Employee Benefit Plans
A Brief Background
Employee Benefit Plans
A Brief Background
Group Health and Medical Insurance
Ancillary & Voluntary Benefits, and Worksite Plans
Many advisors design the benefit package around the group health plan providing ancillary benefits which either fill in the gaps or dovetail the coverage of the group health plan. This strategy allows the employer to implement plans that may cover the cost of hospitalization while tacking on high deductibles on the medical insurance or provide comprehensive dental and vision to offset what medical insurance typically limits.
Since medical insurance care costs have spiraled out of control in the last 30 years, employers seek ways of controlling costs and many of these ancillary lines of coverage created new products and launched an entirely new industry of voluntary and worksite benefits.
Group Life, Disability, Hospitalization, and Accident & Sickness
Group life, long term disability, short term disability, hospitalization, and accident & sickness plans can be offered on a voluntary or employer paid basis. A hybrid model can also be established to promote employees to participate. These plans are designed to provide coverage for a financial loss in the event of an emergency, accident, loss of life or limb, and to provide an income stream when the employee retires or when needed during a life-changing event, such as the birth of a child or the purchase of a first home.
The financial impact on the family of a disabled or deceased employee can be devastating depending on the severity. A loss of life, without life insurance to replace the loss of income of the worker may be limited to what the Social Security Benefits provide, as most medical insurance policies exclude this coverage. The loss due to disability related to a worksite injury can be covered by workers’ compensation, but a disability outside work is generally covered by short term disability and currently only about a half a dozen states require the employer to provided statutory disability coverage, or DBL or STD. Generally, these policies provide nominal benefits and are limited in duration.
The loss of income can be greater than that of medical care depending on how much income is lost due to the employee’s inability to work. The ongoing expense to care for the disabled worker can be ongoing and may require environmental modifications in the home to meet the needs of the injured individual. These expenses are generally limited by medical insurance or not covered at all.
We recommend offering these lines of coverage at least on a voluntary basis which empowers the employee to decide whether the protection is needed. Payment of premium can often be made by payroll deduction.
Dental and Vision Insurance
Dental insurance seems to be more popular and requested by employees than other types of ancillary products, probably because of the frequency of utilization, especially with children. Usually, the financial impact of dental claims is not as great as medical, and most dental plans have limits on how much is available for all dental care each ear. Recent studies have linked poor dental hygiene and gum disease with heart related medical conditions, so prevention is crucial to the long-term health of the worker, and many think the annual dental check-up is as important as annual medical exam, which may be the reason why pediatric dental insurance is mandated under the Affordable Care Act.
Coverage for dental insurance can be comprehensive or designed to cover preventative and basic services. As with health insurance, the cost can vary substantially between plans based on the level of coverage, the network, and out of pocket expenses to the user. Preventative dental is recommended at the very least and as with medical, exams for vision are also recommended.
Dental and Vision Insurance
Dental insurance seems to be more popular and requested by employees than other types of ancillary products, probably because of the frequency of utilization, especially with children. Usually, the financial impact of dental claims is not as great as medical, and most dental plans have limits on how much is available for all dental care each ear. Recent studies have linked poor dental hygiene and gum disease with heart related medical conditions, so prevention is crucial to the long-term health of the worker, and many think the annual dental check-up is as important as annual medical exam, which may be the reason why pediatric dental insurance is mandated under the Affordable Care Act.
Coverage for dental insurance can be comprehensive or designed to cover preventative and basic services. As with health insurance, the cost can vary substantially between plans based on the level of coverage, the network, and out of pocket expenses to the user. Preventative dental is recommended at the very least and as with medical, exams for vision are also recommended.
Pension Plans, 401k’s, 403b’s, Tax Deferred Annuities, and other Employer Sponsored Saving Plans
What we can do to help…
What we can do to help…
What You Need to Know if You Administer a Group Benefit Plan
Due to the recent decision by the Supreme Court to uphold many of the changes in the Affordable Care Act, employers need to know important mandates or face strict repercussions and/or penalties. There are several mandates that have already passed such as raising the dependent age to 26, eliminating pre-existing condition exclusions for minors, and banishing lifetime benefit caps. These mandates greatly affected the way the carriers provide coverage, but what about the employer? What are the mandates plan sponsors must follow?
There have been discussion and debates regarding the non-discrimination issues, or Section 105-h, which essentially prohibits employers for carving out high option plans to their rank and file and even more concerning–having an equal employer contribution level across the board. Thus far, this has been postponed by the IRS until further notice, however plan sponsors still face a myriad of mandates and requirements which loom on the horizon.
What You Need to Know if You Administer a Group Benefit Plan
Due to the recent decision by the Supreme Court to uphold many of the changes in the Affordable Care Act, employers need to know important mandates or face strict repercussions and/or penalties. There are several mandates that have already passed such as raising the dependent age to 26, eliminating pre-existing condition exclusions for minors, and banishing lifetime benefit caps. These mandates greatly affected the way the carriers provide coverage, but what about the employer? What are the mandates plan sponsors must follow?
