A Health Insurance Pick Six
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This has been a year of preparation for employers with respect to their health insurance benefits. Between numerous play changes by the Affordable Care Act (ACA) and an important decision by the Supreme Court, employers have had a busy time keeping up. Here’s a breakdown of some of the important issues employers are tackling on their way to an ACA compliance touchdown.
1. Defense of Marriage Act Decision – the Supreme Court earlier this year struck down Section 3 of DOMA, clearing the way for same-sex spouses to be treated the same as opposite-sex spouses, as long as they were legally married. The IRS was quick to follow up that decision by declaring the tax treatment of employee benefits would be the same for all spouses; the Departments of Labor along with Health and Human Services followed suit in the last few weeks. Employers offering coverage to spouses now need to check their plan definitions to ensure they remain compliant with the new regulations.
2. Exchange/Marketplace Notices – the ACA required employers to distribute notices to their employees regarding the new health insurance Exchanges (also known as Marketplaces) by October 1, 2013. While this mass communication appears to be a one-time requirement, there is also an ongoing requirement for employers to distribute these notices to new hires within 14 days of their start date. Employers cannot overlook this step and need to modify their new employee procedures accordingly.
3. Affordable Plan Rules – while the Obama Administration recently delayed certain parts of the “Employer Mandate” affecting those with 50 or more employees, employers will still need to pay attention to how much they charge employees for their health insurance benefits. This is a factor in whether or not an employee may qualify for government subsidies should they forego their employer’s benefits and purchase coverage through the Exchange. Generally, the IRS has identified three ways that employers can ensure their benefits are priced properly, and the good news is they only have to look at “employee-only” coverage when measuring the cost. The basic concept is employees can’t spend more than 9.5% of their income on the cost of health insurance.
4. Revised Waiting Period Rules – waiting periods are the time between when an employee first meets the eligibility requirements to be covered by the health insurance and when they can actually enroll. The ACA limits this time period to no more than 90 calendar days. Many employers currently use a “three month” or “first of the month following 90 days” waiting period; this practice will need to be modified for plans as they renew starting on January 1, 2014, to ensure the 90 calendar day limit.
5. Expansion of Coverage for Adult Children – Illinois law was amended a number of years ago to allow adult children coverage under their parent’s plan until they turned 26. The ACA expanded that to all insurance plans including self-funded plans. However, plans that were “grandfathered” under the ACA were able to defer this requirement under some circumstances. Starting in 2014, this rule becomes a requirement for all groups regardless of grandfather status.
6. Changes in Wellness Programs – lastly, the ACA has given employers more latitude to expand and enhance their wellness programs. In the past, employers could reward employees who participated in their wellness programs by reducing their premium contributions up to 20%; this has been expanded to 30% starting in 2014 across the board, and up to 50% for programs that address tobacco usage. Employers aren’t required to make this change but should start evaluating the benefit of enhancing their wellness programs.
Come 2014, the ACA will be fully in place. Yet, many details remain to be published. Employers need to stay focused to ensure they are on the compliance route and ready to intercept any new changes that come our way.
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