What is "Minimum Essential Coverage" ?

Question: In 2015, my client is a large employer and has to comply with the employer mandate. What coverage does it have to offer to its full-time employees to avoid the $2,000 penalty under Code Section 4980H(a).

Answer: Beginning in 2015, a large employer will pay a penalty tax for any month that-

(1) the employer fails to offer full-time employees (and their dependents) the opportunity to enroll in "minimum essential coverage" under an "eligible employer-sponsored plan" for that month; and

(2) at least one full-time employee has been certified to the employer as having enrolled for that month in a QHP for which health coverage assistance is allowed or paid.

The $2,000 penalty applies only if the employer fails to offer adequate coverage and at least one employee enrolls for subsidized exchange coverage. If it offers "minimum essential coverage" to full-time employees and dependents, a large employer will not be liable for this penalty. Most employer-provided group health coverage will meet the very broad definition of minimum essential coverage.

The definition includes any coverage under an "eligible employer-sponsored plan"-a term that means a group health plan or group health insurance coverage offered by an employer to an employee that is (1) a governmental plan, or (2) any other plan or coverage offered in a state's small or large group market. IRS regulations clarify that self-insured employer coverage qualifies as an eligible employer-sponsored plan.

Minimum essential coverage does not include certain excepted benefits. HRA coverage that does not consist solely of excepted benefits generally will be considered minimum essential coverage.

Benefits under an EAP-even if the EAP is considered a group health plan-will be considered "excepted benefits" if the EAP does not provide "significant benefits in the nature of medical care or treatment."

It is important not confuse the term "minimum essential coverage" with minimum value. "Minimum value" refers to a requirement that an eligible employer-sponsored plan cover at least 60% of the allowed cost under the plan and is important in determining whether the penalty under Code Section 4980H(b) may apply.

Minimum essential coverage is the term used to describe both the coverage that an individual must have to avoid the individual shared responsibility tax and the coverage that large employer member must offer to full-time employees and dependents to avoid the $2,000 penalty under Code Section 4980H(a).

Essential health benefits, on the other hand, is the term used to describe the benefits that qualified health plans are required to cover. Pending further clarification, it is important to note that coverage under an employer-sponsored health plan can be "minimum essential coverage" even if it does not cover all essential health benefits.

Minimum essential coverage may not necessarily be affordable or provide minimum value. An employee who is eligible for minimum essential coverage that is not affordable or does not provide minimum value may still qualify to purchase subsidized Marketplace coverage. If the employee purchases subsidized Marketplace coverage, the employer may be liable for $3,000 penalty under Code Section 4980H(b).

What to expect from another Health Care enrollment-changes

WASHINGTON (AP) -- HealthCare.gov, the website for health insurance under President Barack Obama's health care law, has been revamped as its second enrollment season approaches. But things are still complicated, since other major provisions of the Affordable Care Act are taking effect for the first time. A look at some of the website and program changes ahead:

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Old: 76 online screens to muddle through in insurance application.

New: 16 screens - for the basic application that most new customers will use. But about a third of those new customers are expected to have more complicated cases, and how they'll fare remains to be seen.

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Old: Prone to crashing, even with relatively few users.

New: Built to withstand last season's peak loads and beyond, at least 125,000 simultaneous users. Actual performance still to be demonstrated.

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Old: Six-month open enrollment season, extended to accommodate customers bogged down by website glitches or stuck in line at the last minute.

New: Shorter open enrollment season, just three months, from Nov. 15 to Feb. 15.

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Old: Everybody was new to the system.

New: As many as 7 million existing customers could be coming back, and that could create a crunch. Returning customers who want to make changes to their accounts must act by Dec. 15 for those changes to take effect Jan. 1. Many will want to at least look, because they could save money. Potential wrinkle: Returning customers have to go back into their long-form application for 2014. It will have the information they already provided, but it's not the new streamlined form.

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Old: Amateur Spanish, to put it kindly.

New: HealthCare.gov's Hispanic-oriented website could still use a going-over from a high school Spanish teacher. But one conspicuous mistake in translating the appeal to "get ready" got fixed quickly. Maybe that's a sign of things to come.

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Old: No way to window-shop anonymously when the system went live.

New: Window-shopping for health insurance plans available without first creating an account. But the site still lacks a way for consumers to search for plans by simply entering their doctor's name. Instead, they'll have to follow links to individual insurance company directories. Tip: Double check with your doctor's office to see whether he or she is still in the plan.

