan Roth Conversions

By James A. Woehlke, Esq., CPA

COO / General Counsel, MBL Benefits Consulting Corp.

On September 27, 2010, President Obama signed into law the Small Business Jobs Act of 2010, H.R. 5297. Sec. 2112 of the law, “Rollovers from Elective Deferral Plans to Designated Roth Accounts,” permits 401(k) and 403(b) plan participants to convert their pre-tax accounts into after-tax Roth accounts. The plan document must provide the option to participants. Plans without Roth features will need to be amended to include them.

As a general rule, contributions to Roth accounts are made with “after-tax” dollars, that is, there is no deferral for contributions, but withdrawals from the accounts occur without a tax impact. The income earned in a Roth account, therefore, ordinarily is never taxed.

Making the conversion from an after-tax account to a Roth account IS a taxable event; however, the early withdrawal penalty is not imposed. The law permits conversions occurring in 2010 to result in tax either (a) payable solely in 2010 or (b) spread equally over 2011 and 2012.

If you are interested in adding a Roth feature to a plan or a feature to permit in-plan conversions, please contact your MBL Benefits consultant.

__________
Additional Resources

From the Proskauer Rose law firm, http://www.proskauer.com/publications/client-alert/in-plan-conversions-under-the-small-business-jobs-act/

October 28, 2010

W-2 Reporting of Group Health Care Delayed to 2012

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA includes a requirement that employers are to report the cost of an employee’s group health care on the employee’s annual wage statement, the W-2 form. While the ACA originally required this reporting on W-2’s issued in 2011, on October 12, the IRS made compliance in 2011 voluntary and deferred the requirement until 2012.

The draft form W-2 for 2011, the voluntary compliance year, includes codes for reporting health care costs if the employer so chooses.

The IRS News Release also attempts to debunk an Internet urban legend that reporting health care coverage causes it to be no longer exempt from taxes. Specifically, the release states:

This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee’s income, and it is not taxable.

If you have questions about the new W-2 reporting requirement, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

__________
Additional resources

IRS Notice 2010-69: http://www.irs.gov/pub/irs-drop/n-2010-69.pdf

IRS News Release: http://www.irs.gov/newsroom/article/0,,id=228881,00.html

IRS news summary: http://www.irs.gov/newsroom/article/0,,id=220809,00.html?portlet=6

Article: P. Marathas, Jr., “Setting the Record Straight on the W-2 Panic”, Employee Benefit News Legal Alert, http://ebn.benefitnews.com/news/setting-the-record-straight-on-the-w-2-panic-2684258-1.html

Rev. 10/27/2010.

October 28, 2010

Preventive Care Regs Issued

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA includes a requirement that preventive care specifically identified in regulations is to be provided at no cost to participants. Cost-sharing may be imposed on other preventive care. This is not a requirement imposed on grandfathered plans. The Administration issued guidance on this requirement in the form of interim final regulations on July 19, 2010.

The regulations define preventive care with reference to those recommendations from the

  • United States Preventive Services Task Force which were believed to have the greatest beneficial effect (for evidenced-based items, those rated A or B).
  • Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention.
  • Health Resources and Services Administration

The current list of recommendations and guidelines required to be covered under the regulations is posted at www.healthcare.gov/center/regulations/prevention.html. (In the first category above, there are 45 procedures.) It is expected that these groups will augment their recommendations from time to time; and, health plans will need to expand (or decrease) coverage accordingly.

The regulations address what is to occur when preventive care is provided but not separately billed, if, for instance, a preventive care procedure is administered as part of a routine office visit, which otherwise requires a co-pay.

If you have questions about the new preventive care requirements, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

__________
Additional resources available at

Official publication of interim final regulations on preventive care coverage: http://federalregister.gov/a/2010-17242

From Proskauer Rose law firm, http://www.proskauer.com/publications/client-alert/health-care-reform-preventive-services-final-rules/.

From Venable LLP law firm, http://www.venable.com/files/Publication/cf848032-4911-4da3-b0e1-887f65921899/Presentation/PublicationAttachment/28f6dabc-8c97-4c04-9134-8d07c170586c/Preventive-Care-Coverage-Rules_8-30-10.pdf

Rev. 8/30/2010.

October 28, 2010

IRS Calls for Public Comment on Nondiscrimination Rules

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


On October 12, the IRS called for public comment on enhancing the current regulations on nondiscrimination in self-insured group health plans to cover the new requirements passed in the Affordable Care Act. After reviewing the maze of statutes that together impose the nondiscrimination requirement on nongrandfathered, fully-insured plans, the Notice summarizes the consequences when a plan fails the nondiscrimination rules as follows:

If a self-insured plan fails to comply with [the nondiscrimination rules], highly compensated individuals lose a tax benefit; if an insured group health plan fails to comply with [the nondiscrimination rules], the plan is subject to a civil action to compel it to provide nondiscriminatory benefits and the plan or plan sponsor is subject to an excise tax or civil money penalty of $100 per day per individual discriminated against.

Public comments are due November 4, 2010.

If you have questions about the impact of the nondiscrimination rules on your group plans, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

__________
Additional resources available at

IRS Notice 2010-63: http://www.irs.gov/irb/2010-41_IRB/ar07.html

Rev. 10/28/2010.

October 27, 2010

Age 26 Coverage Regulations Issued

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.

The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA requires that both new and grandfathered group health plans be designed to cover participants’ children up to age 26. The Administration issued guidance on this requirement in the form of interim final regulations on May 13, 2010.

Prior to the ACA, it was typical for plans to tie dependent coverage to the same rules used for tax purposes. For instance, children were covered if they met certain residency or financial support requirements, or were full-time students up to age 23. Some states, however, had mandated expanded coverage for adult children. Effective for plan years beginning after September 23, 2010, if a group health plan offers coverage to participant’s children, the ACA now requires that coverage extend until the child reaches age 26.

This change is required both for grandfathered and new plans. However, for plan years beginning before 2014, a plan is permitted to deny coverage to a child under 26 if he or she is covered by another plan, other than the plan of the child’s other parent. In other words, if the child is covered by his or her own employer’s plan or that of a spouse, the parents’ plans may exclude the child until 2014.

