Impact of Health Reform on HRAs, Cafeteria Plans & Waiting Period Rules

Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC
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?
•Limit for 2015 is $2,550.
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 Non-calendar 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.

•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:
ƒ Had 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.

•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.

•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.
•May use 12 month measurement period in 2015 for 2016.
Measurement 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

•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

•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

•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

•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 of $5 million or less will have a one-year delay to comply with obtaining the HPID and certifications.
Introduction

•Employers with health plans 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

•Who Must Obtain an HPID?
CMS has issued FAQ guidance and a quick reference guide explaining the requirement—and the process—for health plans to obtain health plan identifiers (HPIDs).
Fully Insured Health Plans. Based on their control over fully insured health plans, insurers are treated as offering CHPs, and the discrete employer plans are SHPs.
Thus, the insurer is required to obtain an HPID for fully insured plans, and employers may, but are not required to, obtain HPIDs for their SHPs.
New ACA Requirement: Health Plan Identifier (HPID)

Self-Insured Health Plans.
•A self-insured health plan must obtain an HPID if it:
meets the definition of health plan because it provides or pays the cost of medical care; and
is a CHP .
•The FAQs note that a self-insured health plan that is a CHP must obtain an HPID even if it does not conduct standard transactions (e.g., if it uses a TPA to conduct standard transactions on its behalf).
•A self-insured health plan may authorize a TPA or other person to obtain an HPID on the health plan’s behalf, but the HPID still belongs to the health plan
•Most self-insured plans providing medical care are controlled by the plan sponsor and will fit within the literal definition of a CHP; employers with multiple self-insured plans may want to consider whether one could serve as a CHP for the others.

Health FSAs, HSAs, and HRAs.
•As “individual accounts directed by the consumer,” health FSAs and HSAs are not required to obtain HPIDs .
•HRAs are not required to obtain HPIDs if they are limited to reimbursing deductibles and out-of-pocket costs.
•The scope of the HRA exemption is less clear— It is assumed that the reference to out-of-pocket costs includes cost-sharing amounts (such as deductibles, co-insurance, and co-pays) for covered services under a health plan.
•An HRA that reimburses noncovered services (such as acupuncture or Lasik) apparently would not qualify for this exemption.

Small Health Plans.
•The FAQs include a reminder that CHPs must obtain HPIDs by November 5, 2014, but small CHPs (those reporting annual receipts of $5 million or less to the IRS) have an additional year to comply.
•Since most ERISA health plans do not report “annual receipts” to the IRS, the FAQs provide alternative measures:
• Fully insured health plans should use the total premiums paid during the plan’s last full fiscal year; and self-insured plans, both funded and unfunded, should use the total amount paid for health care claims by the employer, plan sponsor, or benefit fund, on behalf of the plan during the plan’s last full fiscal year.
•Plans providing benefits through a mix of purchased insurance and self- insurance should combine these measures to determine their total annual receipts.

For example, if an employer has one self-funded medical plan for active employees, a separate self-funded plan for early retirees, and a separate self-funded dental plan, each plan would have to obtain a separate HPID, unless one plan is designated as the CHP and it applies for one HPID on behalf of itself and the other self-funded plans.
Plan sponsors must go on the CMS portal themselves and obtain an HPID.
Third-party administrators (TPAs) cannot obtain an HPID for self-funded health plans.

•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_SjzQ0NzM1NTExNTPTj9CPykssy0xPLMnMz0vMAfGjzOLdDSDAyN_QzMjA08vF3MMryNHYwB- kIRKowAAHcDQgpN_PIz83VT83KscCAEx_1KM!/dl4/d5/L2dBISEvZ0FBIS9nQSEh/) on the upper left-hand side of the website page to access the system to register and obtain the HPID.
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

•Effective October 31, 2014, the Centers for Medicare & Medicaid Services announceds a delay, until further notice, in enforcement of 45 CFR 162, Subpart E, the regulations pertaining to health plan enumeration and use of the Health Plan Identifier (HPID) in HIPAA transactions adopted in the HPID final rule.
Recent Developments

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 open enrollment period for 2015 is set to begin November 15, 2014 and extend through February 15, 2015. Coverage will be effective January 1, 2015 only for applications received by December 15, 2014.
Starting in 2014, the Marketplace must provide advance written notice to each enrollee about annual open enrollment no earlier than September 1, and no later than September 30.

•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;

• 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).

•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).

•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.
•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.

•Notice 2014‐55 addresses cafeteria plan elections in two specific situations related to the availability of coverage through a Health Insurance Exchange (or Marketplace).
•An employee may want to revoke an election under his or her employer’s plan in order to purchase coverage through an Exchange if:
The employee’s hours of service are reduced so that the employee is expected to average less than 30 hours of service per week, but the reduction does not affect eligibility for coverage under the employer’s group health plan; or
The employee would like to cease coverage under the employer’s group health plan and purchase coverage through an Exchange, without having a period of either duplicate coverage or no coverage.
•In each of these situations, Notice 2014‐55 permits a cafeteria plan to allow an employee to prospectively revoke his or her election for coverage under the employer’s group health plan during a period of coverage.

•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

•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.

•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.

•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 Marketplace discussion
•Enrollment rules and deadlines
•Marketplace 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 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

Contact Information
Larry Grudzien
•Phone: 708-717-9638
•Email: larry@larrygrudzien.com
•Site: www.larrygrudzien.com

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