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Old: Subsidies to keep premiums affordable were paid directly to your health insurance plan.

New: The government will keep paying your health plan, but this year you will also have to show the Internal Revenue Service that you got the right subsidy for 2014. If you got more than you were entitled to, your tax refund will be dinged. If you got less than you deserved, your tax refund will be fatter.

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Old: Budget number crunchers for Congress had estimated 7 million people would enroll, but cut that back to 6 million because of website glitches. Eight million actually signed up, beating expectations. About 7 million are still enrolled.

New: The Congressional Budget Office expects enrollment next year to total 13 million - the new yardstick for HealthCare.gov.

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Old: Pent-up demand from people denied coverage by insurance companies because of pre-existing medical conditions, or who were just unable to afford it.

New: Tougher sell to convince customers who sat out last year's open enrollment season, even under threat of fines.

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Old: Fines for staying uninsured the full year start at $95.

New: Fines for staying uninsured all of 2015 start at $325.

Group Health Benefits

This is an exciting time for the employee benefits industry.

The Patient Protection and Affordable Care Act (PPACA) has precipitated a new appreciation for voluntary benefits and a spike in enrollment. Businesses are enhancing their benefits packages to offset rising healthcare costs and to allow employees to fill the gaps left by high-deductible health plans.

Employees are taking a more active role in decisions about coverage. Carriers and brokers are responding with customized products and platforms that ease administration and cost for employers; and that assist employees in the decision-making process.

While the landscape of employee benefits is continually changing, the industry’s message to the market has remained relatively static. Healthcare costs are rising. Emergency savings accounts are shrinking. Employees are shouldering greater accountability and risk. 

While these arguments are valid, ultimately PPACA prompted employers to make fundamental changes in their approach to employee benefits. 

It is time for employers to look at the Self Funded, or Level Funded, options available.  

Contact me for a quote.

IRS releases draft forms for Employer reporting of Health Coverage

The Affordable Care Act (ACA) created new reporting requirements under Internal Revenue Code Sections 6055 and 6056.  Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees.

On July 24, 2014, the Internal Revenue Service released draft versions of the following forms that employers will use to report under Sections 6055 and 6056:

1. Form 1094-B:  Transmittal of Health Coverage Information Returns;
2. Form 1095-B: Health Coverage;
3. Form 1094-C:  Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return;
4. Form 1095-C:  Employer-Provided Health Insurance Offer and Coverage.

Forms 1094-C and 1095-C will be used by applicable large employers (ALEs) that are reporting under Code Section 6056.  Forms 1094-B and 1095-B will generally be used by entities reporting as health insurance issuers or carriers, sponsors of self-insured group health plans not reporting as ALEs, sponsors of multiemployer plans and providers of government-sponsored coverage under Section 6055.  However, a reporting entity that is reporting under Section 6055 as an ALE will file under a combined reporting method, using forms 1094-C and 1095-C. 

According to the IRS, these are draft forms currently and are intended to help stakeholders prepare for these new reporting provisions.

Overview of Sections 6055 and 6056

The Code Sections 6055 and 6056 reporting requirements are intended to promote transparency with respect to health plan coverage and costs. They will also provide the government with information to administer other ACA mandates, such as the employer and individual mandates. 

Reporting for Medium-sized ALEs

On Feb 10, 2014, the Treasury released final rules implementing the ACA's employer shared responsibility provisions.  These final rules include transition relief delaying compliance for medium-sized ALEs for one year, until 2016.  Medium-sized ALEs are those with at least 50 full-time employees but fewer than 100 full-time employees. 

ALEs eligible for this transition relief will still report under Section 6056 for 2015.  As part of this transition relief, the ALE must certify on its Section 6056 transmittal form (Form 1094-C) for calendar year 2015 (that is, for the Section 6056 transmittal form that will be filed in 2016) that it meets the following eligibility conditions:

1. The ALE employs a limited workforce of at least 50 full-time employees (including full-time equivalents), but fewer that 100 full-time equivalents), but fewer that 100 full-time employees (including full-time equivalents) on business days during 2014
2. Between Feb. 9, 2014 and Dec 31, 2014, the ALE does not reduce the size of its workforce or the overall hours of service of its employees in order to satisfy the workforce size condition
3. During the coverage maintenance period (that is, the period ending Dec 31, 2015 or the last day of the plan year that begins in 2015) the ALE does not eliminate or materially reduce the health coverage, if any, it offered as of Feb 9, 2014.