The regulations identify criteria which are no longer permitted in defining eligibility of children, including

  • financial dependency on the participant or primary subscriber (or any other person),
  • residency with the participant or primary subscriber (or any other person),
  • student status,
  • employment,
  • marital status,
  • eligibility for other coverage,
  • or any combination of the above.

Although, eligibility may not hinge upon a child’s marital status, there is no requirement that plans must cover spouses or children of participants’ children. The regulations also provide that the terms of the plan or policy for dependent coverage cannot vary based on the age of a child, except for children age 26 or older. Where states set a higher age or coverage requirement, as does New York, which requires plans to make coverage available to age 29, the state mandate will apply.

There are many individuals over age 23 but under 26 who lost coverage before the effective date of this ACA provision. The regulations provide transition rules for these people. They must be given notice of the opportunity to receive coverage and have an open enrollment period of at least 30 days to occur not later than the first day of the first plan year beginning on or after September 23, 2010.

If you have questions about the age 26 coverage requirement, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

__________
Additional resources available at

Official publication of interim final regulations on coverage for children to age 26: http://www.federalregister.gov/articles/2010/05/13/2010-11391/interim-final-rules-for-group-health-plans-and-health-insurance-issuers-relating-to-dependent

From the Proskauer Rose law firm, http://www.proskauer.com/publications/client-alert/health-coverage-for-children-to-age-26/

Rev. 8/30/2010.

October 27, 2010

Patient Protections Regs Issued

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA identifies certain patient protections which need to be incorporated into new plans. These protections are not required for grandfathered plans. The Administration issued guidance on this (and several other) requirement(s) in the form of interim final regulations on June 28, 2010.

The ACA-mandated patient protections relate to selection of one’s personal health care provider and certain emergency services. The requirements regarding choice of health care providers apply only for nongrandfathered plans that participate in a network of providers.

There are three requirements relating to provider choice. First, if the plan participates in a network, the enrollee must be notified of the plan provisions regarding selection of a primary care doctor and must be permitted to select from any of the network providers who are available, that is, taking on new patients. The same notice requirement and selection rights pertain to the identification of a pediatrician for children. Regarding OB/GYN services, the participant must be permitted to select her own OB/GYN and not be required to use one selected for her. Also, OB/GYN services are deemed to be services of a primary care physician.

If a plan provides for emergency services, they may no longer require prior authorization for emergency services. The carrier may not require that emergency services be provided by an in-network provider. There may not be any additional administrative requirement or limitation on benefits that is more restrictive for in-network emergency care than out-of-network care. Also, there may not be a different cost-sharing (co-pay, deductible, etc.) for in-network and out-of-network emergency care. Out-of-network providers may, however, bill the patient for any amount not paid by the carrier. That being said, to avoid abuse, the regulations require that the carriers pay a “reasonable amount” before the patient becomes liable for any balance due. A reasonable amount per the regulations is the greater of

  • the in-network amount that would have been paid for the services,
  • the amount that would usually be paid for out-of-network services but substituting in-network cost-sharing provisions for the out-of-network provisions, and
  • what Medicare would pay for the emergency services.

If you have questions about the new patient protection requirements, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

__________
Additional resources available at

Official publication of interim final regulations on patient protections: http://www.federalregister.gov/articles/2010/06/28/2010-15278/patient-protection-and-affordable-care-act-preexisting-condition-exclusions-lifetime-and-annual

From the Proskauer Rose law firm, http://www.proskauer.com/publications/client-alert/health-care-reform-interim-final-regulations-released-for-preexisting-condition-exclusions/

Rev. 8/30/2010.

October 27, 2010

Pre-Existing Conditions Regs Issued

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA requires that both new and grandfathered group health plans be designed without exclusions for pre-existing conditions. The Administration issued guidance on this (and several other) requirement(s) in the form of interim final regulations on June 28, 2010.

ACA prohibits health plans from denying coverage due to preexisting conditions effective for plan years beginning after 2013. In addition, they may not deny coverage to children under age 19 due to preexisting conditions for plan years beginning on or after September 23, 2010. Until the effective date, HIPAA rules that permit exclusions due to preexisting conditions remain in effect. Grandfathered group health plans must comply with this requirement.

If you have questions about the new pre-existing exclusion prohibition, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

__________
Additional resources available at

Official publication of interim final regulations on pre-existing condition coverage: http://www.federalregister.gov/articles/2010/06/28/2010-15278/patient-protection-and-affordable-care-act-preexisting-condition-exclusions-lifetime-and-annual

From the Proskauer Rose law firm, http://www.proskauer.com/publications/client-alert/health-care-reform-interim-final-regulations-released-for-preexisting-condition-exclusions/

Rev. 8/30/2010.

October 27, 2010

Annual and Lifetime Caps Regs Issued

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.


The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA limits the ability of group health plans to cap coverage on either an annual or lifetime basis. The Administration issued guidance on this (and several other) requirement(s) in the form of interim final regulations on June 28, 2010.

The ACA prohibits lifetime caps in all plans effective for plan years beginning on or after September 23, 2010.

In addition, annual caps are prohibited on “essential health benefits”, but for plan years beginning before 2014 “restricted annual limits” are permitted on these benefits. Plans may continue to impose limits for nonessential health benefits. The regulations define essential health benefits with reference to as-yet-unissued regulations interpreting ACA § 1302(b), which lists the following benefits as being essential:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

Until additional regulations are issued, plan sponsors are permitted to use a rule-of-reason approach with regard to what constitutes essential health benefits. However, plan sponsors are required to apply the definitions they use on a consistent basis.

The regulation sets the following interim “restricted annual limits”:

Plan years beginning on or after . . .But before . . .Annual Limit
9/23/20109/23/2011$750,000
9/23/20119/23/2012$1,250,000
9/23/20121/1/2014$2,000,000

The limits operate on an individual basis; there is not a separate set of limits for families.

If a plan participant had exceeded a lifetime limit prior to the effective date of this ACA provision and otherwise still qualified for coverage, the participant must be notified that lifetime limits no longer apply and coverage is once again available. If not currently enrolled in the plan, the individual needs to be given the opportunity to re-enroll no later than the first day of the plan year beginning after September 22, 2010.

The prohibition on annual and lifetime limits applies to both new and grandfathered plans. If a grandfathered plan has no limit and subsequently imposes one, even one of the pre-2014 permitted limits, grandfathered status is lost.

