Are You Up to Date on Health Care Reform?

Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC
Are You Up to Date on
Health Care Reform?
By
Larry Grudzien
Attorney at Law

• Impact of Health Care Reform on HRAs and Cafeteria Plans
• Transitional Rules for application of the Employer Mandate for 2015
• New Waiting Period Rules
• Reporting Requirements for Employers for 2015
• HPIDs
• Rules for allowing employees to drop employer coverage and enroll
on the Marketplace
• Contraceptive coverage after Hobby Lobby
• Other Developments
Agenda

Impact of
Health Reform
on HRAs and
Cafeteria Plans

• Cannot reimburse employees for individual
medical premiums.
• Must be integrated with group medical plan.
• Can be free standing for other coverages
(dental & vision).
• Can be free standing for retiree benefits
HRAs

• For Health FSAs to avoid the
requirements of Health Care Reform, they
must meet the requirements of an
“excepted benefit.”
• Free standing health FSAs are still
possible if reimburse excepted benefits.
• What requirements apply if a Health FSA
is not an excepted benefit?
Health FSAs

• A health FSA is considered an “excepted benefit” if
it satisfies two conditions:
 Maximum Benefit Condition: The maximum benefit payable
under the health FSA to any participant in the class for a year
cannot exceed two times the employee's salary reduction
election under the health FSA for the year (or, if greater, the
amount of the employee's salary reduction election for the
health FSA for the year, plus $500), and
 Availability Condition: Other nonexcepted group health
plan coverage (e.g., major medical coverage) must be made
available for the year to the class of participants by reason of
their employment.
Health FSAs

• For medical premiums to be reimbursed, it must be
made after-tax and not conditioned on purchasing
coverage
• Possible to reimburse premiums of other coverage:
 Dental
 Vision
 Disability
 Life insurance
 Voluntary benefits
When is it possible reimburse
individual premiums under a
Cafeteria Plan?

• On May 13, 2014, the IRS issued Q&A guidance restating
the conclusion in Notice 2013-54, that an employer is
considered to establish a type of group health plan-called an
"employer payment plan"-if it reimburses employees'
premiums for individual health insurance policies.
• Q/A-1 provides that the employer's exposure to excise taxes
of $36,500 per year (i.e., $100 per day) for each employee
affected by the failures. This excise tax liability requires self-
reporting on IRS Form 8928. Adverse consequences are also
possible under ERISA and the PHSA.
• Q/A-2 indicates that the DOL issued substantially identical
guidance in Technical Release 2013-03, and HHS is
expected to announce soon that it concurs.
Recent Guidance

Transitional Rules
for the Employer
Mandate for 2015

• For 2015, employer mandate will apply to those
employers with 100 or more full-time employees if
transitional rules are met.
• For the application of the $2,000 penalty in 2015 -30
employee reduction is increased to 80.
• To avoid the $2,000 penalty in 2015, employer must
offer coverage to 70% of all full time employee,
instead of 95%.
• Large employer determination for 2015, can be
made over either calendar year 2014 or any
consecutive 6 month period in 2014.
Large Employer for
Employer Mandate Purposes

• Large Employers will not be subject to the
employer mandate penalties until the first day of
the plan year in 2015 for employees who are
either enrolled or were eligible to enroll in the plan
as of February 9, 2014.
• If these employees are offered affordable,
minimum value coverage no later than the first day
of the 2015 plan year, the large employer will not
be liable for a penalty with respect to these
employees for the months in 2015 before the plan
year begins.
Large Employers with
Noncalendar Plans

• Transition relief for employers with a significant
percentage of employees eligible for or covered
under a non calendar year plan, if the large‐
employer:
 Had at least one quarter of its employees covered
under those non calendar year plans as of any date in‐
the 12 months ending on February 9, 2014; OR
 Offered coverage under those plans to one third or
more of its employees during the open enrollment
period that ended most recently before February 9,
2014.
Noncalendar Plans

• Transition relief is extended to employers that have a
significant percentage of full time employees eligible‐
for or covered under a non calendar year plan, if the‐
employer:
 ƒHad at least one third of its full time employees covered‐
under those non calendar year plans as of any date in the‐
12 months ending on February 9, 2014; OR
 Offered coverage under those plans to one half or more of
its full time employees during the open enrollment period‐
that ended most recently before February 9, 2014.
Noncalendar Plans