DC Appeals Court Overturns Subsidies for Federal Exchange

Federal Appeals Court invalidates some ObamaCare subsidies, in blow to health law.




In what could be a major blow to the Affordable Care Act, a three-judge panel for the U.S. Court of Appeals in Washington ruled today that subsidies may not be offered in the federal health exchange. The decision overturned a lower court ruling.


Though the ruling is likely to be appealed, the decision threatens to gut the foundation of the law by potentially nixing subsidies that millions of people obtained through the federally run exchange known as HealthCare.gov.


The suit maintained that the language in ObamaCare actually restricts subsidies to state-run exchanges -- of which there are only 14 -- and does not authorize them to be given to the 36 states that use the federally run system, which Ohio is one of. 


Background
Through the Affordable Care Act (ACA) in 2010, the federal government asked states to establish exchanges on which to sell qualified health plans. If a state did not establish its own exchange, the federal government would do so. Section 36B of the Internal Revenue Code (IRC) states premium assistance (i.e., tax subsidies) is available to individuals “… who were enrolled … through an Exchange established by the State under 1311” of the ACA. However, in 2012, the Internal Revenue Service determined that “established by the State” also included exchanges established by the federal government.




Two appellate court cases heard arguments regarding whether the subsidies are only available on the state-based exchanges, and not available on the federally run exchanges that are used by the majority of states:

• The Court of Appeals for the DC Circuit ruled that the ACA only authorized premium tax subsidies for people who enrolled in coverage through a state-based exchange, a more literal interpretation of section 36B of the IRC.
• The Court of Appeals for the Fourth Circuit ruled to uphold the interpretation that the intent of the ACA was to provide subsidies to anyone buying qualified coverage.

What does this mean in Ohio?


In Ohio, which has a federally facilitated exchange, everything stays the same for now. Subsidies are still available to our customers.  These appellate court decisions change nothing right away.


We will continue to follow the law as additional ruling are made.


We cannot speculate at this time what the outcome will be.  We will follow the issue closely and prepare ourselves appropriately,


Because there is a conflict between the rulings of the appellate courts, the losing side of each case can choose one of two options:

1. Request an "en banc" review, which is a full review by all judges in the particular court
2. Petition the Supreme Court to hear the case (the Supreme Court will begin hearing cases again this October)

Five Ways to Perk up Your Day

It happens to everybody. Sometimes we wake up on the wrong side of the bed. We miss trains. We dunk our neckties in coffee, and we don’t realize it until after an important meeting.

 

Every now and then a storm cloud will settle over your head. Rather than letting it ruin your day, try these simple steps to bring in a bit of sunshine!

 

1. Call a friend on his or her birthday. Check Facebook to find out which of your friends are celebrating birthdays today. Instead of just sending a short message, give them a call and wish them well. They will be glad to know you are thinking of them, and they will most likely send some good vibes your way, too!

 

2. Return a book you borrowed. Your friend lent you her personal copy of Don Quixote two years ago. She scribbled in the margins, spilled a little coffee on the cover, and dog-eared many, many pages. In other words, she loved that book. Don’t feel bad about returning it late. Even if you didn’t get around to reading it, she will be thrilled to see it again and it will take a little weight off your shelf and your shoulders.

 

3. Treat yourself to something sweet. Numerous studies have sought to measure the effects of chocolate on human happiness. It’s possible that dark chocolate can lower the stress hormone known as cortisol. It’s also possible that it’s delicious and you deserve it anyway.

 

4. Take lunch in the park. A little sunshine will help your body produce vitamin D and thereby increase serotonin—a mood neurotransmitter. Lunch in the park also dramatically increases your likelihood of sharing your sandwich with a duck.

 

5. Smile. According to the facial feedback hypothesis, exercising zygomatic (smiling) muscles can boost emotional activity in the brain. Simply smile a few times throughout the day. Think of it as an exercise, with you as a champion bodybuilder of positive energy.

Health Care Reform: Cost-Sharing Limits for Health Plans

Beginning in 2014 the ACA requires certain health plans to comply with cost-sharing limits with respect to essential health benefits coverage. The cost sharing limits include both an annual out-of-pocket maximum and anannual deductible limit.


 Call me for a copy of the Legislative Brief summarizing the ACA's cost sharing limits.


On April 1, 2014 President Obama signed into law the Protecting Access to Medicare Act which repels the ACA's deductible limit, effective as the date the ACA was enacted.


