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Blue Shield of California will issue a one-time credit to approximately 31,500 members who are enrolled in grandfathered Individual and Family Plans.
The California Department of Insurance completed its review of the 2015 rates for the grandfathered individual and family plans. As a result of the review, Blue Shield will issue a one-time 26.6 percent credit to members monthly premium on their May bill. A letter will be sent to members prior to the arrival of their May bill.
The amount due back will appear as a credit in the summary section of the bill arrive which will arrive around mid-April. There is no action required for members to receive the credit.
Covered California has launched a special enrollment period for consumers who say they were not aware of the tax penalty for remaining uninsured.
Under the Affordable Care Act's individual mandate, U.S. residents who did not have health coverage in 2014 must pay $95 or 1% of their incomes, whichever is higher, as they file their 2014 taxes. The penalties will increase to $325 or 2% of individuals' incomes, whichever is higher, for those who do not have insurance in 2015
Eligible consumers who wish to sign up during the period must indicate on their applications that they were unaware of the tax penalty for foregoing health insurance.
Up to 600,000 Californians could face such penalties. The extension will not exempt individuals from 2014 penalties, but it can help them avoid larger penalties that begin in 2015.
On February 18, 2015, the IRS issued Notice 2015-17, which provides transition relief from the assessment of excise tax under Section 4980D for small employers (in particular, employers that are not applicable large employers) that reimburse or pay a premium for an individual health insurance policy for an employee. Notice 2015-17 also addresses the treatment for federal tax and market reform purposes of arrangements reimbursing premiums of 2%-shareholder employees of S corporations. Finally, Notice 2015-17 addresses application of the market reforms to certain employer arrangements to fund Medicare premium payments or to provide a TRICARE-related health reimbursement arrangement. -- AON
On February 20, 2015, the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) released final regulations on the notice of benefit and payment parameters for 2016, as required by the Affordable Care Act. The final regulations establish payment parameters and provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost-sharing parameters and cost-sharing reductions; and user fees for the federally-facilitated Exchanges. The regulations also finalize additional standards for the individual market annual open enrollment period for the 2016 benefit year, essential health benefits, qualified health plans, network adequacy, quality improvement strategies, the Small Business Health Options Program, guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program, the medical loss ratio program, and other related topics. -- AON
- Plans without hospitalization benefits will not meet minimum value.
- Employers that relied on the HHS minimum value calculator AND have contracts that were already executed prior to November 3, 2014, will not be penalized. However, their plan will need to be changed at the end of contract.
- Employees who have an offer of coverage that is minimum value but does not include hospitalization benefits may still be able to access tax credits.
- Employers who have contracted for these plans must amend any communications state that an employee cannot acess tax subsidies if enrolled in one of these plans.
- See IRS Notice 2014-69
In order to buy or change health coverage outside the annual open enrollment period, your clients must have a qualifying life event. Most special enrollment periods last 60 days from the date of the qualifying life event.
Qualifying life events that create a special enrollment period include:
- Getting married
- Gaining a dependent or becoming a dependent through marriage, birth, adoption or placement for adoption or placement for foster care
- Permanently moving to a new area that has different health plan options
- Losing other healthcare coverage that is considered minimum essential coverage (Note: voluntarily quitting other health coverage or being terminated for not paying premiums is not considered a qualifying event)
- A change in income that would affect an enrollee’s eligibility for financial assistance
- Becoming a U.S. citizen
What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)?
Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventative care without cost sharing. Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code.
Where can I get more infomation?
On September 13, 2013, the IRS issued Notice 2013-54, which explains how the Affordable Care Act's market reforms apply to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy.
DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03, and HHS will shortly issue guidance to reflect that it concurs with Notice 2013-54. On Jan.24, 2013, DOL and HHS issued FAQs that addressed the application of the Affordable CAre Act to HRAs.
IRS Clarifies Rule on Individual or Exchange Coverage for Employees
On May 16, 2014, the Internal Revenue Service (IRS) issued an FAQ response to clarify whether employers can provide added compensation to employees, so they may purchase individual health coverage.
The IRS FAQ answer says it is illegal for an employer that does not establish health coverage for employees to simply pay for individual coverage through a qualified health plan or a state marketplace (or the federal marketplace). It is also illegal for an employer to provide added cash compensation to an employee to pay for individual coverage.
