Health Reform — MichBusiness

Health Care Reform Questions – Enrolling in the Marketplace This Fall

June 27, 2014/in Expert Advice, Health Reform

By Larry Grudzien
Attorney-At-Law

Question: I enrolled in my employer’s group medical coverage at its open annual enrollment on July 1, 2014. In November 2014, I plan to drop this medical coverage and enroll in Health Insurance Marketplace at its next open enrollment for 2015. Can I drop my employer’s group medical coverage in November 2014 for coverage on the Health Insurance Marketplace for 2015.

Answer: No. You may not drop coverage in the middle of a plan or policy year unless you incur a qualifying event specified in in the employer’s cafeteria plan. Enrolling in the Health Insurance Marketplace is not considered a qualifying event for 2015.

IRS provided transitional relief in the proposed employer mandate regulations allowing employees in noncalendar year group medical plans to drop coverage and enroll in coverage in the Health Insurance Marketplace for January 2014, if the employer amended its cafeteria plan to allow it.

This transitional relief has not been extended to enrollments on the Health Insurance Marketplace for 2015 or any other future year.

Question: My employer is having its open annual enrollment in a few weeks for its health coverage effective on July 1, 2014. If I do not enroll in my employer’s health coverage effective July 1, 2014 and voluntarily drop it, can I then enroll in health coverage on the Health Insurance Marketplace because of a loss of coverage?

Answer: No. If you voluntarily drop your employer sponsored coverage or lose it because you did not pay the premium, you do not qualify for a special enrollment period for a loss of coverage. This means you will not be able to get covered through the Marketplace until the next open enrollment period in November 2014, with coverage starting January 1, 2015.

To be considered a loss of coverage for a special enrollment period to apply, you must lose health coverage because you quit your job, had a reduction of hours o are laid off. In other words, you lost eligibility for the employer health coverage.

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.

For More Information: If you have any comments or questions regarding any of above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

Medicaid Expansion Draws 300,000+

June 27, 2014/in Expert Advice, Health Reform

According to Department of Community Health officials, the Healthy Michigan Plan—the state’s expanded Medicaid Program—now has a total of 301,645 enrollees as of Wednesday this week. The program’s enrollment numbers have been released every Monday since the program began just 11 weeks ago, with Monday’s numbers being reported at more than 297,000 as officials noted the 300,000 enrollee milestone would be reached in a matter of days. With the milestone’s achievement, Governor Snyder said in a statement that the results shows the state is “moving in the right direction for the health of our residents and our state,” while Community Health Director James Haveman observed the number is a testament to the hard work of department officials and community partners with state officials “greatly encouraged by the strong demand we’ve seen” since the program began. Enrollment projections going into the expanded program forecast a first-year enrollment of some 320,000 with the program eventually providing assistance to some 477,000 state residents. However, if the current pace of enrollment is maintained, the first-year enrollment projections could be surpassed before the end of July. The expanded program allows individuals with an income of up to 133 percent of the federal poverty level to obtain health care coverage. The expansion was initially a requirement of the federal Patient Protection and Affordable Care Act for all the states, a mandate that the U.S. Supreme Court ruled was unconstitutional. When the program expansion became optional, the issue became one of the most intense political conflicts facing the Michigan Legislature in 2013.

Medicaid and CHIP Enrollment Data

June 27, 2014/in Expert Advice, Health Reform

On June 4, 2014, the Centers for Medicare and Medicaid Services (CMS) published a report on state Medicaid and Children’s Health Insurance Program (CHIP) enrollment data.

As of April 2014, approximately 65 million were enrolled in Medicaid and CHIP nationwide. This is a 1.1 million increase from March. Since the Marketplace open enrollment began, more than 6 million additional individuals have enrolled in Medicaid and CHIP.

Michigan’s Medicaid expansion went into effect on April 1, 2014. Over 287,000 individuals have enrolled in the program since then. The Department of Community Health originally projected at least 325,000 individuals would enroll by the end of 2014.

Blue Cross Blue Shield of Michigan and Blue Care Network of Michigan are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.

Final Regulations Released on 30-Day Orientation Period

June 24, 2014/in Business Knowledge, Expert Advice, Health Reform

By Larry Grudzien
Attorney-At-Law
June 21, 2014

On June 20, 2014, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (the Departments) released new final regulations on application of the 30-day orientation period under the 90-day waiting period limit. On February 20, 2014, the Departments had published proposed regulations to address orientation periods under the 90-day waiting period limitation of PHS Act section 2708 when the final regulations on the 90-day waiting period were published. The following summarizes the provisions of these final regulations. The final regulations contain several clarifications.

The Proposed Regulations
The proposed regulations had provided that one month would be the maximum allowed length of any reasonable and bona fide employment-based orientation period. The Departments stated that, during an orientation period, they envisioned that an employer and employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin. Under the proposed regulations, if a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

The Final Regulations
The final regulations continue to provide that one month is the maximum allowed length of an employment-based orientation period. For any period longer than one month that precedes a waiting period, the Departments refer back to the general rule, which provides that the 90-day period begins after an individual is otherwise eligible to enroll under the terms of a group health plan. While a plan may impose substantive eligibility criteria, such as requiring the worker to fit within an eligible job classification or to achieve job-related licensure requirements, it may not impose conditions that are mere subterfuges for the passage of time.