If you have questions about the new limitations on annual and lifetime caps, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act, or ACA.

__________
Additional resources available at

Official publication of interim final regulations on annual and lifetime caps: http://www.federalregister.gov/articles/2010/06/28/2010-15278/patient-protection-and-affordable-care-act-preexisting-condition-exclusions-lifetime-and-annual

From the Proskauer Rose law firm, http://www.proskauer.com/publications/client-alert/health-care-reform-interim-final-regulations-released-for-preexisting-condition-exclusions/

Rev. 8/30/2010.

October 27, 2010

Grandfathered Plan Regulations Issued

by James A. Woehlke, Esq., CPA
General Counsel / COO, MBL Benefits Consulting Corp.

Background
The Patient Protection and Affordable Care Act (the ACA*) was enacted on March 23, 2010. The ACA permits certain of its provisions to not apply to group health plans in existence on the effective date. These plans are called “grandfathered plans”. The Administration issued guidance on a plan’s status as a grandfathered health plan in the form of interim, final regulations on June 17, 2010.

Grandfathered plan status excuses grandfathered plans from certain, but not all, of the ACA’s requirements. Many feared grandfathered-plan status was so delicate that almost any change would cause a plan to lose its grandfathered status. The regulations issued June 17 put this fear to rest, permitting slightly more flexibility than many originally predicted.

Grandfathered plans are not subject to the following ACA requirements:

  • Extended nondiscrimination rules
  • Inclusion of access to out-of-network emergency services without cost-sharing or pre-certification
  • Provision of certain preventive care without cost-sharing
  • Inclusion of HIPAA wellness program rules pertaining to obstetrical and gynecological care
  • Implementation of internal and external review processes
  • Permit identification of any available primary care physician as the participant’s PCP

How Grandfathered Status is Lost
Generally speaking, grandfathered status is lost by changing a plan’s carrier or redesigning a plan to significantly increase the contributions required of employees. This presents employers with a planning decision relating to whether the avoidance of these mandates justifies the additional premium burden the employer would bear to maintain the grandfathered status. Performing this cost-benefit analysis will require some additional time and effort with each year’s renewal. Employers and their health care advisors need to factor that additional analysis into their renewal process. In addition, if the decision is made to maintain grandfathered status, the plan must provide notice to employees that the employer believes the plan is grandfathered and document the plan description as it existed on March 23, 2010, which description must be made available upon request. (See, Department of Health and Human Services sample notice at http://www.dol.gov/ebsa/grandfatherregmodelnotice.doc.)

Plan Changes Permitted for Grandfathered Plans
The statute and new interim final regulations permit the following plan changes without adversely affecting grandfathered status:

  • Adding new and deleting terminated participants
  • Certain collectively bargained-for changes
  • Plan changes required by health care reform
  • Cost adjustments to keep pace with medical inflation
  • Adding benefits
  • Making modest adjustments to existing benefits
  • Voluntarily adopting new consumer protections under the new law
  • Making changes to comply with state or other federal laws

Grandfathered status will be lost if (a) the plan changes insurance carriers or (b) significant changes are made which either reduce benefits or increase costs to the participants. These significant changes include:

  • Significant reductions in coverage
  • Any increase in percentage cost-sharing (i.e. co-insurance)
  • Fixed cost-sharing increases greater than medical inflation plus 15%
  • Certain reductions in employer cost-sharing
  • Imposition of a new cap or reducing an existing cap

Significant Reductions in Coverage. If a plan eliminates all or substantially all benefits to diagnose or treat a particular condition, such as cystic fibrosis, grandfathered status is lost. The elimination of benefits for any necessary element to diagnose or treat a condition would also be considered a significant reduction causing loss of status. For example, if a plan provides benefits for the treatment of a mental health condition and that treatment would normally include medication and counseling, the later elimination of benefits for counseling will cause loss of grandfathered status.

Change to Percentage Cost-Sharing. Percentage cost-sharing automatically tracks with the rate of inflation for medical costs. Therefore, the regulations provide that any change in percentage-cost sharing will cause loss of status.

Change in Fixed Cost-Sharing. If a plan increases fixed cost-sharing, such as a deductible, copayment, or an out-of-pocket limit, grandfathered status is affected only if the change exceeds 15% plus the rate of medical inflation. For instance, if medical inflation is 10% and a $200 deductible is increased to $300, grandfathered status would be lost because the increase of $200 to $300 (a 50% increase) exceeds the 25% maximum under the assumed facts. However, for copayments, the regulations have a special rule that permits an increase of $5 plus medical inflation, in the event the 15% plus medical inflation limitation is exceeded. For example, a copayment increase from $10 to $15 in the previous example would exceed the inflation plus 15% limit, but be permitted under the special rule for copayments.

Reductions in Employer Cost-Sharing. Grandfathered status is also lost if the employer reduces its contribution for health coverage by more than 5%.

Imposition of a New Cap or Reducing an Existing Cap. Grandfathered plan status is lost if a plan adds either an annual cap or lifetime cap. Also, a plan with an existing cap will lose its grandfathered status if it reduces the cap.

If you have questions about your plan’s grandfathered status, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act or ACA.

__________
Additional resources available at

Official publication of interim final regulations: http://www.federalregister.gov/articles/2010/06/17/2010-14488/interim-final-rules-for-group-health-plans-and-health-insurance-coverage-relating-to-status-as-a

Department of Health and Human Services Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans, http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html

Department of Health and Human Services Model Grandfathered Health Plan Notice in Word format, http://www.dol.gov/ebsa/grandfatherregmodelnotice.doc.

Department of Health and Human Services Question and answer sheet on grandfathered status, http://healthreform.gov/about/grandfathering.html
Healthreform.gov information page on grandfathered plans, http://healthreform.gov/about/grandfathering.html

Proskauer Rose article on Grandfathered Plan Status, http://www.proskauer.com/publications/client-alert/health-care-reform-grandfathered-health-plan-interim-final-regulations/

Proskauer Rose Table on the Application of the ACA to grandfathered plans, http://www.proskauer.com/files/uploads/Images/Comprehensive-Chart-on-Part-A-Mandates.pdf.

