NOTIFICATION OF THE EXISTENCE OF HEALTH EXCHANGE-URGENT

Essentially all employers must notify all of their employees, regardless of those on a medical plan or not, of the existence of the Health Exchanges.  The Model Notice of Health Exchange is the Notification issued by the Department of Labor (or one that contains essentially the same information) that MUST be sent to ALL employees by 10-1-2013. There are three pages to the notification.  Page 2 needs to be completed by you prior to sending to your employees. The third page is optional.  All newly hired employees must be given the notification within 14 days of Hire.

Below please find the distribution and delivery requirements. 

Distribution Requirements

Employers

Any employer who is subject to the Fair Labor Standards ACT of 1938 is required to distribute the Exchange Notice to its employees. Employers who do not currently offer health care coverage to their employees and/or are not subject to the Employer Mandate under the ACA are not exempt from this notification requirement.

Employees

ALL employees must be provided with an Exchange Notice, including employees who are not eligible to enroll in employer-sponsored benefits. A few exceptions do apply. A notice does not need to be issued to:

• Spouses and dependent children covered under an employer’s plan,
• COBRA participants, and
• Retirees (even if they are enrolled in an employer-sponsored health plan).

Delivery

When it comes to getting the Exchange Notice into the hands of employees, the updated guidance provides employers with two options: 1) First Class Mail and 2) Electronic Distribution. You may choose one option for all employees or a combination of both (depending on your employee population). Please note that electronic distribution is only permissible if the following DOL regulations are satisfied:

• Access to the electronic delivery system is an integral part of the employees’ work duties.
• A statement regarding the importance of the Exchange Notice is provided.
• A free paper copy is made available upon request.

     

AETNA/COVENTRY PULLING OUT OF THE INDIVIDUAL MARYLAND EXCHANGES

Earlier this week Aetna, who recently purchased Coventry Health Plans, told the Maryland Health Administration Commissioner, Therese Goldsmith that both Aetna and Coventry will be pulled out of the mix for plans offered on the individual exchange.  Aetna requested rates for one of their plans that was 29% higher than what the exchange would allow and decided that to lower their premiums by that amount would be unprofitable. Aetna and Coventry, however, have shown no signs that they are pulling out of the Small Group Exchange Plans.  

POSSIBLE DELAYS TO THE INDIVIDUAL MANDATE UNDER TRANSITION RELIEF

According to IRS Notice 2013-42, for non-calendar year Medical Plans, transition relief is available for those plans that begin in 2013 and end in 2014.  If your coverage is available through an employer, depending upon when that coverage is made available to you (or your spouse) would depend upon when you would need to obtain coverage.

Example 1. You are eligible for enrollment in a non-calendar year employer sponsored medical plan beginning August 1, 2013 and ending July 31, 2014.  You have parent/child coverage for you and your 10-year old son.  You do not elect coverage for yourself/son on August 1, 2013.  Under this rule you would have transition relief through July 31, 2014.  If you do not elect coverage at this time, penalties would be assessed.

Example 2. You are Married and both you and your spouse are eligible for enrollment in a Non-Calendar Year Plan of an Employer for the 2013-2014 Plan Year and in a Calendar Year Plan with your Spouse’s Employer for 2014.  Your plan begins August 1, 2013 and ends July 31, 2014.  Your spouses plan begins January 1, 2014.  You do not elect coverage for you and your spouse under your plan August 1, 2013 and your spouse does not elect coverage for the both of you on January 1, 2014. In this example both you and your spouse would have transition relief until your plan renewal in August of 2014.  If at this time, no coverage was elected, penalties would be assessed.

(From IRS Notice 2013-42)

GREAT NEWS! KEY PROVISION OF HEALTH REFORM DELAYED UNTIL 2015

Do you remember when employers with 50 or more employees were either going to offer affordable, minimal essential coverage or pay stiff penalties?  Well, that provision has been delayed until 2015.  

"We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action," Mark J. Mazur, assistant secretary for tax policy, wrote in a post on the Treasury Department's website.

"Obamacare costs too much and it isn’t working the way the administration promised,” Sen. Mitch McConnell, the Senate Minority Leader, wrote in response to the decision, adding: “The fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans."

