ACA Compliance—What Employers Need To Think About Now

Attorneys Melissa R. Junge and Michael D. Rosenbaum, from the law firm of Drinker, Biddle & Reath gave advice to employers and health plan professionals regarding remaining in compliance with the Patient Protection and Affordable Care Act (ACA) over the next few years, at the GCG Regulatory and Compliance Update Seminar, held on June 4 in Rosemont, Illinois. Junge and Rosenbaum pointed out that most practitioners know that the new health care flexible spending account (health FSA) limit is $2,500 (for plan years beginning on or after Jan. 1, 2013), and also about the Patient Centered Outcomes Research Institute Fee (PCORI fee), which is, for 2014, $2 times the average number of covered lives, but advised audience members not to forget about evidence of compliance with those two. Plan amendments for the health FSA limit must be completed prior to Dec. 31, 2014, along with updated summary plan descriptions (SPDs) and open enrollment materials evidencing compliance. The PCORI fee must be paid and reported annually on the second quarter IRS Form 720 (Quarterly Federal Excise Tax Return).

Get ready for questions. Model notices have been made available by the EBSA (http://www.dol.gov/ebsa) with regard to providing employees with notice of the new health insurance exchanges (also known as marketplaces). For employees hired on and after Oct. 1, 2013, they must be provided within 14 days of the date of hire and by no later than Oct. 1, 2013 for all current employees. The information on the notices is very general, the speakers pointed out, so employers should expect a lot of questions from employees. Not only must the notices provide basic information about the marketplace and the potential to receive subsidized coverage, they also must include such information as eligibility for employer coverage, whether or not employer coverage is affordable, and whether or not it meets the minimum value (MV) standard under the ACA.

Also, health insurance exchange applications have an “Employer Coverage Tool” through which employees are advised to ask their employers to provide them with exchange information, so attendees were told that they will get questions on this. Audience members were advised to take a look for themselves at the tool on the Internet. In addition, employers should realize that the application for coverage on the exchanges will have questions about an employees’ coverage from their employers.

Employers should determine who should be listed as a contact for questions about employer coverage, Junge and Rosenbaum said. Employers also were advised to think about whether or not they have a “message” that they want employees to take away from their communications regarding their company’s coverage, and whether or not they want to be reactive or proactive with regard to providing information.

When the speakers pointed out that the employer-sponsored coverage information will have to include the amount of premiums/contributions required for employee-only coverage (reflecting tobacco incentives, by the way, but not other wellness incentive, see http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf, Part B), one audience member responded that she could not know what her company’s Jan. 1, 2014 premium would be until November, when the company’s open enrollment starts. She was advised to put the dollar amount in that is in effect now, and to amend it when she got the new information, perhaps with a footnote that an increase is expected, to put employees on notice.

Practitioners also were told to keep in mind the Transitional Reinsurance Program Fee that will be applicable to major medical coverage, including retiree (if not secondary to Medicare) and continuation coverage, and which includes both grandfathered and non-grandfathered plans. The fee is substantial. It is $63 per covered life per year for 2014, and practitioners should attempt to work it into calculations of employees’ premiums. The fee is not applicable to HIPAA excepted benefits, integrated HRAs, HSAs, health FSAs, stand-alone prescription drug coverage, EAPs, and wellness. The first report on the reinsurance fee will be due to the HHS by November 2014, and a notice of payment will probably arrive in employer’s mailboxes later in 2015.

It was recommended that employers start to figure out how they plan to calculate “covered lives” (using either the “snapshot method” using representative dates selected by the plan sponsor from each of the first three quarters of the year, the Form 5500 method using participants counts, or the “actual method,” which also looks at the first three quarters of the year. See HHS final regulations issued March 11, 2013, for more information) Audience members were reminded that “covered lives” means just that, so that they cannot count just employees.

Also applicable to both grandfathered and non-grandfathered plans starting in 2014 are the prohibitions on: preexisting condition exclusions, annual limits on the dollar amount of essential health benefits, and waiting periods longer than 90 days.

For plans that do not have or have lost grandfathered status, audience members were reminded that 2014 will bring cost-sharing limits on deductibles and out-of-pocket payments, IRS coverage reporting requirements regarding minimum essential coverage and the number of full-time employees, provider nondiscrimination provisions, and required coverage for participation in clinical trials.

Finally, the presenters advised that there has been no guidance yet with regard to situations in which an employee opts for coverage through the exchange, but then, mid-year, wants to get back on his or her employer’s coverage, nor has there been guidance on situations in which an employee might try to obtain coverage through the exchange mid-year.

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