• If either of these transition policies apply, the
employer will not be liable for a penalty for
months in 2015 before the 2015 plan year
begins with respect to employees who are
offered affordable, minimum value coverage
no later than the first day of the 2015 plan
year and who would not have been eligible
for coverage under any calendar year group
health plan maintained by the employer as of
February 9, 2014.
Noncalendar Plans

• Employers with 50 to 99 full-time employees (including full-time equivalents)
will not be subject to penalties until their first plan year on or after January 1,
2016 if all of the following conditions are met:
 Employer does not modify its plan year after February 9, 2014 to begin on a later
calendar date;
 Employer must not reduce workforce nor hours of service during 2014 to avoid
compliance;
 Employer must not eliminate or materially reduce health coverage offered on
February 9, 2014 through the last day of the 2015 plan year:
• The employer contribution toward employee-only coverage must continue at either the same
percentage of the total cost of coverage, or at least 95% of the dollar amount contributed on
February 9, 2014.
• If benefits are changed, the coverage provides minimum value after the change and
• Employer does not amend its plan to reduce eligibility of employees or their dependents
• The final regulations require employers to certify to the IRS their eligibility for
this transition relief.
Employers with 50-99
employees

• Employers may adopt a transition measurement period
that is shorter than 12 consecutive months but that is no
less than six consecutive months and that begins no
later than July 1, 2014, and ends no earlier than 90 days
before the first day of the plan year beginning on or after
January 1, 2015.
• May use with a stability of up to 12 months.
• Mays use 12 month measurement period in 2015 for
2016.
Measurement Period

New Waiting Period

• Period cannot exceed 90 calendar days.
• Applies for plan years beginning in 2014.
• Employer can impose up to a 30 day.
orientation period before the waiting period
• Employer may be subject to an assessable
payment if it fails to offer affordable minimum
value coverage to certain newly-hired full-
time employees by the first day of the fourth
full calendar month of employment.
Rules

• For example, if an employee is hired as a full-
time employee on January 6, a plan may
offer coverage May 1 and comply with both
provisions.
• However, if the employer is an applicable
large employer and starts coverage May 6,
which is one month plus 90 days after date of
hire, the employer may be subject to an
assessable payment under Code § 4980H.
Example

Reporting
Requirements for
Employers

• Beginning in 2016 (for information on 2015), insurers and self-funded plans
will be required to report information about health coverage provided during
the prior year to all enrollees, including Taxpayer Identification Numbers of
all covered individuals and the specific dates that such individuals had such
health coverage, as required by Code § 6055.
• In addition, employers with 50 or more full-time equivalent employees will
be required to report information about health coverage offered during the
prior year to full-time employees, including information about the lowest cost
option offered and whether the minimum value requirements were satisfied,
as required by Code § 6056.
• In March, the IRS published long-awaited final regulations outlining these
two new reporting requirements, which largely track proposed regulations
issued on September 9, 2013.
• The regulations specify that the information will be reported on new IRS
Forms 1094 and 1095, and not on Form W-2, as many had hoped.
Overview

• Good Faith Standard for 2015 Penalty
Relief.
 Both the Code §§ 6055 & 6056 final rules
provide for no reporting penalties for any
optional 2014 reporting, and a good faith
effort standard for imposing 2015 reporting
penalties for incorrect or incomplete filings.
Transition relief is available
for 2015

• Simplified Reporting for 2015:
 The Code § 6056 final rules provide a simplified reporting method.
 For an employer that made a qualifying offer to at least 95% of its full-
time employees and their spouses and dependents for 2015, the
employer would be permitted to report simplified section 6056 return
information with respect to those employees.
 Employers eligible for simplified reporting will report to the IRS the
employee’s name, TIN, and address and an indicator code either
indicating that a qualifying offer was made for all 12 months or the
specific months that it was not made.
 The employer will report to the employee the contact name and number
where the employee can get more information regarding the offer of
coverage and either (1) if the qualifying offer applied for all 12 months, a
statement that the employee and the employee’s spouse/dependent will
not be eligible for a tax credit for all 12 months; or (2) if the qualifying
offer did not apply for all 12 months, a statement that the employee and
the employee’s spouse/dependent may be eligible to claim a tax credit
for one or more of the 12 months.
Transition relief is available
for 2015

