The number of employers that plan to continue providing their employees with health insurance has increased, according to a new survey conducted by the International Foundation of Employee Benefit Plans (IFEBP). The survey – 2013 Employer-Sponsored Health Care: ACA’s Impact – addresses how employers are responding to changes made by the Affordable Care Act (ACA). Most (94%) of the 966 benefits and human resource professionals, general and financial managers, and other company officials who responded to the March 2013 survey claimed that they “definitely” or “very likely” will continue providing health insurance coverage when many of ACA’s provisions take effect in 2014, up from 86% who responded similarly in 2012. A large majority (69%) responded that they would definitely continue providing coverage, up from the 46% who made the same claim in 2012. According to the survey, 91% of responding employers already offer medical benefits to employees who work more than 30 hours per week.
The DOL’s Employee Benefits Security Administration (EBSA) has issued new guidance on the Affordable Care Act (ACA) requirement that employers provide employees with a notice of their health insurance coverage options available through the future health insurance exchanges (“Exchange” or “Marketplace”). This notice requirement is established through section 18B of the Fair Labor Standards Act (FLSA), added by the ACA. Technical Release 2013-02 – Guidance on the notice to employees of coverage options under FLSA §18B – provides temporary guidance regarding the new notice requirements, and notes the availability of a Model Notice for employers who offer a health plan to some or all employees; a Model Notice for employers who do not offer a health plan; and a Model Notice for employers who do not offer a health plan COBRA Model Election Notice.
As discussed in the guidance, all employers subject to the FLSA are required to provide the notice of health coverage options to each new employee at the time of hiring beginning October 1, 2013, and to all current employees by October 1, 2013. In 2014, a notice will be considered to have been provided at the date of hire so long as it is provided within 14 days of an employee’s start date. All employees must receive this notice, regardless of plan enrollment status (if applicable) or of part-time or full-time status. Separate notices to dependents or other non-employees who may become eligible for coverage are not required.
With respect to the form and content of the notice, the guidance explains:
Pursuant to the statute, the notice to inform employees of coverage options must include information regarding the existence of a new Marketplace as well as contact information and description of the services provided by a Marketplace. The notice must also inform the employee that the employee may be eligible for a premium tax credit under section 36B of the Code if the employee purchases a qualified health plan through the Marketplace; and a statement informing the employee that if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
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The Internal Revenue Service has released a proposed rule that provides some guidance on what constitutes minimum value (MV) of an employer-sponsored health plan under the Affordable Care Act (ACA) for purposes of eligibility for a premium tax credit. Under the ACA’s pay-or-play employer responsibility provisions, an employer with 50 or more employees will be subject to a penalty if any employee receives a premium tax credit to purchase health insurance through the future health insurance exchanges. Individuals are not, however, entitled to receive a premium tax credit if they are eligible to receive employer-provided coverage that is affordable and provides MV.
As outlined in final regulations issued in February, a plan will be deemed to provide MV if the percentage of the total allowed costs of benefits provided under the plan is no less than 60 percent. In order to determine whether a plan provides minimum value, an employer-sponsored plan may use the MV calculator provided by the HHS and the Internal Revenue Service, or avail itself of “an array of design-based safe-harbors published by HHS and the Internal Revenue Service in the form of checklists to determine whether the plan provides MV.”
The latest set of frequently asked questions (FAQs) regarding the Affordable Care Act’s (ACA) implementation responds to questions on health plan annual dollar limitations, provider nondiscrimination provisions, and transparency reporting, among other topics.
The ACA bans annual dollar limits on covered expenses under a health plan starting in 2014, and imposes restrictions on annual limits until then. Certain group health plans and health insurance issuers have been granted waivers from this annual limit prohibition. One of the FAQs clarifies that the wavier expiration date does not change if a plan or issuer that has been granted such a waiver changes its plan or policy year prior to the waiver’s expiration. By way of example, the FAQ explains:
The Department of Labor’s latest set of frequently asked questions addresses issues related to the Affordable Care Act’s (ACA) requirement that health insurance issuers and group health plans provide participants and enrollees with a summary of benefits and coverage (SBC) describing the health plan’s covered benefits, cost-sharing provisions, coverage limitations and exceptions, and other key features. Notably, the agency is extending for an additional year several safe harbors set forth in earlier sets of FAQs. The guidance lists the specific safe harbor provisions that will be extended, including those related to the circumstances in which an SBC may be provided electronically; penalties for failure to provide the SBC or uniform glossary; an issuer’s obligation to provide an SBC for benefits it does not insure; expatriate coverage; and the use of carve-out arrangements. The DOL is also extending until September 24, 2014 – provided certain conditions are met – the enforcement safe harbor applicable to insurance products that are no longer being offered for purchase.