The affected plans are Grandfathered plans not subject to the ACA's cost-sharing limits.  There was some uncertainty regarding which types of non-grandfathered plans must comply with the cost-sharing limits.  However, the final rule provides the guidance on the types of health plans that must comply.

Funding College with Universal Life

Saving for college is a big concern for many young families.  There are many options available.  It can really confusing to choose.
An option that should be in the mix but generally gets overlooked-Permanent life Insurance.


Of course, the primary purpose of life insurance is to pay a death benefit when someone dies, but it can also be a very flexible alternative to traditional college funding programs.  This can really be appealing to certain clients because it includes features not found in any other program.


Think about it--what other college savings program is self-completing in the event of a premature death?  None.
However, the life insurance death benefit immediately creates a pile of money at death that can be used to fund the college savings goal and cover the college costs.


It also provides tax-deferred growth, just like most of the other programs do.  Income taken from the plan can be income tax-free through the use of loans and withdrawals and can supplement your other college savings sources.  You also have the added benefit of not having to include the accumulating cash values when filling out the required Federal Application for Federal Student Aid (FAFSA) form each year when applying for student aid.
That's Big !!
And finally, the policy can be repositioned after paying for college to then help supplement retirement planning.  And through all this it's still protecting the family with the death benefit.  That's pretty comprehensive.  None of the other programs have all these benefits.

CD Alternative Can Provide Benefit

Many of my clients today have become very comfortable with investing in CD's.  They invest in them more out of habit than anything else.  Here are some questions you can ask yourself the next time you consider a CD:

• Am I looking for guaranteed principal?
• Am I looking for tax deferral?
• Am I looking for a guaranteed income stream?
• Am I looking for potentially higher interest returns than what I am currently getting with my Bank CD's?

If you answer "Yes" to any of these questions, you may to look at one of my Deferred Annuities. 


While both a CD and an annuity can offer you a guarantee of principal, my Annuities off other benefits that CDs do not, including tax-deferred growth, a guaranteed income stream in the future, and a higher potential interest rates.


And with my Flexible Premium Annuity, you also have the ability to add additional money to your account at any time during the contract term, something you cannot do with most CD's.

Supreme Court Rejects Contraceptives mandate for some Corporations

by Adam Liptak; New York Times

The Supreme Court ruled on Monday that requiring family-owned corporations to pay for insurance coverage for contraception under the Affordable Care Act violated a federal law protecting religious freedom.

 

The 5-to-4 decision, which applied to two companies owned by Christian families, opened the door to challenges from other corporations to many laws that may be said to violate their religious liberty.

Justice Samuel A. Alito Jr., writing for the court's five more conservative justices, said a federal religious-freedom law applied to for-profit corporations controlled by religious families. He added that the requirement that the companies provide contraception coverage imposed a substantial burden on the companies' religious liberty. He said the government could provide the coverage in other ways.

Justice Ruth Bader Ginsburg, writing for the court's four-member liberal wing, said the contraception coverage requirement was vital to women's health and reproductive freedom. Justices Stephen G. Breyer and Elena Kagan joined almost all of the dissent, but they said there was no need to take a position on whether corporations may bring claims under the religious liberty law.

On that point, Justice Ginsburg, joined by Justice Sonia Sotomayor, said the

court's decision "is bound to have untoward effects" in other settings.

"The court's expansive notion of corporate personhood," Justice Ginsburg wrote, "invites for-profit entities to seek religion-based exemptions from regulations they deem offensive to their faiths."

The contraception coverage requirement was challenged by two corporations whose owners say they try to run their businesses on religious principles: Hobby Lobby, a chain of crafts stores, and Conestoga Wood Specialties, which makes wood cabinets

The health care law and related regulations require many employers to provide female workers with comprehensive insurance coverage for a variety of methods of contraception. The companies objected to some of the methods, saying they are tantamount to abortion because they can prevent embryos from implanting in the womb. Providing insurance coverage for those forms of contraception would, the companies said, make them complicit in the practice.

The companies said they had no objection to other forms of contraception, including condoms, diaphragms, sponges, several kinds of birth control pills and sterilization surgery.

The court ruled that corporations controlled by religious families cannot be required to pay for contraception coverage for their female workers.

The Obama administration said it did not question the sincerity of the companies' beliefs, and it has offered exemptions to other groups on such grounds.