There have been discussion and debates regarding the non-discrimination issues, or Section 105-h, which essentially prohibits employers for carving out high option plans to their rank and file and even more concerning–having an equal employer contribution level across the board. Thus far, this has been postponed by the IRS until further notice, however plan sponsors still face a myriad of mandates and requirements which loom on the horizon.
The first major change since the Supreme Court decision is the requirement for employers to provide a Summary of Benefit and Coverage (SBC) along with a Health Care Glossary to their employees. This requirement commences on September 23, 2012, for new groups and all groups renewing thereafter.
For the most part, the insurance carriers will bear most of the responsibility by preparing this document unless the plan sponsor offers a self-insured program or is subject to prepare it own SBC’s. However, the employer is still responsible to notify their employees prior to any major change in the plan, provide all the SBCs for each plan offered on renewal & for new hires, and facilitate their employees with the accessibility of the summaries which includes an employee request for the document. If electronic means of communication is the preferred method of disseminating benefit information, then the employer is required to provide computer access to this information. See Summary of Benefit of Coverage for more information.
ERISA and HIPAA requirements are not eliminated; in fact, they will undoubtedly be more regulated and enforced. The privacy act requires employers to maintain confidential information in a manner that protects employees’ information from fraudulent sharing. This includes the storage, sharing, and transmissions of information. Hence, no longer is it safe to send information containing social security numbers by standard e-mail.
Some other mandates that are now required or will be shortly include:
- Groups with over 250 lives, plan sponsors will have to report group health plan costs on box 12 of the W-2 form using Code DD and for groups with less, provide a method for reporting the aggregate value of the benefits, even though the information is for statistical purposes.
- FSA’s will have a $ 2500 limit starting on January 1, 2013, although there are inflation indexing measures and time frames that can affect the actual amount.
- In March of 2013, employers will be required to notify their employees of the Health Care Exchanges.
- Increase Medicare payroll tax withholding by 0.9% on high-income individuals beginning January 1, 2013.
- Report on the distribution of any Medical Loss Ratio rebates for group health plan.
- Limit the waiting period for new hires to 90 days.
- Provide the Department of Health & Human Services with certification of the minimum essential health benefits. See Essential Health Benefits for more information.
By William F. Schaake, CIC, CRM, CLCS, ACA Certified © 2011- 2023 All rights reserved.
Important Plan Sponsor Requirements - What Employers Need to Do to Comply
Age 26 Coverage for Young Adults
What plans are required to extend dependent coverage up to age 26? Source: US Department of Labor
The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until a child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parent’s employer plan even if they have another offer of coverage through an employer.
Model Language of Notice for Opportunity to Enroll - DOL FAQ’s
Children’s Health Insurance Program Reauthorization Act (“CHIPRA”) - Notice
• losing eligibility for coverage under a State Medicaid or CHIP program, or
• becoming eligible for State premium assistance under Medicaid or CHIP.
The employee or dependent must request coverage within 60 days of being terminated from Medicaid or CHIP coverage or within 60 days of being determined to be eligible for premium assistance.
There are also new notice and disclosure requirements associated with CHIPRA.
Read More >>
Continuation of Health Coverage — COBRA
NYS Continuation of Coverage
Source: New York State Department of Financial Services
Continuation Coverage Extension to 36 Months
On July 29, 2009, Governor Paterson signed into law Chapter 236 of the Laws of 2009, which improves access to health insurance for New Yorkers by making state continuation coverage (“mini-COBRA”) available for a total of 36 months. Under the law, people eligible for federal COBRA or state continuation coverage may receive a total of 36 months of coverage.
Creditable Coverage
The Medicare Modernization Act (MMA) requires entities (whose policies include prescription drug coverage) to notify Medicare eligible policyholders whether their prescription drug coverage is creditable coverage, which means that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. For these entities, there are two disclosure requirements:
The first disclosure requirement is to provide a written disclosure notice to all Medicare eligible individuals annually who are covered under its prescription drug plan, prior to October 15th each year and at various times as stated in the regulations, including to a Medicare eligible individual when he/she joins the plan. This disclosure must be provided to Medicare eligible active working individuals and their dependents, Medicare eligible COBRA individuals and their dependents, Medicare eligible disabled individuals covered under your prescription drug plan and any retirees and their dependents. The MMA imposes a late enrollment penalty on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. Accordingly, this information is essential to an individual’s decision whether to enroll in a Medicare Part D prescription drug plan. For more information go to the “Creditable Coverage Guidance and Model Disclosure Notices to be used after January 1, 2009” Section on the left-hand side of this page.
The second disclosure requirement is for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. The Disclosure should be completed annually no later than 60 days from the beginning of a plan year (contract year, renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status. For more information go to the “Disclosure to CMS Form” Section on the left-hand side of this page. — This requirement does not pertain to the Medicare beneficiaries for whom entities are receiving the Retiree Drug Subsidy (RDS).