Health Care Reform Law: Agencies Explain “Grandfathering” http://www.jacksonlewis.com/legalupdates/article.cfm?aid=2099

Venable LLP article on Grandfathered Plan regulations: http://www.venable.com/files/Publication/7948335d-f3ac-4e10-9727-3959d1aa6094/Presentation/PublicationAttachment/eb569e95-25e0-46ee-ab87-543244fc7fb9/grandfathered_health_plans_7-22-10.pdf

Rev. 8/30/2010.

June 25, 2010

Required Participant Notice to Maintain Grandfathered Plan Status

­­

Available from U.S. Department of Labor

The Department of Labor has issued the following model notice to be distributed to plan participants. The notice is available at  http://www.dol.gov/ebsa/grandfatherregmodelnotice.doc.

To maintain status as a grandfathered health plan, a plan or health insurance coverage must include a statement, in any plan materials provided to a participant or beneficiary describing the benefits provided under the plan or health insurance coverage, that the plan or coverage believes it is a grandfathered health plan within the meaning of section 1251 of the Patient Protection and Affordable Care Act and must provide contact information for questions and complaints.

The following model language can be used to satisfy this disclosure requirement:

This [group health plan or health insurance issuer] believes this [plan or coverage] is a “grandfathered health plan” under the Patient Protection and Affordable Care Act (the Affordable Care Act).  As permitted by the Affordable Care Act, a grandfathered health plan can preserve certain basic health coverage that was already in effect when that law was enacted.  Being a grandfathered health plan means that your [plan or policy] may not include certain consumer protections of the Affordable Care Act that apply to other plans, for example, the requirement for the provision of preventive health services without any cost sharing.  However, grandfathered health plans must comply with certain other consumer protections in the Affordable Care Act, for example, the elimination of lifetime limits on benefits.

Questions regarding which protections apply and which protections do not apply to a grandfathered health plan and what might cause a plan to change from grandfathered health plan status can be directed to the plan administrator at [insert contact information].  [For ERISA plans, insert: You may also contact the Employee Benefits Security Administration, U.S. Department of Labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform.  This website has a table summarizing which protections do and do not apply to grandfathered health plans.] [For individual market policies and nonfederal governmental plans, insert: You may also contact the U.S. Department of Health and Human Services at www.healthreform.gov.]

June 24, 2010

Grandfather Plan Status Not as Delicate as Originally Feared

by James A. Woehlke, Esq., CPA

As enacted, the Affordable Care Act* “grandfathered” group health plans in existence on March 23, 2010. Many feared grandfathered-plan status was so delicate that almost any change would cause a plan to lose its grandfathered status. The U.S. Departments of Health and Human Services, Labor, and Treasury published “interim final regulations” on June 17, which define the circumstances under which a plan will lose grandfathered status. The regulations permit slightly more flexibility than originally believed.

Grandfathered plans are not subject to the following requirements, which are imposed on new plans:

• Extended nondiscrimination rules
• Restrictions on cost sharing
• No cost sharing for preventive care
• Inclusion of HIPAA wellness program rules

The statute and new interim final regulations permit the following plan changes without adversely affecting grandfathered status:

• Adding new and deleting terminated participants
• Collectively bargained-for changes
• Plan changes required by health care reform
• Cost adjustments to keep pace with medical inflation
• Adding benefits
• Making modest adjustments to existing benefits
• Voluntarily adopting new consumer protections under the new law
• Making changes to comply with state or other federal laws

However, grandfathered status will be lost if (a) the plan changes insurance carriers, or (b) significant changes are made which either reduce benefits or increase costs to the participants. These significant changes include:

• Significant reductions in coverage
• Any increase in percentage cost-sharing
• Fixed cost-sharing increases greater than medical inflation plus 15%
• Certain reductions in employer cost-sharing
• Imposition of a new cap or reducing an existing cap

Significant Reductions in Coverage. If a plan eliminates all or substantially all benefits to diagnose or treat a particular condition, such as cystic fibrosis, grandfathered status is lost. The elimination of benefits for any necessary element to diagnose or treat a condition would also be considered a significant reduction causing loss of status. For example, if a plan provides benefits for the treatment of a mental health condition and that treatment would normally include medication and counseling, the later elimination of benefits for counseling will cause loss of grandfathered status.

Change to Percentage Cost-Sharing. Percentage cost-sharing automatically tracks with the rate of inflation for medical costs. Therefore, the regulations provide that any change in percentage-cost sharing will cause loss of status.

Change in Fixed Cost-Sharing. If a plan increases fixed cost-sharing, such as a deductible, copayment, or an out-of-pocket limit, grandfather status is affected only if the change exceeds 15% plus the rate of medical inflation. For instance, if medical inflation is 10% and a $200 deductible is increased to $300, grandfathered status would be lost because the increase of $200 to $300 (a 50% increase) exceeds the 25% maximum under the assumed facts. However, the regulations have a special rule for copayments that permit an increase of $5 plus medical inflation, in the event the 15% plus medical inflation limitation is exceeded. For example, a copayment increase from $10 to $15 in the previous example would exceed the inflation plus 15% limit, but be permitted under the special rule for copayments.

Reductions in Employer Cost-Sharing. Grandfather status is also lost if the employer reduces its contribution for health coverage by more than 5%.

Imposition of a New Cap or Reducing an Existing Cap. Grandfathered plan status is lost if a plan adds either an annual cap or lifetime cap. Also, a plan with an existing cap will lose its grandfathered status if it reduces the cap.

If you have questions about your plan’s grandfathered status, please contact your MBL Benefits consultant or the author at jwoehlke@mblbc.com.

* For simplicity, the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act are collectively referred to as the Affordable Care Act or ACA.

Additional resources on this subject can be found at

Official publication of interim final regulations: http://www.federalregister.gov/articles/2010/06/17/2010-14488/interim-final-rules-for-group-health-plans-and-health-insurance-coverage-relating-to-status-as-a

Department of Health and Human Services Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans, http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html

Department of Health and Human Services Model Grandfathered Health Plan Notice in Word format, http://www.dol.gov/ebsa/grandfatherregmodelnotice.doc.