 

A federal judge has estimated that a third of Americans are not subject to the requirement that their employers provide coverage for contraceptives. Small employers need not offer health coverage at all; religious employers like churches are exempt; religiously affiliated groups may claim an exemption; and some insurance plans that had not previously offered the coverage are grandfathered in.

 

But the administration said that for-profit corporations like Hobby Lobby and Conestoga Wood must comply with the law or face fines.

 

The cases are Burwell v. Hobby Lobby Stores, No. 13-354, and Conestoga Wood Specialties v. Burwell, No. 13-356.

 

The companies challenged the coverage requirement under the Religious Freedom Restoration Act of 1993. The law was a response to a 1990 Supreme Court decision that declined to recognize religious exceptions under the First Amendment's free exercise clause to generally applicable laws. Congress effectively reversed that decision.

 

"What this law basically says," President Bill Clinton said before signing the bill, "is that the government should be held to a very high level of proof before it interferes with someone's free exercise of religion."

The threshold question in the new case was whether the companies were permitted to raise a claim under the law.

 

The companies argued that they were, and they said the coverage requirement imposed a "substantial burden" on religious practices by subjecting Hobby Lobby, for instance, to fines of $1.3 million a day if it chose not to offer comprehensive coverage, and to different fines of $26 million a year if it stopped offering insurance entirely.

 

Some scholars responded that the company would be better off financially if it dropped coverage, and so does not face a substantial burden.

 

The administration argued that requiring insurance plans to include comprehensive coverage for contraception promotes public health and ensures that "women have equal access to health care services." The government's briefs added that doctors, rather than employers, should decide which form of contraception is best.

 

A supporting brief from the Guttmacher Institute, a research and policy group, said that many women cannot afford the most effective means of birth control and that the law will reduce unintended

  

A copy of the Supreme Court Decision can be obtained by clicking on the link below:

Can an Employer reimburse employees for premiums pre-tax?

Question:  

Can an employer reimburse its employees for premiums on a pre-tax basis for purchasing individual market medical coverage?

Answer: 

No. In IRS Notice 2013-54  & Technical Release 2013-3, the IRS and DOL prohibit the reimbursement of premiums for individual medical policies from health reimbursement arrangements and premium only plans.

The IRS and DOL indicate that such arrangements that help employees to pay for individual health insurance policies on a tax-free basis fail to satisfy the Affordable Care Act's annual dollar limit and preventive health services "market reform" provisions.

Any employer payment plan will not meet these mandates unless it meets the rules pertaining to participation in a group health plan.

An employer payment plan is defined as any arrangement that facilitates the direct or indirect payment of individual market coverage.

It does not include any arrangement whereby employees may choose between cash or an after-tax amount to be applied toward health coverage, including forwarding post-tax payroll deduction to the insurer, as long as the arrangement satisfies the voluntary plan safe harbor under the DOL regulations.

The reimbursement of premiums for certain other individual coverage are exempt from these requirements.  These include premiums for:

Retiree coverage, Exempted benefits (dental and vision), and coverages that meet the voluntary benefits safe harbor.

On May 13, 2014, the IRS issued a Q & A guidance restating the conclusion in Notice 2013-54, that an employer is considered to establish a type of group health plan, called and "Employer Payment Plan," if it reimburses employees' premiums for individual health insurance policies.

Premium Tax Credits-Tax Return Must be filed. What is Form 1095-A and Tax Form 8962 ?

A Premium tax credit is a refundable tax credit.
It is to help eligible individuals and families pay for health insurance.
The two payment options are:

1. Get it Now-advance credit payments
2. Get it Latter-without advance credit payments

To be eligible for a tax credit, individual must be:

• Be an applicable taxpayer with income between 100 and 400% FPL and cannot be claimed as a dependent, and if married files a joint tax return.
• Have a "Coverage Month" -  Be enrolled in a QHP through a Marketplace, and not eligible for other minimum essential coverage and have the policy premiums paid.

PTC (Premium Tax Credits) Key Considerations

• Advance credit payments are optional
• Reconciling advance credit payments is required !!
• Differences between advance credit payments and the credit are likely
• Changes in circumstances can affect the PTC amount
• A Tax return must be filed!!