• An applicable large employer member who employs an average of
50 or more full-time employees or full-time employee equivalents in
the prior calendar year must file the required Code § 6056 form
(and furnish a copy to each full-time employee).
• In other words, if your company is subject to the employer mandate
rules, it must file the required form (and furnish a copy to each full-
time employee).
• In addition, all employers who sponsor self-funded group health
plans, insurers, government agencies and others that provide
minimum essential coverage (reporting entities) must file the
required Code § 6055 form (and furnish a copy to each
“responsible individual,” defined as a primary insured, employee,
former employee, uniformed services sponsor, parent, or other
related person named on an application who enrolls one or more
individuals, including him or herself, in minimum essential
coverage).
Employers Subject to the
Reporting Requirement

• To report for employer responsibility
purposes (Code § 6056), a large employer
may hire a third party agent (e.g., plan
administrator) to file on its behalf, but the
large employer member remains liable for
the reporting.
• Special rules apply for governmental units
and multiemployer plans.
Employers Subject to the
Reporting Requirement

• Form 1095–C (or a substitute form) will be used by self-
insured employers to meet both the employer responsibility
and the minimum essential coverage reporting requirements.
• An employer that provides insured coverage will also report
on Form 1095–C, but will complete only the employer section.
• Employers who are not subject to the employer mandate
requirements, health insurance issuers, self-insured
multiemployer plans, and providers of government-sponsored
coverage, will report on Form 1095–B (or a substitute form).
• In addition, filers will be required to submit a single Form
1094-B and a single Form 1094-C as a “transmittal form” to
the IRS with the Forms 1095-B or 1095-C, respectively.
Forms Used for Filing

• A link to the forms is provided below:
 Form 1094-B,Transmittal of Health Coverage Information Return:
http://www.irs.gov/pub/irs-dft/f1094b--dft.pdf
 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer
and Coverage Information Return: http://www.irs.gov/pub/irs-dft/f1094c--
dft.pdf
 Form 1095-A, Health Insurance Marketplace Statement:
http://www.irs.gov/pub/irs-dft/f1095a--dft.pdf
 Form 1095-B, Health Coverage: http://www.irs.gov/pub/irs-dft/f1095b--
dft.pdf
 Form 1095-C, Employer Provided Health Insurance Offer and
Coverage:
 http://www.irs.gov/pub/irs-dft/f1095c--dft.pdf
Forms Used for Filing

• There are two simplified reporting alternatives
for employers subject to the employer
responsibility requirements (Code § 6056):
 (i) Certification of Qualifying Offers.
• If the employer offered minimum essential coverage
providing minimum value at an employee cost for employee-
only coverage not exceeding 9.5% of the mainland single
federal poverty line to one or more of its full-time employees,
and offered minimum essential coverage to the employee’s
spouses and dependents (qualifying offer), simplified
reporting generally applies for employees offered coverage
for all 12 months of the calendar year.
 Must provide employee’s name, SSN, and address, and indicate via
indicator code that qualifying offer was made for all 12 months.
 Can also provide simplified information to employees.
Forms used for filing

• There are two simplified reporting alternatives for
employers subject to the employer responsibility
requirements (Code § 6056):
 Minimum Value Coverage Offered to At Least 98% of
all Employees.
• If the employer offers minimum essential coverage providing
minimum value that was affordable (based on a safe harbor in
the employer shared responsibly final rule) to at least 98% of
their employees (and their dependents), it may certify the same
and provide Section 6056 reporting with respect to all
employees (i.e., instead of determining the number of full-time
employees, or specifying whether a particular employee offered
coverage is a full-time employee).
• However, follow-up may be required if an employee goes to the
Marketplace.
Forms used for filing

• The forms are filed with the IRS, in either paper or electronic format
(but electronic format is required if at least 250 such returns are
filed).
• Statements are also required to be provided to the full-time
employee or responsible individual.
• In order to deliver the form to the full-time employee or responsible
individual electronically, actual consent from the full-time employee
or responsible individual to receive the form electronically is
required (similar to the W-2 process).
• If the form is mailed, sending it to the full-time employee or
responsible individual’s last known address, via first class mail
satisfies these rules.
Method of Filing Forms

• The timelines track the Form W-2 rules.
• For example, the form is generally filed with the
IRS by Feb. 28 (March 31 for electronic filing),
and furnished to full-time employees or
responsible individuals by January 31.
• The information on the form pertains to the prior
calendar year and the first forms are due in 2016
(reporting information for 2015).
Due Date for Filing Forms

