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Benefits Bulletin

Employment Based Wellness Programs Final PPACA Regulations

Friday, 07 June 2013 00:00

The Department of Health and Human Services (HHS) issued final Patient Protection and Affordable Care Act (PPACA) Health Care Reform rules on May 29th, 2013 regarding employment based wellness programs.  The final regulations increase the maximum permissible reward under a health-contingent wellness program offered in connection with a group health plan from 20% to 30% of the cost of coverage, and to 50% when the wellness program is designed to prevent or reduce tobacco usage.  The final rules will be effective for plan years beginning on or after January 1, 2014.

The final rules support workplace health promotion and prevention without regard to an employee’s current health status.  These Health Care Reform rules expand non-discrimination protections for employer-sponsored wellness programs.  The final rules also provide more clearly defined guidelines to design and implement workplace wellness programs than were in HHS’s initial proposal.

The final rules include standards for both participatory wellness programs (those available without regard to an individual’s health status such as rewards to employees for taking a health risk assessment, or participating in a biometric screening, etc), and wellness programs that have “health contingent wellness programs” (those which reward individuals for meeting a specific health standard such as no tobacco usage, having a specified cholesterol level, etc).

References in the final regulations include rewards such as:

  • Discount or rebate of a premium or contribution;
  • Waiver of all or part of a cost-sharing mechanism (such as a deductible, copayment, or coinsurance);
  • Additional benefit, or any financial or other incentive;
  • Avoiding a penalty, such as the absence of a surcharge or other financial or nonfinancial.

The final rules state:

  • Individuals eligible for the program must be given an opportunity to qualify for the reward at least once per year;
  • The size of the award reward offered to an individual under all health-contingent wellness programs with respect to a plan cannot exceed the applicable percentage of employee-only coverage under the plan, taking into account both employer and employee contributions towards the cost of coverage for the benefit package under which the employee is receiving coverage.  If, in addition to employees, any class of dependents (such as spouses or dependent children) participate in the health-contingent wellness program, the reward cannot exceed the applicable percentage of the total cost of the coverage in which the employee and any dependents are enrolled or employee-plus-one coverage;
  • The reward for a health-contingent wellness program, together with the reward for other health-contingent wellness programs with respect to the plan, must not exceed 30% of the total cost of employee-only coverage under the plan, or 50% to the extent the program is designed to prevent or reduce tobacco use;
  • Consumers are protected with the following provisions:
    • Wellness programs must be reasonably designed to promote health or prevent disease;
    • The full reward under a health-contingent wellness program must be available to all similarly situated individuals;
    • Recommendations be accommodated which are made at any time by an individual’s physician based on medical appropriateness.

To read the final rules in their entirety, please visit

http://www.ofr.gov/OFRUpload/OFRData/2013-12916_PI.pdf

 

Employer Notice of Coverage Options

Tuesday, 14 May 2013 00:00

As a requirement of the Patient Protection and Affordable Care Act (PPACA), all employers with over $500,000 in annual revenue are required to notify all employees about their healthcare options available through the Health Insurance Exchanges.  This Benefits Bulletin addresses the temporary guidance of this notification that was issued on May 8, 2013.

Employers are not yet required to provide notices under this temporary guidance, and can wait until formal guidance is provided later this year.

This notification is called the Employer Notice of Coverage Options, and a template is located at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf.  Originally scheduled for March 1, 2013, this notice deadline has been delayed until October 1, 2013 to coincide with the beginning of the Health Insurance Marketplace (Exchange) open enrollment period.

 

 

The Employer Notice of Coverage Options is meant to:

  • Be a one-time notice provided by employers on or before October 1, 2013;
  • Be provided to all current full-time and part-time employees employed as of October 1, 2013, regardless if they are enrolled in, or eligible for, an employer-sponsored plan;
  • Be provided regardless if an employer-sponsored plan is offered;
  • Be provided to employees, with no requirement on providing the notice to spouses or dependents;
  • Be provided in writing, but can be provided electronically if ERISA standards for electronic delivery are met (http://www.dol.gov/ebsa/regs/fedreg/final/2002008499.htm);
  • Be provided to new employees within 14 days of being hired after October 1, 2013;
  • Contain language that:
    • The Marketplace exists, including a description of the services it provides and direction for employees to visit HealthCare.gov for more information;
    • Employees who purchase coverage through the Marketplace may be eligible for a premium subsidy if their employer does not provide coverage that is “affordable” and provides a “minimum value”;
    • Coverage is affordable if the employee-only option for the lowest-cost plan offered costs less than 9.5% of an employee’s W-2 wages;
    • Coverage provides minimum value if the plan pays at least 60% of allowed charges for covered services;
    • Employees who purchase coverage through the Marketplace will pay for that coverage with after-tax dollars;
    • Details the medical coverage the employer offers to its employees.