IRS Form 1095-A
Issued by the Health Insurance Marketplace.
It will be sent out by January 31, 2015.
This form will show:

• Documentation of Health Coverage by month
• Premiums
• Advance payments of Premium Tax Credits

IRS Form 8962

This form is filed with your Form 1040 to help taxpayer reconcile your Advance Payments and calculation of PTC (Premium Tax Credit) from form #1095-A

Included on this form:

• Part 1-Annual & Monthly Contribution
• Part 2-Premium Tax Credit Claim & Reconciliation
• Part 3-Repayment of Excess of Advance Payment
• Part 4-Shared Policy Allocations
• Part 5-Alternative Calculation for Marriage

Premium Tax Credit Summary

• Refundable credit for only eligible individuals
• Get it Now (advance credit payments) or Get it Latter (without advance credit payments)
• Must report changes in Life Changing Events to change your Circumstances and credits
• Advance credit payments must be reconciled
• Everyone who receives this credit must file a tax return and use form 1095A, Form 8962, Form 1040

Resources for PTC

• HealthCare.gov website

How much is that Life Insurance Policy?

In a recent poll, 45% of adults stated that they felt life insurance "Costs too Much".  According to the Life Insurance Marketing and Research Association (LIMRA), consumers believe life insurance costs nearly three times what it actually costs. 
Younger adults often overestimate the cost by nearly seven times the actual cost.


Those TV ads that show just how low prices can be, drive me crazy.  They never tell us how long the policy terms are or just how healthy you must be to qualify. 
But with some of my new, reduced rates, I can certainly compete with these TV Ads. 


Now, I know that you already have some life insurance, but I have newly lowered rates that I can now add an additional $250,000 of term coverage as an umbrella over what you already have for only about $19.00 per month. 


Why don't we get together tomorrow to take care of the paperwork??

Double-digit premium increases predate PPACA | LifeHealthPro

This is no surprise to any of us.  Rates for health care will go up for next year. We just are not sure just how much yet.  Insurance Companies have rates approved but will not release them till latter this year.

Double-digit premium increases predate PPACA | LifeHealthPro

IRS Releases Revised Form 720

IRS has issued a revised Form 720 and instructions for filing the PCOR fees by July 31, 2014. Filers will enter covered-lives counts and applicable rates ($1 for plan years ending before Oct. 1, 2013; $2 for plan years ending on or after Oct. 1, 2013) in Part II of Form 720 (line 133) to calculate the amount owed. 

 

Instructions include a table for use by filers with plans or policies subject to both the $1 and $2 applicable rates. Though Form 720 is generally used for quarterly excise taxes, PCOR filers remit that fee annually - by July 31 - and complete only line 133 (unless also submitting excise taxes). 

 

Under the Affordable Care Act, the PCOR fee applies to each plan or policy year that ends after Sept. 30, 2012, and before Oct. 1, 2019.

Link to a copy of Form 720:

http://www.irs.gov/pub/irs-pdf/f720.pdf

Can I drop my group coverage to enroll in the Marketplace?

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 non-calendar 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. 

Health Reform Question-Enrolling in Group Health Insurance

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 or 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. 

Benefits of a Defined Contribution Plan

When choosing benefits for their employees, most employers select generic plans for
Dental, Vision, Life, Disability, Accident, etc., that they hope will cover a little of something
for everyone. However, this one-size-fits-all plan doesn’t always maximize employee
satisfaction, and company dollars could be wasted on benefits that some employees don’t
need or use.

With a Defined Contribution plan, an employer can give his or her employees a dollar
amount to spend on benefits, which allows group members to choose which benefits will
best fit their individual needs.

Benefits for Employers
1) Consistent Cost: Defined Contribution plans allow for a specific dollar amount,
rather than a certain benefit, so annual rate increases are not a threat.
2) More Value for Dollars Spent: Employees choose the benefits they need, and pay
for anything above their allotted amount, so employers are not paying for unneeded
benefits.
3) Fewer Headaches: Having a Defined Contribution plan eliminates the
responsibility of trying to choose a benefits package that makes everyone happy.
4) Participation Eliminated: Using a Defined Contribution strategy eliminates the
need to have a certain number of employees enrolled in the company’s benefit
plans.
5) Employee Retention: Monthly Defined Contribution amounts are far less costly
than hiring and training new employees because employees leave for better
compensation and benefits elsewhere.

Benefits for Employees
1) Satisfied Employees: Employees can buy what suits them most with their current
lifestyle and family structure, rather than just taking what the employer chose for
the group.
2) Multiple Options: A Defined Contribution plan has different options within each
line of coverage from which to choose.
3) Guaranteed Issue: Every benefit is guaranteed issue, so no medical exams or priors
will be a factor in obtaining coverage.
4) Incentive Dollars: Employees can be encouraged to buy into the company’s Defined
Contribution plan with as little as a $15.00 per month or $0.50 per day toward
benefits from the employer.