An employer that takes part in such an arrangement will be subject to an excise tax of $100 per day or $36,500 per year per employee.
You can link to the full IRS FAQ here.
Please be sure to share this information with your clients if they are considering a move to individual coverage rather than renewing or purchasing group coverage.
Please note: This notice is about Pre-Tax dollars. If employers want to help employees pay their individual policy premiums, it generally must be on an AFTER-TAX basis.
Minimum Loss Ratios may be on the horizon for dental insurers in California
Did you know that there is a bill currently proposed in California (AB 1962) that would require a minimum loss ratio (MLR) for dental insurance? AB 1962 proposes to extend the Affordable Care Act (ACA) MLR requirements onto dental health care service contracts and dental health insurance policies in California. Plans offering coverage in the large group market would be subject to a MLR of 85%, while the MLR for plans in the small group or individual market would be 80%.
The bill was passed out of the Assembly Health Committee on April 8, and was sent on to the Assembly Appropriations Committee. The impact of the currently proposed bill on dental plans and consumers would be significant. As presently written, AB 1962 does not address how the MLR would be calculated. Regardless, passage of AB 1962 could force carriers to make changes to dental plan designs, pricing, and administrative expenses.
The National Association of Dental Plans (NADP) is working in tandem with the California Association of Dental Plans (CADP) and other interested parties to attain a better resolution for plans and consumers than is currently presented in AB 1962. In alerting you in regard to AB 1962, we are urging you to contact your elected representatives and tell them to oppose the bill. - Assurant Employee Benefits.
You can use the link below to find your California representative:
—This is a draft proposal of what the California Health Agents’ and Brokers’ Guild might encompass—
The California Health Agent’s and Brokers’ Guild, a non-profit organization, represents the needs of the insurance broker through advocacy, information and service.
We are passionate about our mission to improve the lives of our clients when transacting in the business of insurance. It is our belief that agents/brokers have an incredibly important role in serving the public at large through our collective initiative and collaborative teamwork.
Please be aware that there is backlog at the county offices in processing Medi-Cal applications. If you need to find out the status of your enrollment, please click on the link below and contact your local office for information.
The Obama Administration announced yesterday that the Play or Pay mandate will be delayed, for employers with 50-100 employees, until 2016. Employers will 100 or more employees will still be subject to the mandate for calendar year 2015.
The administration laid out a three-tier approach:
1. Large employers with 100 or more employees, 70% of employees must be offered coverage in 2015, and in later years at least 95% of employees must be offered coverage. Employers that do not meet these standards will be subject to tax penalties.
2. Employers with 50 to 99 employees will have an extra year, until 2016, to provide coverage or pay tax penalties.
3. Nothing has changed in connection with small businesses with fewer than 50 employees. These companies will not be required to provide coverage.
What is it?
Beginning in Janary 1, 2014, the Affordable Care Act (ACA) requires a new rating structure for health insurance carriers issuing coverage to small businessess to rate those health plans at the member's age rather than the subscriber's or employee's age.
The Obama Administration announced on July 2, 2013 that the employer mandate under the Patient Protection and Affordable Care Act (Affordable Care Act) will be delayed until 2015, thus giving employers an extra year to comply with the law’s complicated hours-tracking and health insurance reporting rules.
Under the Affordable Care Act, an employer with 50 or more full-time equivalent employees is liable for monetary penalties if the employer does not offer affordable, minimum value health care coverage to a full-time employee and that employee obtains subsidized health care coverage from a health insurance exchange. Under yesterday’s announcement, those penalties, along with the insurance reporting requirements imposed on employers under the Affordable Care Act, will not be enforced against employers until 2015.
The delay means that employers will have an additional year to offer health insurance coverage to their full-time employees before the Internal Revenue Service (IRS) will assess penalties, known as the employer shared responsibility payment. Employers also will have an additional year to comply with the information reporting provisions required under the Affordable Care Act. These provisions require employers to provide information to the IRS regarding the health insurance coverage offered to their full-time employees. That information will, in part, determine whether those employees are entitled to subsidized health insurance and whether employers are liable for an employer shared responsibility payment. Proposed rules on these reporting requirements are expected to be published later this summer.
The announcement does not delay the effective date for other provisions of the Affordable Care Act, such as the requirement that individuals purchase health insurance or pay a penalty.
Official guidance on this transition relief will be published within the next week, according to the Treasury. - Aon Hewitt
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