Employers can use the template Employer Notice of Coverage Options, or create their own notice, as long as the information above is included.

COBRA Notification Change

Employees, spouses and dependents who become eligible for COBRA will also have the option to purchase coverage through the Marketplace.  The model COBRA notice that employers and COBRA administrators use has been revised to include information about the Marketplace, and can be found at http://www.dol.gov/ebsa/cobra.html.

More information can be found at:

http://www.dol.gov/ebsa/newsroom/tr13-02.html

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

   

2014 HSA and Out-of-Pocket Limits

Friday, 03 May 2013 00:00

The IRS has set the 2014 Health Savings Account contribution limits:

For those with single HDHP coverage, the 2014 maximum HSA contribution is $3,300 (compared to $3,250 in 2013).

For those with family HDHP coverage, the 2014 maximum HSA contribution is $6,550 (compared to $6,450 in 2013).

The 2014 maximum out-of-pocket expense for a qualified High Deductible Health Plan has also been set:

For those with single HDHP coverage, the 2014 maximum out-of-pocket expense is $6,350 (compared to $6,250 in 2013).

For those with family HDHP coverage, the 2014 maximum out-of-pocket expense is $12,700 (compared to $12,500 in 2013).

   

90-Day Limit on Waiting Periods

Monday, 25 March 2013 00:00

In 2012, the IRS released Notice 2012-9 (http://www.irs.gov/pub/irs-drop/n-12-59.pdf) to explain the 90-day waiting period limitation under Public Health Service Act Section 2708.  These regulations were jointly updated on March 14, 2013 by the Internal Revenue Service and the Departments of Labor and Health and Human Services (http://www.irs.gov/PUP/newsroom/REG-122706-12.pdf).  The outcome is a provision in the Patient Protection and Affordable Care Act that states group health plans will not be permitted to apply any waiting periods that exceed 90 consecutive calendar days.

A waiting period refers to the period that must pass before an otherwise eligible employee or dependent can obtain coverage under a group health plan.

This applies to plan years beginning on or after January 1, 2014.  This applies to all group health coverage regardless of financial arrangement, group size or grandfathered status.

Plans currently requiring waiting periods of more than 90 days will need to modify their eligibility waiting period rules to adhere to the 90-day maximum.  Waiting periods may not extend beyond 90 calendar days, with all calendar days, including weekends and holidays, counted.  Plans that have waiting periods effective the first day of the month after the 90-day waiting period must change their rules so that the waiting period does not exceed 90 consecutive calendar days.

More information can be found at:

   

Employer Notification of Health Insurance Exchange Delayed

Friday, 01 February 2013 00:00

As a requirement of the Patient Protection and Affordable Care Act (PPACA), all employers are required to notify all employees about their healthcare options available through the Health Insurance Exchanges.

Originally scheduled for March 1, 2013, this Exchange Notice has been delayed until late summer or fall of this year.

The first section of a FAQ issued on January 24, 2013 by the Department of Labor (http://www.dol.gov/ebsa/faqs/faq-aca11.html) confirms that employers will not be required to provide the Exchange Notice to their employees until critical information is defined, including:

  • The DOL is expected to issue regulations on the Notice
  • The IRS is expected to provide guidance on minimum value
  • Information on HHS’ educational efforts

The FAQ also notes that, in the future:

  • Employers will be provided with model, generic language for the Exchange Notice
  • An alternative template will be available for download on the Exchange website

The Exchange Notice is meant to:

  • Inform employees about the existence of the Exchange and give a description of the services provided by the Exchange
  • Explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer's plan does not meet certain requirements
  • Inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes
  • Include contact information for the Exchange and an explanation of appeal rights

This Exchange Notice is required to be sent out by employers of all sizes, to all employees, regardless if the employee currently has insurance, or if the employer currently offers insurance.

More information can be found at:

http://www.dol.gov/ebsa/faqs/faq-aca11.html

   

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