• The following data is required (and any other information required
as part of the form/instructions) to facilitate administration of the
employer responsibility rules and the premium tax credit:
 Name, address, and employer identification number (EIN) of the employer
 Name and telephone number of the employer’s contact person (which can
be an employee or agent of the employer)
 Calendar year for which the information is reported
 Certification as to whether the employer offered its full-time employees and
their dependents the opportunity to enroll in minimum essential coverage
under a eligible employer-sponsored plan, by calendar month
 Months during the calendar year that minimum essential coverage under the
plan was available
 Each full-time employee’s share of the lowest cost monthly premium (self-
only) for coverage providing minimum value offered to that full-time
employee under an applicable employer-sponsored plan, by calendar month
 Number of full-time employees for each month during the calendar year
 Name, address and taxpayer identification number (TIN) of each full-time
employee during the calendar year and the months, if any, during which the
employee was covered under the plan (the TIN of the spouse or dependent
is not required)
 Any other information prescribed by forms or instructions
Required Information for the
6056 Filing

• In addition, information will be gathered by various
indicator codes, including coverage offered (and why not
offered), number of employees per month, waiting period
information, controlled group information, multiemployer
plan participation, contact information for a third party
reporting agent or governmental unit, whether the
employee was covered by the plan, if coverage was
offered for the month when he/she was not a full-time
employee, or if the employer met one of the affordability
4980H safe harbors.
6056 Filing

• The following data is required (and any other information required
as part of the form/instructions) to facilitate administration of the
individual responsibility and employer responsibility requirements:
 Name, address, TIN (or date of birth, if TIN is not available) for “responsible
individuals,” unless the responsible individual is not enrolled in coverage.
 Name, address, TIN (or DOB, if TIN is not available) of each individual
covered.
• Reporting entities must make “reasonable efforts,” to obtain a TIN. “Reasonable
efforts” are described in the rule.
• No solicitation is required if the entity already has the TIN.
 For each covered individual, the months for which the individual was
enrolled (for at least one day) in coverage and entitled to receive benefits.
 Any other information required on the reporting forms or subsequent
guidance.
• Group health plans must also provide certain information.
6055 Filing

• Failure to timely and correctly report this
information (including employee’s SSN) may
result in reporting penalties under Code
sections 6721 and 6722 for the large
employer, employer who is not a large
employer, insurer or other entity providing
minimum essential coverage, which together
generally results in $200 per return risk
(maximum of $3 million) per year.
Penalties of Noncompliance

HPIDs

• Covered entities including group health plans will be required
to obtain a national 10-digit Health Plan Identifier (HPID) that
will help implement the transition to a standard platform for
conducting certain electronic health plan transactions.
• Health plans will need to demonstrate compliance with the
HIPAA electronic transaction requirements by securing two
independent certifications by December 31, 2015.
• Small health plans with annual receipts (presumably this
refers to premium) of $5 million or less will have a one-year
delay to comply with obtaining the HPID and certifications.
Introduction

• Employers with health plans (including dental, vision, HRAs, and health
FSAs) that meet the definition of a Controlling Health Plan (CHP) will be
responsible to obtain a unique HPID by November 5, 2014 while small
health plans will have until November 5, 2015 to comply.
• Employers that sponsor insured health plans will most likely not be directly
impacted by this requirement as the responsibility will fall to the insurance
carrier to secure a HPID and certify compliance with electronic transaction
standards.
• While professional third party administrators generally perform the electronic
transactions on behalf of employers with self-funded health plan
arrangements, these administrators cannot obtain the HPID on behalf of
their clients.
• Plan sponsors with self-funded plans will need to obtain the HPID and
communicate this new ID to plan administrators and other business
associates.
Introduction

• HIPAA defines a Controlling Health Plan
as a plan that:
 Controls its own business activities, actions or
policies; or is controlled by an entity that is not
a health plan, and
 It has sub-health plans (SHP), exercises
sufficient control over the sub-health plan(s)
to direct its/their business activities, actions or
policies.
Controlling Plans