Legacy Building

COBRA Coverage and Enrollment in Marketplace Coverage

Question:

If someone voluntarily disenrolls in COBRA during open enrollment, are they eligible for subsidies in the Individual marketplace?

Answer:

During Marketplace open enrollment, a person can voluntarily drop their COBRA coverage and get a Marketplace plan instead, even if their COBRA hasn't expired. They also may be determined eligible for credits and subsidies in this case.

Outside of Marketplace open enrollment, if a person's COBRA expires, they would qualify for a special enrollment period and may be eligible for credits and subsidies. If they are voluntarily dropping coverage outside of Marketplace open enrollment (their COBRA has not yet expired), they would not qualify for a special enrollment period.

Remember, during the next open enrollment period or when their COBRA expires, they could enroll in a QHP and may be eligible for credits and subsidies. 

Health Plans Scramble to Calculate 2015 Rates-KHN report

Health Plans Scramble To Calculate 2015 Rates

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By Jay Hancock

KHN Staff Writer

APR 28, 2014

This KHN story was produced in collaboration with 

With the results sure to affect politics as well as pocketbooks, health insurers are already preparing to raise rates next year for plans issued under the Affordable Care Act.

But their calculation about how much depends on their ability to predict how newly enrolled customers – for whom little is known regarding health status and medical needs -- will affect 2015  costs.    

"We're working with about a third of the information that we usually have," said Brian Lobley, senior vice president of marketing and consumer business at Pennsylvania's Independence Blue Cross. "We've really been combing the data to get a first look."

At stake are price increases that buyers on the federal exchange, healthcare.gov, and other online marketplaces will encounter when they get renewal notices later this year. Forecasting success or failure could also affect whether insurers stay on the exchanges, a key pillar of the health overhaul.

The official 2014 enrollment period closed at the end of March for most consumers. But  carriers selling medical plans on healthcare.gov must file initial 2015 rate requests with federal regulators in late May or June -- even though they have little idea about the health and potential costs of their newly enrolled members. Deadlines also loom for state-run exchange filings.

WellPoint, the biggest player in the online exchanges, is already talking about double-digit rate hikes for 2015. Such increases would give ammunition to Republican critics of Obamacare before the November elections.

Analysts' expectations vary, but nobody is predicting decreases.

"We'll see rate increases in the marketplaces, but I think it's anyone's guess" about what the precise changes will be, said Sabrina Corlette, project director at the Georgetown University Center on Health Insurance Reforms. "It's like nailing Jell-O to a wall."

The health law required insurers to accept all applicants this year for the first time without asking about existing illness. That reduces what they know about customers and raises chances they'll sign sicker, more expensive members who were previously denied coverage.

At CoOportunity Health, a nonprofit carrier in Iowa and Nebraska, many enrollees scheduled medical treatments -- including surgeries -- as soon as possible after their new coverage began Jan. 1, said Cliff Gold, its chief operating officer. Among the procedures were several expensive transplant operations including heart-lung procedures that can cost over $1 million each.

But insurers tend to receive pharmaceutical claims long before hospital bills. They are poring over these early prescription records for clues about new members' medical status.

Pharmacy-benefit manager Express Scripts published data April 9 showing that marketplace enrollees in January and February were substantially more likely than average to have HIV infections, chronic pain, depression and other high-cost ailments.

But that doesn't necessarily mean average costs will soar.

For one thing, insurers figured they would cover more sick patients this year and priced plans accordingly. Early pharmacy data at Independence Blue Cross, said Lobley, are "on par for what we expected."

Even if carriers signed more chronically ill customers this year than planned, the health law includes "reinsurance" and other safety valves designed to keep high-cost members from pushing up rates.

A sign-up surge at the end of March is another reason not to rely on early claims information.

Just as the first enrollees were more probably likely to need immediate care, insurers believe people who pushed the deadline may be healthier and younger. If so, they would balance the risk and help cover the cost of the early birds.

"It's clear that sick people were signing up" for January coverage, said David Axene, a fellow of the Society of Actuaries working with insurers to set 2015 rates. "The question now is, were the later people healthier?"

Nobody knows. While March enrollees seem to have been younger on balance, their health status remains largely a mystery.