Department of Health and Human Services Question and answer sheet on grandfathered status, http://healthreform.gov/about/grandfathering.html
Healthreform.gov information page on grandfathered plans, http://healthreform.gov/about/grandfathering.html

Proskauer Rose article on Grandfathered Plan Status, http://www.proskauer.com/publications/client-alert/health-care-reform-grandfathered-health-plan-interim-final-regulations/

Proskauer Rose Table on the Application of the ACA to grandfathered plans, http://www.proskauer.com/files/uploads/Images/Comprehensive-Chart-on-Part-A-Mandates.pdf.

Health Care Reform Law: Agencies Explain “Grandfathering” http://www.jacksonlewis.com/legalupdates/article.cfm?aid=2099

Venable LLP article on Grandfathered Plan regulations: http://www.venable.com/files/Publication/7948335d-f3ac-4e10-9727-3959d1aa6094/Presentation/PublicationAttachment/eb569e95-25e0-46ee-ab87-543244fc7fb9/grandfathered_health_plans_7-22-10.pdf

May 19, 2010

Potential Scam Targeting Debit Card Holders

AmeriFlex clients and participants should be aware of a potential scam targeting participants with an AmeriFlex Convenience Debit Card.

We have received reports of at least one participant who received an automated phone call informing them that their account had been compromised, and it attempted to solicit personal information (including a Debit Card number) through an automated phone system.

The security of our clients’ and participants’ personal information is of the utmost importance to us, so we’d like to take this opportunity to provide you with some important reminders to help you avoid these types of scams. Please feel free to share with your participants:

AmeriFlex will never contact participants by means of an automated phone message to solicit personal information. If you receive an automated phone message from someone claiming to represent AmeriFlex and asking for personal or financial information, please hang up and notify us immediately. No legitimate institution will ever initiate contact with a customer in order to request personal information, including account numbers, Debit Card numbers, or SSNs.

If you receive a call of this nature from a person or an automated recording of someone claiming to represent AmeriFlex, please notify us so that we may document and report it. Do not provide any personal information and be sure to use the AmeriFlex toll-free number (888.868.3539, option 2, then option 3) when contacting us to report the incident.

We have received reports of similar incidents where a bank or credit union’s name is invoked, rather than AmeriFlex’s. Beware of any automated phone message, regardless of who it claims to represent, that attempts to solicit personal or financial information.

Please feel free to contact us if you have any other questions or concerns.

AmeriFlex

888.868.FLEX (3539)

http://www.flex125.com

May 10, 2010

Federal Sexual Harassment Defense Not Available Under NYC Law

by James A. Woehlke, Esq., CPA, CAE

On May 6, 2010, New York State’s highest court, the Court of Appeals, ruled that a key employer defense in federal and state sexual harassment cases is not available for claims brought under the New York City Human Rights Law. The federal defense, dating back to two 1998 U.S. Supreme Court cases, was available to employers who had established that (a) there had been no tangible employment action such as termination or demotion, (b) the employer exercised reasonable care to prevent and promptly correct sexually harassing behavior, and (c) the employee failed to take advantage of the protective policies the employer had made available.

In brief, the reason the federal defense is not available is that the underlying federal laws and cases to which the federal defense applies require that an employer’s action be “severe or pervasive” to result in liability. The NYC law establishes a lower threshold. Under the NYC law, an employer is liable for the conduct of an employee when the “employee or agent exercised managerial or supervisory responsibility.”

Although maintaining anti-harassment policies will not provide a defense under the NYC law, law firm Proskauer Rose advises, “Employers should continue providing avenues for employees to complain about discrimination, as this can help stop problems from escalating. Given this recent decision, prevention is more important than ever. Providing supervisors and all employees with sexual harassment training can help prevent hostile work environments from arising and keep employers free from liability.” In addition, the defense remains useful in actions brought under New York State and federal law.

The law firm of VedderPrice agrees and advises: “Proper training and other strategies to prevent workplace harassment, discrimination and retaliation are now even more essential for two reasons. First, the strict liability standard imposed by Zakrzewska means that employers can no longer successfully plead ignorance as a defense to an NYCHRL claim. An employer’s best strategy for avoiding liability is to take affirmative steps to ensure that harassment never occurs. Second, showing that the employer had effective policies and mechanisms for reporting and remediation of discrimination, harassment and retaliation complaints may be used under the NYCHRL to mitigate civil penalties and punitive damages.”

For more information, see http://www.proskauer.com/publications/client-alert/new-yorks-high-court-rejects-faragher-ellerth-affirmative-defense and
http://www.vedderprice.com/index.cfm/fuseaction/pub.detail/object_id/a6f19ca7-3806-495f-81c0-97bfbb62ae49/SupervisorMisconductundertheNewYorkCityHumanRightsLaw.cfm.

May 10, 2010

Early Retiree Reinsurance Program

reported by Empire Blue Cross/Blue Shield at http://view.email1.empireblue.com/?j=fe6716737365057c7310&m=fef61678716300&ls=fdf71d727760027c70157570&l=fe5f15767367077c711c&s=fe2b15777066027a721471&jb=ffcf14&ju=fe24167775660d7c7d1278.

The Patient Protection and Affordable Care Act includes an early retiree reinsurance program that is available to group health plan sponsors who provide medical coverage to early retirees and their spouses, surviving spouses and dependents. It is intended to encourage employers to provide health coverage to early retirees until state health exchanges and federal subsidies for health coverage are implemented. This temporary program will provide $5 billion to help employers to continue to provide coverage to certain retirees. The program provides for reimbursement of an early retiree’s (and covered dependents’) health care claims in an amount equal to 80% of the costs between $15,000 and $90,000.

The employer is then expected to use the reimbursement to help lower health care costs (such as premium contributions, copays and deductibles) for participating enrollees. The program provides for reimbursement of an early retiree’s (and covered dependents’) claims in an amount equal to 80% of health benefits costs between $15,000 and $90,000.

This program is expected to be effective from June 1, 2010, to January 1, 2014. After January 1, 2014, retirees will have additional coverage options through the health insurance exchanges. Both self-insured and fully insured employer groups can participate. To participate in the program, employers must first submit applications (likely available beginning in June) to the Department of Health and Human Services.