• Controlling Health Plans are required to obtain a HPID while
SHPs are eligible but not required to do so unless the SHP
conducts standard transactions.
• The CHP may obtain the HPID on behalf of its SHPs.
• As a practical matter, it appears that if the health plans are
considered a single plan for purposes of filing the Annual
Return Form 5500 (i.e. the plans are part of a wrap document)
then a single HPID may suffice for both the CHP and SHPs.
• In addition, it appears at this time that employers with a fully-
insured medical plan that sponsor other self-funded
arrangements such as a health FSA or HRA may need to
secure a HPID for these self-funded plans.
Controlling Plans

• Plan sponsors can learn more about the HPID requirements
at the HHS Health Plan Website:
 (http://www.cms.gov/Regulations-and-Guidance/HIPAA-
Administrative-Simplification/Affordable-Care-Act/Health-Plan-
Identifier.html) that includes a power point presentation,
informational videos and a user manual for reference.
• Applicants will need to login to the CMS secure portal:
 (https://portal.cms.gov/wps/portal/unauthportal/home/!
ut/p/b1/04_SjzQ0NzM1NTExNTPTj9CPykssy0xPLMnMz0vMAfG
jzOLdDSDAyN_QzMjA08vF3MMryNHYwB-
kIRKowAAHcDQgpN_PIz83VT83KscCAEx_1KM!/dl4/d5/L2dBIS
EvZ0FBIS9nQSEh/) on the upper left-hand side of the website
page to access the system to register and obtain the HPID.
Obtaining a HPID

• All new users will need to establish an account
(user ID and password) and provide identity
verification before being able to apply for a HPID.
• Identity verification proves that the individual
referenced in the account is the same person
creating the account.
• Additional information collected includes the
following Personally Identifiable Information (PII)
for purposes of the ID Proofing Process: Social
Security Number, Date of Birth, Home Address
and Primary Phone Number.
Obtaining a HPID

• The ACA requires that health plans obtain two independent
certifications by December 31, 2015 from an outside third-
party vendor called the Committee on Operating Rules for
Information Exchange (CORE) to demonstrate the plan
complies with the standard transaction rules by performing a
series of internal and external tests.
• The first certification will focus on eligibility, claim status and
electronic fund transfers while the second certification will
examine claims and encounter information, enrollment and
disenrollment procedures, premium payments, claims
attachments and referrals/authorizations.
• Insurance carriers will most likely need to secure these
certifications however; it is still unclear whether the third party
administrator or the plan sponsor will be responsible to obtain
the independent HIPAA certifications for self-funded plans.
Compliance Certification

• The ACA imposes a penalty on noncompliant
plans of $1 per covered life per day until
certification is complete with a maximum
penalty of $20 per covered life.
• The ACA also imposes a penalty of up to
$40 per covered life if the plan knowingly
provides inaccurate or incomplete
information.
Penalties

Rules for Enrolling
in Marketplace

• Marketplaces are required by health
care reform to have an initial open
enrollment period, an annual open
enrollment period, and certain special
enrollment periods.
Initial, Annual, and Special
Enrollment Periods Required
for Marketplaces

• Annual Enrollment Period for Marketplaces
 The annual enrollment period for 2015 and subsequent
years will begin October 15 and extend through
December 7 of the preceding calendar year.
 Starting in 2014, the Exchange must provide advance
written notice to each enrollee about annual open
enrollment no earlier than September 1, and no later than
September 30.
for Marketplaces

• Special Enrollment Marketplaces for Marketplaces
• Health care reform requires Marketplace to offer special enrollment periods.
• Under final Marketplace regulations, the Marketplaces must allow qualified
individuals and enrollees to enroll in a QHP or change from one to another as a
result of the following triggering events:
 A qualified individual or dependent loses minimum essential coverage;
 A qualified individual gains a dependent or becomes a dependent through marriage, birth,
adoption, or placement for adoption;
 An individual, who was not previously a citizen, national, or lawfully present individual gains
such status;
 A qualified individual’s enrollment or non-enrollment in a QHP is unintentional, inadvertent,
or erroneous and is the result of the error, misrepresentation, or inaction of the Marketplace
or HHS;
for Marketplaces

