1. Is your Health Plan Ready to Disclose SBC’s (Summary of Benefits and Coverage)?
Summary of benefits and coverage are now required to be disclosed for open enrollment periods beginning on or after September 23, 2012. A four page summary of “GHP’s” (Group Health Plans) will be required to be disclosed within seven days after a plan applies for coverage with the insurer. Also “GHP’s” must provide an SBC to plan participants without charge as part of any written application. SBC’s are also requestable by participants at any time. Failure to comply with these disclosure requirements could result in a $1000 fine per violation.
2. When Employees are Considered Full Time Under PPACA?
A full time employee is employed on average 30 or more hours per week. Employers who employ 50 or more FTE’s (Full Time Equivalent) are subject to the shared responsibility penalties that take effect in 2014. These penalties are only imposed if an employer has a FTE who is certified to receive a premium tax credit or cost-sharing reduction due to the employers failure to provide affordable (not more than 9.5% of gross household income) coverage that meets minimum value requirements. And lastly, the 90 day maximum waiting period for coverage will only apply to FTE’s starting in 2014.
3. Is Employer Coverage “Affordable” and of “Minimum Value”?
The imposed tax penalties that will take affect in 2014 are for employers with over 50 employees that either don’t offer health coverage or that offer coverage that is not “affordable” or that does not provide “minimum value”. Coverage that costs more than 9.5% of his or her gross household income is not considered affordable. A plan of “minimum value must offer “minimum essential coverage” that will pay at least 60% of covered expenses.
4. Is Your Company Prepared for W-2 Reporting of Health Coverage?
W-2 forms for 2012 (to be issued in early 2013) must report the aggregate cost of applicable employer-sponsored group health plan coverage – this includes both employer and employee cost shares. Employers filing fewer than 250 W-2 forms for the preceding calendar year are currently exempt from this requirement. Ancillary benefits such as long-term care, HIPAA excepted benefits (i.e., certain dental and vision plans), disability and accident benefits, workers’ compensation, fixed indemnity insurance and coverage for a specific illness or disease are excluded from the value to be reported. The IRS has issued guidance allowing employers to exclude reporting of contributions to consumer-directed health plans such as HRAs and FSAs in most instances. The value of coverage under an Employee Assistance Program (“EAP”) may also be excluded if the coverage does not qualify as a COBRA benefit. The IRS has issued guidance (Notice 2012-9) approving three methods for calculating the value of coverage: 1) the COBRA applicable premium method (COBRA premium less the 2% administrative charge); 2) the premium charged method (for insured plans); and 3) the modified COBRA method (when an employer subsidizes the COBRA premium).
5. Will Your Health FSA be Ready for 2013 Changes?
Effective for plan years beginning in 2013 health FSA’s will only be allowed to reimburse up to $2500 in qualifying expenses per participating employee. Employers offering FSA’s have until December 31, 2014 to amend their plans to reflect this new limit. This change and the PPACA already effective prohibition on reimbursement for non prescribed OTC medications will steer more employers towards other consumer directed health plans such as HRA’s and HSA’s.