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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
CMS Publishes Interim Final Rule on Pre-Existing Condition Insurance Plan Program
On May 17, 2013, the Department of Health and Human Services (HHS) and the CMS released an interim final rule on the Pre-Existing Condition Insurance Plan (PCIP), as established under the Affordable Care Act. The interim final rule establishes the payment rates for covered services furnished to individuals enrolled in the PCIP program administered by HHS beginning with covered services furnished on June 15, 2013. The interim final rule also prohibits facilities and providers who, with respect to dates of service beginning on June 15, 2013, accept payment for most covered services furnished to an enrollee in the federally-administered PCIP from charging the enrollee an amount greater than the enrollee’s out-of-pocket cost for the covered service as calculated by the plan. Comments are due by July 22, 2013. -AONHewitt
CMS Issues Final Rule on MLR Requirements for Medicare Advantage and Medicare Prescription Drug Program; Updates Reporting Deadline to December
CMS Issues Final Rule on MLR Requirements for the Medicare Advantage and Medicare Prescription Drug Program; Updates Reporting Deadline to December
On May 17, 2013, the CMS released a final rule that implements new medical loss ratio (MLR) requirements for the Medicare Advantage Program and the Medicare Prescription Drug Benefit Program (Part D) established under the Affordable Care Act. The MLR represents the percentage of revenue used for patient care, rather than administrative expenses or profit. Under the final rule, Medicare Advantage and Part D sponsors are subject to financial and other penalties for failing to meet an MLR of at least 85%. The final rule primarily follows the proposed rule released in February 2013. However, CMS did agree with commenters on the proposed rule who recommended that the reporting deadline should be December, not July. In the final rule, CMS states that “We agree with the commenters that the best balance between beneficiary protection and calculating MLRs based on the most complete data is to require that, in general, MLR reporting for a contract year will occur in the December following the contract year, on a date and in a manner specified by CMS.” The final rule becomes effective on July 22, 2013. --AON Hewitt
CMS Releases Frequently Asked Questions on Health Insurance Exchanges
On May 14, 2013, the Centers for Medicare and Medicaid Services (CMS) released frequently asked questions (FAQs) on health insurance Exchanges (marketplaces). The federal and state Exchanges are to become operational in 2014 and are intended to provide individuals and small businesses with the opportunity to purchase affordable, quality health insurance options, as part of the Patient Protection and Affordable Care Act (Affordable Care Act). The FAQs address:
- The oversight of premium stabilization programs, advance payments of the premium tax credit, and cost-sharing reductions;
- Issuers’ ongoing compliance with Exchange-specific standards and oversight;
- State-based Exchange reporting requirements;
- Privacy and security standards for state-based Exchanges and non-Exchange entities (e.g., Navigators, agents, brokers, etc.);
- Cost-sharing reductions and health savings accounts (HSAs);
- Eligibility and enrollment; and
- Issuer withdrawal from the small group or large group market. -- AON Hewitt
Your Pharmacy Immunization Program Makes Getting Your Flu Shot Easy and Convenient!
Your employees can get their flu and pneumonia shots fast and easy through their Pharmacy Immunization Program, included in your prescription drug benefit through our health plan.
The best part of getting a flu shot from your pharmacist is the convenience. Your employees can avoid having to schedule their shots at the doctor's office and instead go directly to a participating retail pharmacy that offers the shots. Many are open after hours or on the weekends with no appointment necessary. Your employees simply choose the location and pick a time that works best. Most are usually close by.
The coverage is the same as at the doctor's office. Your employees simply present their health plan ID card at the pharmacy and then receive the shot. No prescription is necessary. And in many cases, there may be no copay. Not all pharmacies offer flu shots, so the best way to find out is to visit a pharmacy and ask.
Not all plans include the option of receiving flu shots at a retail pharmacy, so your employees should call the Customer Service number on the back of their member ID card for details.
You'll find more details in this flier that your employees may find helpful. Or, contact your Pharmacy account manager for more details about the Pharmacy Immunization Program.
Finding the right one for your company can be a daunting task. Here's a great way to figure out which one will work for you:
- Provider Network - One should first determine that their dental provider accepts the dental plan they are looking to purchase. Dental carriers have multiple dental plans and providers may pick and choose which ones they will accept. It is a common mistake to assume that a dental provider accepts all plans from a particular carrier. Typically, dental providers choose plans that command a high reimbursement rate.
- Plan Waiting Period - Some dental plans place restrictions on major services such as orthodontics, root canals, bridges, etc. Sometimes this waiting period can last from no waiting period to up to 12 months before major services will be rendered.
- Rollover benefits - As an enticement for members to seek preventative care, some dental plans roll over additional preventative care benefits to a member as an incentive. For example, if a member has a $ 1,500 dental benefit and the member uses at least $750 for preventative care, the carrier will roll over the remaining $750 of the unused benefit to the following calendar year. Ultimately, this raises the maximum benefit level to $2,250 rather than $1,500.
The federal health care reform law changed the way health plans and issuers approach rescissions in both the group and individual markets. Group health plans are affected whether they are insured or self-insured.
It's important to understand what constitutes a "rescission" for federal health care reform, as opposed to another type of coverage termination. A rescission is broadly defined as a retroactive termination of a member's coverage.
However, there are some important exceptions from this broad definition. For example, termination of coverage because of nonpayment of premium or contribution (either by the group or the member) is not a rescission. It is not considered a "rescission" when the member's coverage is retroactively canceled to the last paid-to date if the member pays no premiums or contribution for periods of time after termination of employment or eligibility. The member's coverage can be retroactively canceled to the last paid-to date.
For information on the restrictions on rescissions and clarification on which coverage terminations qualify as rescissions, refer to the Affordable Care Act Implementation FAQs - Part 2.
Are you looking for a quick and easy way to see whether they're eligible for the new health insurance tax credit?*
Look no further!
As you know the new health reform law is now allowing an unprecedented tax credit of up to 35% on health coverage for qualifying small groups.
And it rises to 50% in 2014!
Blue Shield just launched a new website for you that features a tax estimator powered by H&R Block.** Use this new tool to help estimate how tax credits could mean big savings for you.
Visit bscataxcredit.com to calculate your potential savings today!
Small businesses may be eligible this year for a tax credit up to 35 percent of the cost of providing health insurance for their employees."
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