Any way you slice it, it's good news for larger organizations that are trying to implement the provisions of the law without getting themselves into a lot of hot water in the meantime.  This definitely gives them a bit of breathing room.

HAPPY FOURTH OF JULY

From our home to yours, we wish everyone a happy and safe 

Fourth Of July celebration.  Thanks to all the troops and families

who have suffered to keep our country free. 

God Bless America. 

Ben

RENEWING YOUR HEALTH PLAN EARLY (PRIOR TO JANUARY, 2014)

In a previous post strategies were discussed regarding avoiding some of the impacts of the ACA (Health Reform) beginning January 1, 2014.  As an employer new and additional taxes and fees, the elimination of average age rating, and new plan designs could affect Insurance premiums for your current health plan.  Most carriers are allowing early renewals, some are waiving their stipulations in order to do so.  For those who have a high deductible plan(s) this could be a problem as deductibles will reset.  However, some carriers are allowing a deductible carry-over for those employees who have not met their deductible and have had claims within the last three months prior to early renewal to be rolled over into the new contract year's deductible.  As mentioned, this idea of early renewal was touched on in the last post but due to its significance thought it may be a good idea to touch on it again.  The idea, if it makes sense for your firm, is to let the law get up and running instead of being a guinea pig early on.

WHAT SOME COMPANIES ARE DOING TO AVOID REFORMS AND PENALTIES

Strategy 1

As we all know starting January 1, 2014 almost every man, woman and child must have medical coverage or pay a fine.  Some religious groups, Indian Tribes  and others are exempt.  Here in the state of Maryland the exchange will begin enrolling people October 1, 2013.  In addition when employers renew their medical coverage, they are then subject to the reforms as well.  What this means is that each person within the group will stand on their own and pay premiums based on them self.  In other words a person who is individual and 38 may have a different premium than someone who is 58.  In addition, the family rate will be separated out to include the individual, the spouse, number of children, etc.  There will not be a melded four rate structure any longer.  In addition, there will also be additional premiums due on those employees who smoke, up to a 50% increase over the standard rate.  For this, employer group can expect (according to some carriers) an additional 5-15% increase on top of their already ridiculously high renewals.  What are the carriers suggesting?  Early renewals.........most of the carriers are coming out and saying renew early if it makes financial sense.   If you have a renewal that may be in January, 2014 through say July, 2014, you may want to renew December 1, 2013.  What this will do is simply delay the impacts.  However, if you have a HRA, HSA or some other high deductible plan, these deductibles re-set so it may not make sense to you.  

Strategy 2

Larger organizations with lower paid employees are going to get killed either by having to offer Affordable, Minimal Essential Coverage or paying fines......period.  What some companies are doing is offering Minimal Essential Coverage although unaffordable and creating  a potential penalty to the employer. What employers are doing is making available Limited Medical Benefit Plans at a lower cost than the subsidized coverage made available to them on the exchange.  A limited Medical Benefit Plan, depending on the persons age may cost approximately $40-$50 per month.  Lets say a 30 year old person making $10 per hour would pay $80 per month on the exchange for a subsidized medical plan.  The idea is that if an employee has a Limited Medical Benefit Plan that is working for them and the costs are considerably less than the exchange plan (although not nearly as comprehensive), they will stay with the lower cost plan.  If they do, the employer has avoided a $3,000 penalty since the only way they are penalized is when an employee actually gets a subsidized health plan on the exchange.  

As a note, Limited Medical Benefit Plans typically offer preventive care, some prescription benefit's and other services.  They typically do not or have limited coverage for hospitalization.  These plans can be dangerous to the employee if they aren't explained very well and would caution any employee electing this coverage in place of a true medical plan. 

Strategy 3

Self-Fund....or partially self-fund.  Since health insurance, for the most part, will be guaranteed issue (except self-funded plans), and rates will favor older people rather than younger people, the population will be made of an older, more expensive pool.  If you have a relatively healthy group, you may be able to avoid the additional costs that the exchange will saddle employers/employees with and your healthy population will stand on its own merit.  Partially self-funded plans go down to as small as 5 employees and have premiums that are guaranteed.  In addition you will have a standard four tier rating structure.