For additional details, take a look at the attached frequently asked questions http://click.email1.empireblue.com/?ju=fe29167775660d7c7d1372&ls=fdf71d727760027c70157570&m=fef61678716300&l=fe5f15767367077c711c&s=fe2b15777066027a721471&jb=ffcf14&t=.

April 29, 2010

US Department of Labor Updates Its Web Site for Recent COBRA Subsidy Extension

By James A. Woehlke, Esq., CPA, CAE

On Tuesday, April 27, the United States Department of Labor updated its website for the most recent COBRA subsidy extension found in the Continuing Extension Act of 2010. The new information is available at the following links

COBRA Model Notices

Application for Expedited Review of Denial of COBRA Premium Reduction

Fact Sheet on COBRA Continuation Coverage Assistance Under ARRA Including Continuing Extension Act of 2010

General COBRA FAQs for Employees and General COBRA FAQs for Employers

April 13, 2010

Join Us For Health Care Reform Breakfast Briefing On April 28th

Health Care Reform Breakfast Briefing

Wednesday, April 28, 2010
8:30-10:00 am
One Penn Plaza, Suite 409, New York City
(250 W. 34th Street, between 7th and 8th Avenues)

The new health insurance reform law will affect every current health care plan and will greatly change the health insurance marketplace going forward. Our clients are asking

  • How will health insurance reform affect their plans?
  • When will reform become effective?
  • How will the state government health care “exchanges” work?
  • What are the penalties employers face if they fail to comply with the law?
  • What will happen to the cost of health coverage?

Please join us for a panel discussion of these and other issues. Panelists include

  • Marc B. Levy, CEO, MBL Benefits Consulting
  • Howard Margolies, Vice President, NY Sales, United Healthcare
  • Avery E. Neumark, CPA, J.D., Partner, Rosen Seymour Shapss Martin & Co. LLP
  • Joshua Mandell, Vice President, MBL Benefits Consulting

Moderator: James A. Woehlke, Esq., CPA, General Counsel and COO, MBL Benefits Consulting

A continental breakfast will be served.

Space is limited. To assure a seat, please register right away by emailing your name and company name to seminars@mblbc.com.

Please be sure to bring a photo i.d. to enter the building.

If you are unable to join us in person and wish to participate via webcast, please let us know.  We will forward to you the log-in to participate a few days before the event.

April 13, 2010

MBL Health Care Reform Briefing

Wednesday, April 28, 2010
8:30-10:00 am
One Penn Plaza, Suite 409, New York City
(250 W. 34th Street, between 7th and 8th Avenues)

The new health insurance reform law will affect every current health care plan and will greatly change the health insurance marketplace going forward. Our clients are asking

  • How will health insurance reform affect their plans?
  • When will reform become effective?
  • How will the state government health care “exchanges” work?
  • What are the penalties employers face if they fail to comply with the law?
  • What will happen to the cost of health coverage?

Please join us for a panel discussion of these and other issues. Panelists include

  • Marc B. Levy, CEO, MBL Benefits Consulting
  • Howard Margolies, Vice President, NY Sales, United Healthcare
  • Avery E. Neumark, CPA, J.D., Partner, Rosen Seymour Shapss Martin & Co. LLP
  • Joshua Mandell, Vice President, MBL Benefits Consulting

Moderator: James A. Woehlke, Esq., CPA, General Counsel and COO, MBL Benefits Consulting

A continental breakfast will be served.

Space is limited. To assure a seat, please register right away by emailing your name and company name to seminars@mblbc.com.

Please be sure to bring a photo i.d. to enter the building.

If you are unable to join us in person and wish to participate via webcast, please let us know.  We will forward to you the log-in to participate a few days before the event.

March 24, 2010

Q and A’s About the New Health Care Legislation

If you have any of the following questions about the new health care legislation, click here.

I want health insurance, but I can’t afford it. What do I do?

What if I make too much for Medicaid but still can’t afford coverage?

How would the legislation affect the kind of insurance I could buy? Would it make it easier for me to get coverage, even if I have health problems?

How would the legislation affect young adults?

I own a small business. Would I have to buy insurance for my workers? What help could I get?

I’m over 65. How would the legislation affect seniors?

How much is all this going to cost? Will it increase my taxes?

What will happen to my premiums?

March 22, 2010

President Signs Slimmed-Down Jobs Bill

By James A. Woehlke, Esq., CPA, MBL Benefits Consulting COO/General Counsel

On March 18, President Obama signed the Hiring Incentives to Restore Employment Act (“HIRE”), the greatly slimmed-down jobs bill presented him by Congress. With a price tag of $17.6 Billion, the centerpieces of the bill are (1) a social security tax “holiday” for employers that hire people who have been employed 40 hours or less in the 60 days preceding the hire date and (2) a business tax credit for continuing qualified employees’ employment beyond 52 weeks.

The provision exempts employers from the 6.2% employer-portion of social security tax on wages paid to the employee between March 19 and December 31, 2010. (The 1.45% employer match on Medicare tax is unaffected by the Social Security Tax holiday.) If the employment is maintained for 52 weeks, there is an additional benefit, a business tax credit of 6.2% of the wages paid during the 52-week period up to a maximum credit of $1,000. To take advantage of these benefits, the employer must choose not to apply for the Work Opportunity Tax Credit on the affected employees. Because the WOTC can result in a higher tax benefit, however, the employer may prefer to opt out of the HIRE benefits. Be sure to consult your CPA or attorney regarding which is more beneficial.

To qualify, the employee must have begun work after February 3, 2010, and before January 1, 2011, and must certify under penalties of perjury that he or she had not worked over 40 hours in the 60 days preceding the date of employment. The employee cannot replace a former employee unless that employee left freely or was fired for cause. The credit may be applied for re-hired employees who otherwise meet the requirements. Finally, family member/employees will not qualify.

For additional information on the HIRE benefits, see “HIRE Act Signed Into Law- What It Means to Employers” and “Breaking news from Capitol Hill from Grant Thornton’s National Tax Office, 2010-05.”

