YOU NEED TO KNOW THIS! DETERMINING YOUR FULL-TIME EMPLOYEES

IRS Notice 2012-58  is aimed at employers with more than 50 full-time employees and solidifies how employers are to determine whether an employee is full-time or part-time.  A full-time employee, for health reform purposes, is defined as someone who works, on average, 30 hours or more per week.  This number is important for several reasons but mainly if you should be offering them health coverage and if they could count against you if you are penalized for either not offering minimal essential coverage or if your health plan is deemed unaffordable.

Often-times employers will bring employees on board as a part-time employee and through shift changes or picking up hours here and there become full-time but still labeled part-time.  The IRS is going to be looking at these employees very closely as to whether they should have been considered full-time.  The way they are going to do this is specified in the link above but a synopsis is located below:

Ongoing Employees (Safe Harbor)

1) For ongoing employees (employees who have been working for at least one standard measurement period), employers "Look-Back" over a period of "Standard Measurement" of at least 3 months but no more than 12 Calendar months to determine average weekly hours.

2)  Those employees who average more than 30 hours during this "Standard Measurement Period" or "Look-Back Period" are considered full-time.  Employers may take an (Optional) "Administrative Period" of no longer than 90 Days to bring them into full-time benefits.

3) Following the Look-Back Period", starts the "Stability Period" which is at least 6 months long and no shorter than the "Standard Measurement Period".  During the stability period the employee remains either Part-Time or Full-Time based on their determination, even though they may have moved back into Part-Time or Full-Time status.


Newly Hired Employees, Variable and Seasonal (Safe Harbor)

1) Similar to ongoing employees, Employers may use an initial "Measurement Period" of at least 3 months but no more than 12 months to determine average hours, and an (Optional) administrative period of no more than 90 days to bring that employee on board as full-time eligible if they meet the Full-Time criteria.

2) The "Stability Period" must be the same length as the "Stability Period" for ongoing employees.

3) The rules for the "Stability Period" are the same for Newly Hired and Ongoing Employees.


This requirement under health reform appears to be aimed at those 50+ employers who are thinking that they may be able to avoid penalties associated with not offering minimal essential coverage or unaffordable coverage by hiring more part-time employees.  The fed needs their penalty income to pay for health reform so one way or another they will get it.  Unless you plan on bringing a part-time employee on full-time, keep them under 30 hours per week to avoid any potential fines.

HEALTH REFORM (PPACA) COMPLIANCE....SAVE THE DATE!!

So here we are, on the heels of a presidential election, a bit over a year away from the full effects of the Affordable Care Act (Health Reform) and employers need to make sure they are remaining compliant or it could cost, a lot.  Below is a time-line and essential changes that you may want to earmark.  In past posts I have shared these with you but thought were important enough for a re-visit.

2012

1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  

2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.

3) Summary of Benefits Coverage (SBC)-Applies to first Open Enrollment period after September 23, 2012.  Insurers and Plan Administrators must provide a summary of benefits and coverage to employers and plan participants.  For employer groups the responsibility to get these to the employees relies primarily on the employer.  Under this provision, there is a 60 Day Advance Notice of Material Change where carriers must provide a 60 day advance notification if any material changes to the coverage are to go into effect.

4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.


5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.

6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.  

SUMMARY OF BENEFITS COVERAGE (SBC)...IT'S ON YOU

Under PPACA (Health Reform), you as an employer, starting with your first open enrollment period after September 23, 2012, will be required to issue a Summary Of Benefits Coverage (SBC) to all health plan participants.  This is an approximate 4 page (front and back) document explaining the key benefits and coverage of the employer plan(s).  In most cases the insurance carrier will provide either copies or a link to a file in PDF format in order to download and distribute.  According to PPACA, the responsibility to distribute the SBC to plan participants lies with the employer group.  This is not to say, that at some point, carriers may decide to simply issue these directly to the plan participants as a courtesy to their clients. 

COMPARATIVE EFFECTIVENESS FEE (TAX?)

Starting in October 1, 2012 employers will pay $1 per participant on your health plan per year to fund Comparative Effectiveness Research.  The dollars will go to the Patient-Centered Outcomes Research Trust Fund and will fund a new organization call the Patient Centered Outcomes Research Institute (PCORI).  This amount will increase to $2 per participant per year in 2013.

The idea behind the fee or tax is that these dollars will go to conduct comparative effectiveness research of various medical interventions and publicly disseminate them. Whether or not this fee will go to fund decisions on your personal healthcare is yet to be seen.
  

SUPREME COURT UPHOLDS THE INDIVIDUAL MANDATE

At approximately 10:00 today, in a vote of 5-4 Chief Justice Roberts, siding with the liberal Justices, read that the Individual Mandate under the Affordable Care Act (Health Reform) is constitutional not as interstate commerce but as a tax.  In other words the government can't force individuals to purchase health care but they can impose a tax penalty if they don't.  


For people in favor of the law, this is an obvious win in their direction.  However, people not in favor of the law, the President, or continued government over-reach could see this as helpful for Romney's presidential bid in November.

PPACA-CAREFIRST TO ISSUE MEDICAL LOSS RATIO (MLR) REBATES

PLEASE SEE BELOW FROM CAREFIRST:

The Affordable Care Act requires CareFirst to rebate part of the premiums it received if it does not spend at least 80 percent of the premiums CareFirst receives on health care services, such as doctors and hospital bills, and activities to improve health care quality, such as efforts to improve patient safety. No more than 20 percent of premiums may be spent on administrative costs such as salaries, sales and advertising. This is referred to as the “Medical Loss Ratio” standard or the 80/20 rule. The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars. You can learn more about the

80 /20 rule and other provisions of the health reform law at: http://www.healthcare.gov/law/features/costs/value-for-premium/index.html.

What the Medical Loss Ratio Rule Means to You

The Medical Loss Ratio rule is calculated on a State by State basis. In the District of Columbia,  CareFirst did not meet the 80/20 standard. In Virginia the Small and Large Group HMO plans did not meet the 80/20 Standard and in Maryland the Individual Consumer-Driven Only Market was affected.   In 2011, CareFirst spent only 79.2%of a total of $1,000,000 in premium dollars on health care and activities to improve health care quality. Since it missed the 80 percent target by .8% of premium it receives, CareFirst must rebate .8% of the total health insurance premiums paid by the employer and employees in your group health plan. We are required to send this rebate by August 1, 2012, or apply this rebate to the health insurance premium that is due on or after August 1, 2012. Employers or group policyholders must follow certain rules for distributing the rebate.

Ways in Which an Employer Can Distribute the Rebate

If your group health plan is a non-Federal governmental plan, the employer or group policyholder must distribute the rebate in one of two ways: Directed to: Small Groups Platform: Facets

• Reducing premium for the upcoming year; or

• Providing a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based. 

Beginning July 9, 2012, CareFirst will distribute rebate checks to 9,870 fully insured employer groups for the 2011 calendar year.

• Rebates differ by product and jurisdiction. The typical group will receive a rebate check between $561 and $10,785.

PPACA-HEALTH REFORM UPDATE

As we all wait for the Supreme Court to rule on the future of health reform, there are items in the law that will be taking place in the near future.  Below is a listing of those items:


1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  


2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.
(I  am thinking that most carriers will offer this coverage as its easier for them to manage than trying to determine Grandfathered and Non-Grandfathered eligibility)


3)  Plan years beginning after September 23, 2012-Summary of Benefits will need to be updated to include more easily readable and understandable benefit descriptions.  This responsibility will fall mainly on insurers for fully insured plans.


4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.


5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.


6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.