• An enrollee adequately demonstrates to the Marketplace that the QHP in which he or she is
enrolled substantially violated a material provision of its contract in relation to the enrollee;
• An individual is determined newly eligible or newly ineligible for advance payments of the
premium tax credit or has a change in eligibility for cost-sharing reductions, regardless of
whether such individual is already enrolled in a QHP. (The Marketplace must permit individuals
whose existing coverage through an eligible employer-sponsored plan will no longer be
affordable or provide minimum value for his or her employer’s upcoming plan year to access this
special enrollment period prior to the end of his or her coverage through such eligible employer-
sponsored plan);
• A qualified individual or enrollee gains access to new QHPs as a result of a permanent move;
• An Indian may enroll in a QHP or change from one to another one time per month; and
• A qualified individual or enrollee demonstrates to the Marketplace that the individual meets
other exceptional circumstances (as defined by the Marketplace).
for Marketplaces

• The special enrollment period generally is 60 days
from the date of the triggering event.
• Coverage must be effective as of the first day of the
following month for elections made by the 15th of
the preceding month and on the first day of the
second following month for elections made
between the 16th and the last day of a month (but
coverage must be effective on the date of birth,
adoption, or placement for adoption, when that is
the special enrollment triggering event).
for Marketplaces

• An employee may be required to continue to pay for his or
her employer plan, even if the employee has chosen to
purchase an individual health plan through the Marketplace.
• Although an employee may be eligible under the ACA’s
enrollment rules to apply for Marketplace coverage, the
employee may be limited by his or her employer’s health
insurance/section 125 cafeteria plan rules if the employee
is covered by an employer’s group health plan at the time
the employee applies for public Marketplace coverage.
• This will typically be the case for employees enrolled in
group coverage that does not align with a calendar year
(otherwise the employer’s open enrollment period and the
Marketplace Open Enrollment period may be in synch,
potentially mitigating this issue).
Participation in Cafeteria
plan

• Employer-sponsored group health insurance elected pre-tax through a
section 125 cafeteria plan cannot be changed mid-cafeteria plan year
unless the employee experiences a change in family status or other
event that permits the employee to make that mid-year election change
under the section 125 cafeteria plan rules (26 CFR s. 1.125-4).
• Some changes in family status rules correspond with Marketplace rules
for enrollment in public Marketplace coverage.
• Although the loss of group health coverage is a triggering event that can
allow an individual to enroll in public Marketplace coverage at any point
during the year, the availability of coverage through a Marketplace does
not constitute grounds under Section 125 rules for an employee to dis-
enroll either during or outside of a Marketplace Open Enrollment period.
• Neither is simply wishing to dis-enroll from an employer’s health
insurance coverage to enroll in public Marketplace coverage outside of
the employer plan’s open enrollment period.
Participation in Cafeteria
Plan

• Outside Open Enrollment
 Outside Open Enrollment, an individual’s choices and savings will
depend on whether his or her COBRA coverage is running out or he or
she is ending it early.
 If the individual’s COBRA coverage is ending outside Open Enrollment,
he or she will qualify for a special enrollment period.
 This means the individual can enroll in a private health plan through the
Marketplace.
 An individual may qualify for tax credits that can lower his or her
monthly premiums and for lower out-of-pocket costs.
 If an individual is ending your COBRA coverage early outside Open
Enrollment, he or she will not be able to enroll in a Marketplace plan at
all, with or without lower costs.
Participation in COBRA

• During Open Enrollment
 During the Open Enrollment period an individual can drop your
COBRA coverage and get a plan through the Marketplace instead.
 This is true even if the individual’s COBRA coverage hasn’t run out.
 When COBRA coverage ends and an individual applies for a
Marketplace plan during Open Enrollment, he or she may qualify for
tax credits that can lower his or her monthly premiums and for lower
out-of-pocket costs.

• A former employee who may enroll in COBRA or
continuation coverage under state law is considered eligible
for minimum essential coverage only for months that the
individual is enrolled in the coverage.
• A former employees on COBRA are only disqualified from
eligibility for premium tax credits for months in which they
actually enroll in employer-sponsored coverage.
• Family members of former employees would be accorded
the same treatment.