The document notes it “supersedes any previous subregulatory guidance (including FAQs) stating that enforcement relief for the SBC and uniform glossary requirements is limited to the first year of applicability.”
In addition, the DOL has made available an updated SBC template and sample completed SBC to use for plan coverage beginning on or after January 1, 2014, and before January 1, 2015, which the DOL refers to as the “second year of applicability.” Although the updated templates include places to enter whether the plan or coverage provides minimal essential coverage (MEC) and minimum value (MV), the agencies charged with enforcing the SBC requirements will not require plans or issuers to use the new template for the second year of applicability so long as they provide a cover letter or disclosure statement with the SBC stating whether the plan provides MEC and MV. The new set of FAQs provides sample disclosure statements.
The first 13 sets of FAQs can be found here.
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In Thurber v. Aetna Life Ins. Co., the Second Circuit joined a majority of circuits in holding that an ERISA plan participant does not defeat the plan’s right to reimbursement under ERISA Section 502(a)(3) by spending or comingling funds from which the plan seeks reimbursement.
Section 502(a)(3) of ERISA provides for “appropriate equitable relief” to enforce ERISA plan terms requiring reimbursement, but courts have struggled to define the contours and requirements for such relief. Most cases grappling with this issue involve scenarios in which the plan pays disability benefits to a plan participant who later receives other disability benefits (such as SSDI) from a non-plan source, and the initial plan has provisions requiring reimbursement. In such cases, the plan participants have often spent the disability payments by the time they receive the third party payments. This situation can also arise when the plan pays medical benefits for injuries caused by a third party, and the individual later receives payment from that third party.
On Wednesday the U.S. Supreme Court heard arguments in United States v. Windsor, the case in which the Second Circuit Court of Appeals declared the Defense of Marriage Act (DOMA) unconstitutional. The issue under consideration is whether Section 3 of DOMA – which defines the term “marriage” for all purposes under federal law, including the provision of federal benefits, as “only a legal union between one man and one woman as husband and wife,” and “spouse” as “a person of the opposite sex who is a husband or a wife” – violates the Fifth Amendment’s guarantee of equal protection of the laws as applied to persons of the same sex who are legally married under the laws of their state. As previously discussed, should the Court ultimately affirm the Second Circuit’s position and nullify DOMA, employers will need to reevaluate their provision of benefits, as married same-sex couples could be entitled to a host of federal benefits and protections that currently exist for heterosexual married couples.
On Tuesday the Supreme Court heard oral arguments in Hollingsworth v. Perry, the case addressing whether California’s Proposition 8 can constitutionally outlaw same-sex marriages once the state has already authorized them. On Wednesday, the Court will hear arguments in United States v. Windsor to consider the constitutionality of the Federal Defense of Marriage Act (DOMA), which defines “marriage” as a legal union between a man and a woman. Depending on how the Court ultimately rules on these issues, married same-sex couples could be entitled to a host of federal benefits and protections, including the ability to file joint federal tax returns, receive spousal benefits through Social Security, obtain employer-sponsored medical benefits tax-free, and receive protection under the spousal provisions of ERISA relating to qualified retirement plans. The following summarizes the first day of arguments on this pivotal issue.
The justices spent a fair amount of time exploring whether the proponents of Proposition 8 have standing to defend the proposition (which outlawed same-sex marriage) when California’s officials choose not to defend it. The other major themes – if we can discern any from the wide-ranging questioning – are whether the Court should issue a broad decision that would apply to all states, just those with non-marriage equivalents for same-sex couples, just California, or whether the Court should simply let the political process take its course.
Various federal agencies have issued proposed regulations on the new Affordable Care Act (ACA) requirement that prohibits group health plans and health insurance issuers offering group health insurance coverage from imposing any waiting period that exceeds 90 days. A waiting period is defined as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. The new regulations implement this requirement, as well as amend existing requirements – such as preexisting condition limitations and other portability provisions added by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) – to conform them to other ACA provisions. Some key elements of the proposal are as follows: Continue Reading
Regulations to implement various provisions of the Affordable Care Act (ACA) continue to be issued at a rapid pace. On Friday, the U.S. Department of Health and Human Services (HHS) released a final rule expanding standards set forth in earlier rules and providing additional information on the permanent risk adjustment, transitional reinsurance and temporary risk corridors programs, advance payments of the premium tax credit, cost-sharing reductions, medical loss ratio, and the Small Business Health Options Program (SHOP). The agency also issued a proposed rule governing certain transitional provisions of SHOP, while the U.S. Office of Personnel Management (OPM) issued a proposed rule establishing the Multi-State Plan Program (MSPP) under ACA.