These final regulations provide that the one month period would be determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage. For example, if an employee’s start date in an otherwise eligible position is May 3, the last permitted day of the orientation period is June 2. Similarly, if an employee’s start date in an otherwise eligible position is October 1, the last permitted day of the orientation period is October 31.

If there is not a corresponding date in the next calendar month upon adding a calendar month, the last permitted day of the orientation period is the last day of the next calendar month. For example, if the employee’s start date is January 30, the last permitted day of the orientation period is February 28 (or February 29 in a leap year). Similarly, if the employee’s start date is August 31, the last permitted day of the orientation period is September 30.

The final regulations continue to provide that if a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition is not considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period does not exceed one month and the maximum 90-day waiting period begins on the first day after the orientation period.

But compliance with these final regulations is not determinative of compliance with Section 4980H of the Code (employer mandate), under which an applicable large 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.

For example, an applicable large employer that has a one-month orientation period may comply with both PHS Act section 2708 and Code section 4980H by offering coverage no later than the first day of the fourth full calendar month of employment. However, an applicable large employer plan may not be able to impose the full one-month orientation period and the full 90-day waiting period without potentially becoming subject to an assessable payment under Code section 4980H.

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 section 4980H.

Effective Date
These final regulations apply to group health plans and health insurance issuers for plan years beginning on or after January 1, 2015. Until these final rules are applicable, as stated in the preamble to the proposed rules, the Departments will consider compliance with the proposed regulations to constitute compliance with PHS Act section 2708.

A copy of the final regulations can be obtained by clicking on the link below:

http://www.ofr.gov/OFRUpload/OFRData/2014-14795_PI.pdf

For More Information: If you have any comments or questions regarding any of the above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

MichBusiness – Explore, Connect, Thrive!

June 16, 2014/in Agent Community, Expert Advice, Health Reform, Legislative Influence

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BCBSM allows extension for employers with 50-99 employees

June 10, 2014/in Expert Advice, Health Reform

Blue Cross Blue Shield of Michigan issued the following statement regarding the transition of group customers with 50 to 99 employees into ACA-compliant plans:

“Changes to ACA regulations announced in March gave states the option to delay, for employers of 50 to 99 employees, their transition into the small group ACA-compliant insurance plans until their plan renewal dates in 2017,” said John Dunn, vice president for Middle and Small Group Business at BCBSM.

“Blue Cross Blue Shield of Michigan will allow our group customers with 50 to 99 employees to delay their transition into the new small group market, thereby keeping their current health plan. These customers now have two options – they can continue with their existing group ACA-compliant plan or choose to transition into an ACA-compliant small group plan. Blue Cross will continue to work with our customers and their insurance agents over the next two years to evaluate their needs and determine the best course of action for their employees and business.”

The ACA defines a “small group employer” as having fewer than 51 full-time equivalents. On Jan. 1, 2016, the ACA regulations expand this definition to include all employers with fewer than 100 employees. This extension will be permitted for all employers with renewal dates through Oct. 1, 2016. After the extension period expires, all employers with 50 to 99 employees must offer small group ACA-compliant plans to align with the regulation, effective on their renewal date.

Please contact your health insurance agent for more details on this new update

Health Premiums – May 30, 2014

June 6, 2014/in Expert Advice, Health Reform

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.

In Notice 2013-54, the IRS states that because employer payment plans cannot integrate with individual insurance policies, they will violate the prohibition on annual dollar limits for essential health benefits (EHB) and the requirement to cover certain preventive services without cost-sharing.

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.

A copy of the IRS Q/As is provided below:

Q1. 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 preventive 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.

Q2. Where can I get more information?

On Sept. 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.

Larry Grudzien, Attorney-At-Law

If you have any comments or questions regarding any of above information, please do not hesitate to call me at (708) 717-9638 or e-mail me at larry@larrygrudzien.com

Administration Announces Proposal to Clarify Availability of Marketplace Coverage to Workers Eligible For COBRA

May 28, 2014/in Expert Advice, Health Reform

May 2, 2014

WASHINGTON – The Obama administration today announced updates to model notices informing workers of their eligibility to continue health-care coverage through the Consolidated Omnibus Budget Reconciliation Act. The updates make it clear to workers that if they are eligible for COBRA continuation coverage when leaving a job, they may choose to instead purchase coverage through the Health Insurance Marketplace.

“In many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the Marketplace,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “COBRA continues to play an important role in helping workers and families maintain coverage after a job loss, and it is important that workers know that in some cases there is a Marketplace option as well.”

Workers and their families who are eligible for employer-sponsored coverage generally must be informed of their right to COBRA continuation coverage at the start of employment. They must also be informed of their right to purchase COBRA coverage when separating from a job. The proposed changes to the model notices would offer information on more affordable options available through the Marketplace, where workers and families may be eligible for financial assistance that would not otherwise be available for COBRA continuation coverage. In most cases, workers and their families eligible for, but not enrolled in, COBRA continuation coverage would be able to enroll in Marketplace coverage outside of the normal open enrollment period.

