Insurance market rules: 2014 No pre-ex for anyone No annual limits on EHB (“mini med” plans) Cost sharing limits OOP not to exceed HSA limits (2014 = $6,350 for employee-only, $12,700 for family) Delayed where medical and Rx provided by different carriers Wellness incentive limits increase 30% of cost of coverage 50% for tobacco programs
Insurance market rules: 2014 Deductible limits ($2,000 single, $4,000 family) Applies only to small group market Clinical trial coverage Must cover “routine patient costs” No guidance will be issued prior to effective date – use “good faith, reasonable interpretation” Waiting period limitations (90 days or less) Coverage must begin on 91 st day
Insurance market rules: 2014 Auto enrollment for large employers (>200 EEs) Not effective until guidance is issued – not expected by 2014 Must provide notice, opportunity to opt out Annual fee on health insurers Applies to carriers Also applies to self funded MEWAs Not applicable to self funded GHPs
Insurance market rules: 2014 Fair health insurance premium Small group Age, area, status, tobacco 3 age bands: under 21, adults 21-63, and adults 64 and older Transparency Financial statements published Delayed
Insurance market rules Guaranteed availability Accept every employer and individual Guaranteed renewability Renew every group Single risk pool Inside and outside exchange
Insurance market rules Reinsurance Funded by insurers and plans Risk corridors Limits on gains or losses Risk adjustment Payments to insurers in high risk markets
Notice 2013-54 Application of Market Reform HRA used to purchase individual coverage not integrated FSA that is excepted not subject to market reforms Standalone HRA is minimum essential coverage, and retiree will not be eligible for subsidy EAPs generally are excepted benefits Two methods of integration Minimum value required Minimum value not required
105(h) nondiscrimination testing Rules previously applied to self-funded plans Many “discriminatory” plans choose fully insured status PPACA requires fully insured plans to satisfy rules “similar to” §105(h) Effective date: PPACA: Plan Years beginning after 9-23-10 IRS: Not until guidance, likely in 2015
105(h) nondiscrimination testing Problem industries: Restaurants Retail Hospitality Workforce Will Regs look at choice? Beware interaction with pay or play strategies
Employer exchange notice All EEs must receive the notice Current employees – by 10/1/13 New hires after 10/1/13 – within 14 days of start date Two model notices (ERs with and without group health plans) DOL: No penalty
Enrollment Initial: 10-1-13 to 3-31-14 Special Annual: 11-15 to 12-17
Small employer SHOP exchanges Small = 100 unless state says 50 Employer disclosures to employees All employers subject to FLSA Current and new hires Consequences of exchange vs. employer plan FF-SHOP – no employee choice model in 2014 Employer only able to chose a single QHP to offer employees
Individual mandate Not delayed Penalty tax for not purchasing coverage Penalty tax applies to: Applicable individuals without Minimum essential coverage Exceptions
Impact on cafeteria plans Individual – no SHOP – yes (2014) Amendment allowed for non-calendar year plans, transition relief from change event rules
Delayed until 2015 Announced 7/2/13 Official Guidance – IRS Notice 2013-45 (7/9/13) IRS encouraged employers expand coverage Delays required information reporting as well IRS requests voluntary compliance Does not affect premium tax credit For now we have IRS proposed rules and public hearing testimony
Delayed until 2015 Reporting delayed Penalties delayed Mandate not delayed Employer liability?
Delay good? Federal and state agencies have more time to implement exchanges. Agencies have more time to issue further guidance on pay or play penalties. Employers have more time to develop pay or pay strategies.
Delay good? Trend of employers dropping hours was becoming quite worrisome for employees and employee groups. New deadline coordinates with the expanded SHOP options projected for 2015.
Delay bad? Employers now have another year to procrastinate. Employers with completed strategy now need to decide whether to implement the strategy, or in some cases even revoke the strategy. Confusion because the mandate still exists; only reporting and penalties are delayed.
Delay bad? Employers are left with only proposed regulations, which likely will change between now and 2015. Reduced enrollment may create more adverse selection in the exchanges, which will raise premiums even further.
Where are we? Large Employer Status: Are you subject to the penalties? Who are your full-time employees? What are the applicable penalties? What are your strategies with respect to the penalties?
Strategies for 2014? Currently have no coverage Offer coverage, OR not offer coverage and pay penalty Coverage, but it is not affordable because employee premium is greater than 9.5% Coverage, but it fails 60% minimum value test Keep full-time employee level below 50, OR keep number of full-time employees as limited as possible (Caution!)
Strategies for 2014? Some employers already in compliance Others can do a “trial run” Await guidance on specified employee classifications Skinny plans – delay allows time for Regs.
Coverage of contraceptives First dollar basis; list of required coverages Exemption for religious employers Hobby Lobby case Other litigation
DOMA: U.S. vs. Windsor decision 5-4 decision Supreme Court ruled that DOMA definition of spouse and marriage are unconstitutional (deprivation of protections of Fifth Amendment) Full faith and credit clause was not addressed (remains law)
DOMA: IRS Guidance 8-29-13 Recognizes all same sex marriages, even if not recognized in state of residence Other relationships not recognized Ruling applies for all tax purposes, including employee benefits Permits individual and employer refunds on taxes paid on value of coverage Requires retirement plans to recognize same sex spouses as of 9-16-13
DOMA: Issues remaining Must benefits be provided retroactively? Plan design and administration issues Impact on HSAs, FSAs, HRAs and other account balance plans Impact on COBRA, FMLA, and HIPAA special enrollments
DOMA: Domicile vs. state of marriage Only 12 states issue same-sex marriage licenses CT, DE, DC, IA, ME, MA, MN, NH, NY, RI, VT, WA 7 states and DC provide for spousal rights (short of marriage – ex. domestic partnership/civil union) CA, HI, IL, NJ, NV, OR, WA