Blue Shield of California signed more than 50,000 people the last two weeks in March.

"It's still too early to draw conclusions," said Amy Yao, Blue Shield's chief actuary. "I have the best actuarial team in the whole country. Even with that, it's less than 50 percent confidence" that they'll hit the rate-setting sweet spot for 2015, she said.

It's unclear how many of the 8 million who enrolled through the exchanges were previously uninsured. Many who did have coverage switched carriers this year, meaning their new insurers couldn't see their health histories.  

At CoOportunity Health, a start-up created with funding from the health law, every one of the 74,000 customers is new.

"It is an actuarial nightmare to try to guess what you’re going to get," said Gold.

It's not just member health that insurers have to think about. President Barack Obama allowed many people to keep old plans that aren't compliant with ACA rules. Carriers must calculate how that exception (people covered under old plans are thought to be healthier on average) affects average costs in their new policies.

Backup resources for plans with disproportionate shares of sick and expensive members will become a little weaker next year. Insurers have to factor that into their rates.

And they need to look at the big picture.  

What economists call the cost trend -- how high prices rise per procedure and how many procedures Americans get this year -- may be the single biggest variable in setting prices for 2015, experts said.

And the trend seems to be up. After several years of relatively tame increases that many tie to a sluggish economy, analysts saw medical spending accelerate late last year.

Even so, the forces affecting 2015 premiums may not drive up Obamacare prices as much as some are forecasting. Finding that insurers have gotten discounts from select hospitals and doctors, the Congressional Budget Office recently lowered its estimate for the cost of premiums and taxpayer subsidies under the health law.

"I'm not expecting double digits like some people have predicted" for 2015 rate increases, said Axene. "I'm expecting mid-to-high single digits" — somewhere from 6 percent to 8.5 percent.

That would still be far higher than growth in the economy or family incomes.

Given the uncertainties that come with a major new social law, Independence Blue Cross believes the picture won't become fully clear until much later.

"We always viewed this as a three-year plan," said Lobley. "We always thought there would be a lot of volatility in years one and two. We really thought 2016 would [bring] market stability in the individual market."

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What are the Out-of-Pocket limits for 2015?

For 2015, please be aware that there will two different out-of-pocket limits.

  

Overall Out-of-Pocket Limits:

  

There is an overall cost-sharing limitation to all non-grandfathered group health plans, as provided in HHS Reg. § 156.130(a); PPACA; Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation, 45 CFR Parts 147, 155, and 156, 78 Fed. Reg. 12834, 12837 (Feb. 25, 2013).

The overall cost-sharing limits for plan years beginning in 2014 are the same as the maximum out-of-pocket expense limits for self-only and family coverage for HSA-compatible high-deductible health plans (HDHPs) for taxable years beginning in 2014 , as provided in PPACA, Pub. L. No. 111-148, § 1302(c)(1)(A) (2010). 

For 2014, these limits are $6,350 for self-only coverage and $12,700 for family coverage. The limits for 2015 are $6,600 for self-only coverage and $13,200 for other than self-only coverage, as provided in PPACA; HHS Notice of Benefit and Payment Parameters for 2015, 45 CFR Parts 144, 147, 153, 155, and 156, 79 Fed. Reg. 13743, 13802 (Mar. 11, 2014). 

For a plan year beginning in a calendar year after 2014, the cost-sharing limit for self-only coverage is the amount for self-only coverage for plan years beginning in 2014, increased by an index amount equal to the product of that amount and the "premium adjustment percentage" for the calendar year. For coverage other than self-only coverage, the cost sharing limit for a plan year beginning in a calendar year after 2014 is twice the amount for self-only coverage.  The premium adjustment percentage for a calendar year is the percentage by which the average per capita premium for health insurance coverage in the United States for the preceding calendar year (as estimated by HHS by October 1 of the preceding calendar year) exceeds the average per capita premium for 2013 (as determined by HHS).

Out-of-Pocket Limits for HDHP Coverage for HSA Contributions

For 2015, the out-of- pocket limits for a High Deductible Health Plans (HDHP) to be eligible to contribute to a Health Savings Accounts will be different.  Under Revenue Procedure 2014-30, the IRS indicated that the 2015 maximum limit on out-of-pocket expenses (including items such as deductibles, co-payments, and co-insurance, but not premiums) for self-only HDHP coverage is $6,450 (a $100 increase from 2014), and the limit for family HDHP coverage is $12,900 (a $200 increase from 2014).