“We are pleased that the Marketplace is providing affordable health insurance options to consumers,” said Centers for Medicare & Medicaid Services Administrator Marilyn Tavenner. “With over eight million enrollees, we know that the Marketplace is working and is providing consumers with additional choices and control over their health care.”

The Departments of Labor, Health and Human Services, and Treasury are also publishing frequently asked questions related to the proposed changes to model notices.

The FAQs are posted on the Department of Labor website at http://ww.dol.gov/ebsa/faqs/faq-aca19.htmland the HHS website at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.

In addition, HHS is publishing a clarifying bulletin regarding a special enrollment period in the Marketplace for individuals already enrolled in COBRA continuation coverage. The bulletin is posted on the HHS website at http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/SEP-and-hardship-FAQ-5-1-2014.pdf.

The updated model notices are posted on the Department of Labor website at http://www.dol.gov/ebsa/modelgeneralnotice.doc and http://www.dol.gov/ebsa/modelelectionnotice.doc.

A related notice of proposed rulemaking on the COBRA notice requirements will be published in the May 7 edition of the Federal Register.

The notice of proposed rulemaking can also be viewed at http://www.dol.gov/ebsa/pdf/cobranprm.pdf.

Blue Alert – Health Savings Account Limits to Increase in 2015

May 28, 2014/in Expert Advice, Health Reform

Health Savings Account limits to increase in 2015

The Internal Revenue Service has released 2015 minimums and maximums for HSAs and related high-deductible health plans.

The limits are adjusted annually based on cost-of-living calculations. The 2015 limits will go into effect Jan. 1, 2015. Here is a comparison of the 2014 and 2015 limits.

	2014	2015	Change
HSA Contribution Limit	Individual: $3,300 Family: $6,550	Individual: $3,350 Family: $6,650	Individual: +$50 Family: +$100
Minimum HDHP Deductible	Individual: $1,250 Family: $2,500	Individual: $1,300 Family: $2,600	Individual: +$50 Family: +$100
Maximum out-of-pocket amount (deductibles, copayments, not premiums)	Individual: $6,350 Family: $12,700	Individual: $6,450 Family: $12,900	Individual: +$100 Family: +$200
Catch-up Contribution (age 55 and older)	$1,000	$1,000	No Change

For More Information, visit: www.irs.gov/pub/irs-drop.rp-14-30.pdf

Questions? Contact your managing agent.

Understanding The Difference Between “Seasonal Workers” and “Seasonal Employees” Under PPACA

May 28, 2014/in Expert Advice, Health Reform

By: Kristi R. Gauthier
Clark Hill PLC

Employers who employ workers on a seasonal basis face unique challenges when trying to comply with the Patient Protection and Affordable Care Act (“PPACA”) employer-shared responsibility provisions. These challenges were exacerbated by the lack of clear guidance from the Agencies as to how these types of employees are defined and classified. Thankfully, the Agencies have provided some clarification in the final regulations issued earlier this year by making a distinction between “seasonal worker” and “seasonal employee” and providing definitions for each term.

Seasonal Worker
When an employer is determining whether it is an applicable large employer (“ALE”) and thus subject to the employer-shared responsibility provisions and penalties, the regulations provide that the employer must count seasonal workers. However, if the employer has more than 50 full-time employees and/or full-time equivalents for 120 days or less during the calendar year and it was the seasonal workers who pushed the employer over this 50 employee threshold, the employer is permitted to back out the seasonal workers from its calculation and will not be considered an ALE for the year at issue.

For these purposes, the final regulations coin the term “seasonal worker” and define it as “a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor” which includes, but is not limited to, the following:

• A position where labor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed during certain seasons or periods of the year which from its very nature, cannot be performed continuously or throughout the year; and

• Retail workers employed exclusively during holiday seasons.

The final regulations also provide that employers may continue to apply a reasonable, good faith interpretation of “seasonal worker.”

Seasonal Employee
When determining how to calculate hours of service in order to identify full-time employees for employer-shared responsibility purposes, ALEs may subject new hire “seasonal employees” to an initial measurement period, which can extend up to 12 months from the individual’s hire date. For these purposes, “seasonal employees” are defined in the final regulations as “an employee who is hired into a position for which the customary annual employment is six months or less.” The preamble to the final regulations further clarifies that “customary” means that by the nature of the position an employee in this position typically works for a period of six months or less, and that period should begin each calendar year in approximately the same part of the year, such as summer or winter. With that said, the final regulations do provide that in certain unusual circumstances, an employee can still be considered a seasonal employee even if the seasonal employment is extended in a particular year beyond its customary duration. The example provided is if ski instructors at a resort have a customary period of annual employment of six months, but are asked in a particular year to work an additional month due to an unusually long snow season, these employees could still be considered seasonal employees for these purposes.

Employers who employ workers on a seasonal basis should become familiar with these complex rules and work with their benefits consultants and legal counsel to ensure compliance in properly classifying employees for employer-shared responsibility purposes.

*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.

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