Contraceptive
Coverage after
Hobby Lobby

• In a 5-4 decision, the U.S. Supreme Court has
held in favor of three for-profit employers that
challenged health care reform’s preventive
services mandate as it relates to coverage of
women's contraceptive services—the businesses’
owners asserted religious objections to providing
certain types of contraceptives.
• The mandate generally requires non-
grandfathered, nonexcepted group health plans to
provide coverage for all FDA-approved
contraceptives without cost-sharing when services
are provided in-network.
Overview

• But qualifying religious employers are exempt, and
accommodations are available to certain nonexempt,
nonprofit organizations with religious objections.
• The Court held that the requirement to provide
contraceptive coverage, as applied to “closely held”
for-profit corporations, violates the federal Religious
Freedom Restoration Act (RFRA) when providing the
coverage would be contrary to the owners’ religious
beliefs.
• The RFRA provides that the government cannot
substantially burden a person's exercise of religion
without a compelling governmental interest that cannot
be satisfied by any less restrictive means.
Overview

• The Court first concluded that closely held corporations, like
the family-owned businesses at issue, were “persons” within
the meaning of the RFRA and could bring a lawsuit under its
provisions.
• Turning to the RFRA’s provisions, the Court held that the
contraceptive coverage requirement substantially burdened
the exercise of religion, noting the owners’ sincere religious
beliefs regarding the contraceptives at issue and the
substantial fines payable for noncompliance.
• And while the Court assumed, for this analysis, that there was
a compelling government interest in ensuring cost-free access
to the contraceptives, the government had not shown that it
lacked other, less restrictive ways to achieve this goal.
Overview

• The Court suggested that for-profit employers with
religious objections could be provided with
accommodations similar to those available to nonprofit
employers.
• Or the government could assume the cost of providing
the contraceptives at issue to women who would
otherwise not receive them due to their employers’
religious objections.
• But the Court cautioned that its holding was “very
specific,” involved only the contraceptive coverage
requirement, and did not allow employers to opt out of
any law for religious reasons or require religious
beliefs to be accommodated regardless of the impact.
Overview

• Challenges could include objections to coverage
for other forms of birth control, blood
transfusions, prescription antidepressants and
other mental health therapies, participation in
trial studies that rely on the use of embryonic
stem cells, vaccinations, or the implantation of
replacement heart valves derived from animals,
all of which are or could be objectionable to
certain religious groups.
• The potential challenges to ACA’s coverage
requirements based on religious grounds are as
varied as individual religious convictions.
Impact

• The majority opinion did not completely foreclose the
possibility that corporations that are not closely held will
attempt to also avail themselves of RFRA’s protections.
• As a result it is conceivable that corporations that are not
closely held—perhaps even publicly traded corporations—
may try to make use of the same exemption, or seek new
exemptions, based on the religious beliefs of individuals
holding controlling interests in the companies’ stock.
• By the time the Court issued its decision in Hobby Lobby,
there were nearly 50 pending federal lawsuits brought by for-
profit employers raising religious objections to various aspects
of ACA’s contraceptive coverage mandate—this figure is sure
to increase with other religious challenges to ACA in the wake
of Hobby Lobby.
Impact

• For plans subject to the Employee Retirement
Income Security Act (ERISA), ERISA requires
disclosure of information relevant to coverage of
preventive services, including contraceptive
coverage.
• Specifically, the Department of Labor’s longstanding
regulations provide that, the summary plan
description (SPD) shall include a description of the
extent to which preventive services (which includes
contraceptive services) are covered under the plan.
• if an ERISA plan excludes all or a subset of
contraceptive services from coverage under its
group health plan, the plan’s SPD must describe the
extent of the limitation or exclusion of coverage.
Disclosure Requirements

• For plans that reduce or eliminate coverage of
contraceptive services after having provided such
coverage, expedited disclosure requirements for
material reductions in covered services or benefits
apply.
• It require disclosure not later than 60 days after the
date of adoption of a modification or change to the
plan that is a material reduction in covered services
or benefits.
• Other disclosure requirements may apply, for
example, under State insurance law applicable to
health insurance issuers.”
Disclosure Requirements

Other
Developments

• Two federal appeals courts ruled on a key provision of the
ACA – and reached opposite conclusions.
• At issue is the component of the ACA that allows individuals
who earn between 100% – 400% of the federal poverty level
(FPL), or $11,670 and $46,680 for an individual, to be eligible
to receive a subsidy to purchase insurance in a Health
Insurance Marketplace (www.HealthCare.gov).
• Specifically at issue is the actual language of the ACA
provision that says individuals living in states that have a
Marketplace “established by the State” are eligible to receive
subsidies if they meet the income eligibility criteria specified in
the ACA.
A Tale of Two Decisions:
Circuit Courts Divided on
ACA Tax Credits