February 12, 2010

U.S. Department of Labor Issues CHIRPA Notice; Employers with Group Health Plans Must Notify Employees

by James A. Woehlke, Esq., General Counsel/COO MBL Benefits Consulting

Under the CHIP Reauthorization Act of 2009 (CHIPRA), employers offering group health plans each year must notify employees of their potential rights to receive premium assistance under a state’s Medicaid or CHIP program. On February 4, 2010, the Department of Labor issued a model notice to satisfy this requirement. The notice may be obtained directly from the DOL by clicking on either of the following links:

http://www.dol.gov/ebsa/chipmodelnotice.doc – Word
http://www.dol.gov/ebsa/pdf/chipmodelnotice.pdf – pdf

Employers may combine the notice with other information such as open enrollment materials. The requirement applies to employers with employees who reside in any of 40 states that currently provide premium assistance. See the list below.

This means that if a group health plan provides benefits for medical care directly or through insurance to participants, beneficiaries or providers in one of these states, the employer must provide the Employer CHIP Notice, regardless of the employer’s location or principal place of business.

As to timing, employers are required to provide these Notices by the date that is the later of
(1) the first day of the first plan year after February 4, 2010 or
(2) May 1, 2010.

So, for plan years beginning from February 5, 2010 through April 30, 2010, the Employer must issue the notice by May 1, 2010. And if the plan year begins after May 1 the notice must be made by the first day of the plan year. Again, the Notice must be provided annually.

States that provide Medicaid or CHIP assistance in the form of premium assistance subsidies as of 1/22/2010 include the following: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.

If you have any questions or comments about this article, contact MBL Benefits Consulting at jwoehlke@mblbc.com.

December 31, 2009

New Health Reform Bill

Volume I, Issue 15 – December 28, 2009

 UnitedHealth Group is pleased to bring you this issue of the Health Care Modernization News Flash to update you on health care issues under discussion in Washington, D.C. and in the states.  

 Our Perspective

Since the beginning of the reform debate we have advocated for comprehensive changes to the health care system that would expand coverage, reduce costs, and improve quality.  Our view has not changed.  

 The current legislation reflects some of the market reforms we have advanced that would not only expand access but ensure that the cost of coverage is affordable for everyone.   However, we believe there is more that can, and should be done, to slow the growth of medical costs and increase the likelihood that reform results in a health care system that is sustainable over time.

 

 Senate Passes Health Reform Bill

 On December 24th, with a vote of 60 to 39, the Senate passed the “Patient Protection and Affordable Care Act” after nearly one month of floor debate.  A 383-page manager’s amendment was added to the original bill containing a variety of provisions to secure the support of 60 Senators, thus allowing a final vote on the bill. The CBO estimates that this bill will cost $871 billion over ten years and cover 31 million of the 54 million uninsured. To offset the cost of the legislation, the bill places a 40% excise tax on “high value” employer-based plans (insured and self funded) valued at over $8,500 for individuals and $23,000 for families, places annual fees on pharmaceutical companies, medical device manufacturers, and health insurers (excluding some non-profit plans), increases the Medicare FICA tax by 0.9% on income over $200,000 for singles and $250,000 for couples, changes HSA and FSA rules, increases the threshold for individual tax deductibility of medical expenses to 10%, sets a 10% tax on tanning bed services, reduces spending for the Medicare Advantage program, reduces provider payment rates under Medicare, and secures rebates for Medicaid and discounts for Medicare Part D from pharmaceutical companies. Details of the Senate bill include:

·     Insurance Market Rules Effective Within Six Months of Enactment:  Several insurance market rules take effect within six months of enactment, including review of health plan premiums by state departments of insurance and HHS, prohibition of lifetime benefit limits and “restricted” annual limits, a requirement that plans that cover dependents cover children through the age of 25, prohibition of waiting periods exceeding 90 days, a requirement that all individual and group plans cover preventive services without cost-sharing, prohibition of pre-existing condition exclusions for children under 19, and prohibition of coverage cancellation or rescission except in cases of fraud. Prior to the implementation of new market rules in 2014, the bill also establishes high risk pool provisions for individuals who can not obtain coverage due to health status and creates a reinsurance program for employer coverage of early retirees. Provisions related to lifetime and annual limits, dependent coverage, waiting periods, preventive services, and retiree reinsurance apply to insured and self funded plans. 

·     Insurance Market Rules Effective in 2011:  The bill sets up a 80% medical loss ratio (MLR) for individual and small group plans and a 85% MLR for large group plans. Certain non-profit plans must meet higher MLR standards to be exempt from the annual fee on health insurers. The definition of small group follows current state law until 2014, when small group is defined as 100 employees unless a state limits the definition to 50 employees before 2017. These requirements apply to health plans inside and outside of Exchanges, including “grandfathered plans.”

·      Insurance Market Rules Effective Starting in 2014:  Reforms that require guarantee issue and renewal during an open enrollment period, establish risk sharing mechanisms (partly funded by insured and self funded health plans), prohibit annual limits (insured and self funded), prohibit pre-existing condition exclusions as well as premium variations based on health status, and limit premium variation to tobacco use, age (3:1 band), geography, and family composition apply to individuals and small groups to size 100 (states may limit small groups to 50 and may increase beyond 100 with expanded Exchange eligibility starting in 2017). States can pass legislation to form “Health Care Choice Compacts” to allow the purchase of individual insurance across state lines. 

·     Multi-State Plans and CO-OPs:  The Senate bill establishes “Multi-State Plans” in 2014 to compete with private insurers in state Exchanges. The Office of Personnel Management (OPM) will enter into contracts and negotiate premiums and other conditions with at least two private health plans (health plans may voluntarily participate and at least one must be non-profit) to create Multi-State individual and small group plans to be offered in every state by 2017. The bill also provides start-up funding to establish non-profit member-governed health plans (CO-OPs) not currently in existence to compete with private insurers and Multi-State Plans in Exchanges. CO-OPs and Multi-State Plans must comply with the same rules as other plans in Exchanges. States are not required to establish CO-OPs.

·     State Exchanges:   The Senate bill establishes state-based “Exchanges” in 2014 for individuals without access to affordable group coverage (and not eligible for Medicare or Medicaid), small groups to size 100 (states may limit small groups to 50 and may increase beyond 100 starting in 2017), and CHIP eligibles if benefit plans are similar. State Exchanges are designed to facilitate comparison shopping, enrollment, and subsidy administration and certify plans for participation that meet established standards and rules, including reasonable rate increases. Participation is voluntary.

·     Benefit Plans:   Individuals and small groups to size 100 (states may limit small groups to 50 and may increase beyond 100 with expanded Exchange eligibility starting in 2017) have a choice of up to five plan types including “Bronze” (60% actuarial value), “Silver” (70% actuarial value), “Gold” (80% actuarial value), “Platinum” (90% actuarial value) and “Young Invincible” (catastrophic plan available for adults under 30 and for those whom a Bronze premium would exceed 8% of income). Individuals between 133% and 200% of the federal poverty level without access to employer coverage would be enrolled in a state-negotiated “Basic Plan” where available. HHS establishes and updates benefit plan definitions through a public process, but states may establish additional benefit rules as long as additional subsidy costs are state paid. Out-of-pocket spending is limited to HSA limits for individual and group plans (insured and self funded). Wellness incentives up to 30-50% of the cost of coverage are allowed for group plans (insured and self funded).

·     Coverage Mandates, Penalties, and Subsidies:  I n 2014, individuals are required to have coverage through a “grandfathered plan,” a large group plan, a government program (Medicaid, Medicare, and the like), or through an individual or small group plan that meets minimum requirements (“Bronze” plan or “Young Invincible” plan for those under age 30), or pay a penalty. The penalty is the greater of a flat dollar amount ($95 in 2014 phased-in to $750 by 2016) or a percent of income (0.5% in 2014 phased-in to 2.0% by 2016). Waivers of the penalty are allowed for Native Americans, those with religious objections, and individuals with a financial hardship defined as premiums exceeding 8% of income. Individuals up to 400% of the federal poverty level ($88,000 for a family of four) are eligible for premium and cost-sharing subsidies. Employers are not required to offer coverage, but those with 50 or more employees not offering coverage are required to pay a $750 fee for employees obtaining a subsidized plan through an Exchange. Employers offering coverage must pay up to a $3,000 fee for employees obtaining subsidized coverage through an Exchange. Those employers offering coverage must also provide tax-exempt “free choice vouchers” to qualifying employees (whose premium contribution would be between 8% and 9.8% of their income) to purchase coverage through an Exchange that is equal to the contribution the employer would have made to its own plan. Employers are also assessed a $600 fee per employee for imposing a waiting period exceeding 60 days. Low wage employers (average salary less than $50,000) with 25 or less employees are eligible for up to a 50% premium credit for two years if they pay for at least 50% of the premium.

·     State Waivers:   States can seek a waiver from HHS starting in 2017 to adopt their own rules in lieu of the new federal standards related to benefit requirements, Exchanges, and coverage mandates as long as the state standards would result in similar outcomes and not increase the federal deficit.

·     Medicaid and the Children’s Health Insurance Program (CHIP):  Medicaid eligibility is expanded to 133% of the federal poverty level for all individuals in 2014 with full federal funding of the expansion until 2017 (up to 95% federal funding thereafter that varies by state). States are required to maintain existing Medicaid and CHIP eligibility. Funding for CHIP is extended to 2015 when states can enroll CHIP eligible children into private coverage through an Exchange if the benefits are similar to those under CHIP.

·     Medicare:   The Senate bill changes the payment structure for Medicare Advantage by reducing payments, creating a competitive bidding process, and providing financial incentives for care coordination programs and quality achievement. Pharmaceutical manufacturers provide a 50% discount for brand name drugs purchased in the “donut hole” or coverage gap under Part D and the income subsidy exclusion for employers who maintain prescription drug plans for Part D eligible retirees is eliminated. The bill also links provider payments to quality outcomes, creates pilot programs for coordinated care delivery models, establishes a new “Innovation Center” to test and implement new provider payment methods, and changes payment incentives to reduce hospital acquired infections and preventable readmissions. Annual provider payment updates are reduced for Medicare Part A and B and an independent “Payment Advisory Board” is established to report on system-wide health care costs, access, and quality and recommend policy changes to slow the rate of national health care spending growth and limit the rate of growth in Medicare spending.

 

President Obama Signs COBRA and “Doc Fix” Extensions Into Law

 On December 19th, the President signed the Department of Defense (DoD) Appropriations bill that includes provisions extending COBRA benefits and delaying a scheduled 21.2% cut in Medicare physician payments (the so-called “doc fix”) for two months to February 28, 2010. As enacted earlier this year as part of the American Recovery and Reinvestment Act of 2009 (ARRA), individuals losing their jobs between September 1, 2008 and December 31, 2009 were eligible for a 65% premium subsidy for up to nine months. The COBRA provision in the DoD Appropriations bill extends the eligibility period for premium subsidies by two months to February 28, 2010 for individuals involuntarily terminated and lengthens the duration of the subsidy from 9 to 15 months. 

  

Utah: Health System Reform Task Force Considers Reform Proposals

The Health System Reform Task Force, created by the Utah Legislature to review and make recommendations on health care reform, is contemplating various health reform proposals for the 2010 legislative session. A set of proposals under discussion attempt to address issues with the “Portal” (Exchange) related to rating and defined contributions that have delayed full implementation of the Portal and resulted in more expensive premiums inside than outside the Portal. These proposals would require all insurers to participate in the Portal, designate the Portal as the only market for small group coverage, implement modified community rating in the small group market, and specify the variations in actuarial plan values to be offered in the Portal. Other proposals under discussion would create a pilot program for large groups to participate in the Portal, specify the types of information that insurers must provide to the Portal, establish demonstration projects for delivery system and payment reform, and allow data from the state’s all payer database to be used for various purposes including the Portal’s risk adjustment mechanism and consumer comparison reports.

For more information on health reform and modernization, state updates and copies of newsletters and reports visit:  www.unitedhealthgroup.com/reform <http://trackometry.com/link.htm?camp=229&i=0&r=9817&orig=http%3A%2F%2Fwww.unitedhealthgroup.com%2Freform> .

Questions or Comments?  Please contact your account representative.

© 2009 UnitedHealth Group

September 15, 2009

Swine Flu Shots to Start in Three Weeks as U.S. Cases Spread

http://www.bloomberg.com/apps/news?pid=20601124&sid=asYlPo7IOFqw

May 28, 2009

New MBL Site

A new logo, a new attitude. MBL site offerings for clients increase value.

Welcome to our new look! MBL Benefits Consulting is working for you and has improved our offerings to our clientele.