• The D.C. Circuit ruled 2-1 that the Internal Revenue
Service (IRS) lacks the authority to allow subsidies to
be provided in federally-facilitated Marketplaces.
• Conversely, the Fourth Circuit – based in Richmond,
VA – ruled that the law’s language is ambiguous, and
that the IRS is free to allow the subsidies in all states,
including those with federally-facilitated Marketplaces.
• Because there is uncertainty about the provision’s
application, the question may end up in the Supreme
Court.
ACA Tax Credits

• The Obama administration has indicated that it will
appeal the D.C. Circuit’s ruling.
• The Justice Department will ask the entire D.C. Circuit
appeals court panel to review the decision (called an en
banc hearing).
• That panel is dominated by judges appointed by
Democrats, 7-4.
• The court’s rules indicate that the ruling will not become
effective for 45 days to give the government time to ask
for an en banc hearing, or 7 days after the en banc
hearing has been denied.
ACA Tax Credits

• DOL released updated model COBRA
notices in May
• Both General Notice (sometimes called
the COBRA Rights Notice) and Election
Notice models
• Located at: –
http://www.dol.gov/ebsa/cobra.html
COBRA Notices Updated

• Revised COBRA General Notice:
 Emphasizes ACA Marketplace, Medicaid, and
possible spouse group health coverage (and
possible lower cost)
 Simplifies multiple qualifying events
 Contains a fair amount of wordsmithing
(around 150 changes in total—many minor)

• Revised COBRA Election Notice:
 Emphasizes ACA Marketplace, Medicaid, and
possible spouse group health coverage (and
possible lower cost)
• “Cost” referenced 14 times!
 Notes end of preexisting condition exclusions
 Simplifies multiple qualifying events
 Warns of subsequent restrictions on switching
to other coverage

• Revised COBRA Election Notice:
 Detailed Exchange discussion
• Enrollment rules and deadlines
• Exchange contact information
• Switching coverage
• Special enrollment windows
 Factors to consider:
• Premiums
• Networks
• Drug formularies

• Section 213 of "Protecting Access to Medicare Act of 2014" repeals the
annual deductible limit requirement for small employer insured health plans
that was to be effective for plan years beginning on or after Jan. 1, 2014.
• The repeal of the Affordable Care Act's (ACA) deductible limit is
retroactively effective to the date of the ACA's enactment in March 2010.
• President Obama signed the Protecting Access to Medicare Act of 2014 into
law on April 1, 2014.
• Section 1302(c)(2)(A) of the ACA provided that deductible limits for 2014
could not exceed $2,000 for a plan covering a single individual, or $4,000
for any other plan.
• The proposed deductible limits for 2015 would be $2,150 for self-only
coverage and $4,300 for other than self-only coverage.
New Law Repeals Deduction
Limits for Small
Employer Insured Health
Plans

• The overall cost-sharing limits for plan years beginning in
2014 for non-grandfathered plans are the same as the
maximum out-of-pocket expense limits for self-only and family
coverage for HSA-compatible high-deductible health plans
(HDHPs) for taxable years beginning in 2014.
• For 2014, these limits are $6,350 for self-only coverage and
$12,700 for family coverage.
• The limits for 2015 are $6,600 for self-only coverage and
$13,200 for other than self-only coverage.
• For HSA-compatible HDHP for 2015, the limits are $6,450 for
self-only coverage and $12,900 for family coverage.
Cost -Sharing Limits update
for 2015

• CMS indicated that an on-line process will be available at www.pay.gov to offer a
“one-stop” resource for registration, submission of headcount and payment to CMS
by November 15.
• Either the self-insured plan sponsor or the plan’s TPA can complete the reinsurance
contribution process, including payment, on behalf of the self-funded plan.
• Whichever entity does so will be required to complete these steps:
 Register on pay.gov, so payment can be made when the time comes.
 Enter the plan’s enrollment data in a yet unveiled on-line form called the “ACA
Transitional Reinsurance Program Annual Enrollment and Contributions
Submission Form.”
 Prior to the submission of the form:
• Attach “supporting documentation.”
• Attest to the accuracy of the information.
• Schedule payment for early 2015.
Reinsurance Fees

• Larry Grudzien, Attorney at Law
 Phone: 708-717-9638
 Email: larry@larrygrudzien.com
 Website: www.larrygrudzien.com
Contact Information

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