This page provides guidance documents relating to Creditable Coverage requirements for employers and union-sponsored plans and model notice documents.
CMS.gov: More Information on Medicare D Credible Coverage and Employers Responsibilities
United Healthcare: Medicare D Credible Coverage Frequently Asked Questions
Modal Notice Letters
Family and Medical Leave Act
Source: U.S. Department of Labor
Overview
The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are entitled to:
Twelve workweeks of leave in a 12-month period for:
• the birth of a child and to care for the newborn child within one year of birth.
• the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement.
• to care for the employee’s spouse, child, or parent who has a serious health condition.
• a serious health condition that makes the employee unable to perform the essential functions of his or her job.
• any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or
Twenty-six workweeks of leave during a single 12-month period to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin (military caregiver leave).
For more information from DOL including forms, posters, and tools go to:
Involuntary Loss of Coverage
Source: U.S. Department of Labor
Ensure that the plan’s special enrollment provisions permit individuals to enroll when a loss of eligibility for other group health plan or health insurance coverage occurs and when employer contributions toward other coverage cease.
Example: A group health plan allows individuals to enroll through special enrollment for loss of other coverage only if the loss was due to an involuntary termination of employment.
Tip: The plan is required to permit individuals who declined health coverage under the plan because they had other group health plan or health insurance coverage to enroll in the plan through special enrollment upon any loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.
Under HIPAA, individuals who are otherwise eligible, but had declined health coverage because they had other group health plan or health insurance coverage, must be permitted to enroll in the plan (regardless of any late enrollment provisions) upon loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.
Loss of eligibility includes loss of coverage due to legal separation, divorce, voluntary or involuntary termination of employment, reduction in hours, children aging out of coverage, or moving out of an HMO service area. It does not include loss of coverage due to the failure of the individual to pay premiums on a timely basis or termination of coverage for cause.
Under HIPAA, special enrollment rights are also triggered when employer contributions toward an individual’s other coverage cease, regardless of whether the individual is still eligible for coverage under the other plan.
Qualifying Event - Special Enrollment Period
Source: U.S. Department of Labor
A plan’s special enrollment provisions must also permit employees and dependents (who are otherwise eligible) to enroll upon marriage, birth, adoption, or placement for adoption.
Example: A group health plan allows employees who are already enrolled for coverage to add dependents upon marriage, birth, adoption, and placement for adoption. However, if an employee is not already enrolled, the plan does not permit any enrollment when these events occur.
Tip: HIPAA allows eligible employees and dependents to enroll upon marriage, birth, adoption, or placement for adoption.
Group health plans are required to offer special enrollment to otherwise eligible employees, spouses and any new dependents upon marriage, birth, adoption, or placement for adoption. Accordingly, an employee who is otherwise eligible, but not enrolled for coverage, can enroll (and can also enroll a spouse and any new dependents, if they are otherwise eligible under the plan) when any of these events occur.
The plan should amend its special enrollment provisions to allow employees and dependents who are otherwise eligible to enroll at these events.
For individuals who enroll through special enrollment, ensure that the effective date of coverage complies with HIPAA.
Example: After an individual enrolls through special enrollment, a group health plan makes coverage effective on the first day of the first calendar month following the date a completed request for enrollment is received.
Tip: HIPAA sets forth specific dates when coverage is required to be made effective for special enrollees. In this case, the plan is not making coverage effective early enough for some individuals.
For special enrollment upon birth, adoption or placement for adoption, group health plans are required to make coverage effective as of the date of the birth, adoption or placement for adoption. For these events, this plan, in this example, is not making coverage effective early enough. Therefore, the plan should change the effective date of coverage provision to comply with HIPAA.
Summary of Benefits and Coverage (SBC)
Source: Healthcare.gov
As directed by the Affordable Care Act, health insurance companies and group health plans will soon provide consumers with a concise document detailing, in plain language, simple and consistent information about health plan or individual insurance policy benefits and coverage. The SBC will help consumers better understand the coverage they have and allow them to easily compare different coverage options. It will summarize the key features of the plan or coverage, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. The SBC will be available to consumers at important points in the enrollment process, such as when they are shopping for coverage, when they apply for coverage, at each new plan year, and at any time upon request.
The SBC will include a new, standardized health plan comparison tool for consumers known as “coverage examples” – using a format modeled on the Nutrition Facts label required for packaged foods. The coverage examples will illustrate, for comparison purposes, what proportion of the cost of care a health insurance policy or plan would cover for a sample patient for two common medical situations—having a baby and managing type 2 diabetes. Additional scenarios will be added in the future as feedback is gathered from consumers. These examples will help consumers understand and compare a sample patient’s share of the costs of care under a particular plan and have a better idea of how valuable the health plan will be at times when they may need the coverage.
The SBC will make it easier for health insurance consumers to find the best coverage for themselves and their families – and for employers to find the best coverage for their business and their employees.
Uniform Glossary of Health-Coverage and Medical Terms
Accessing this Information
Information when shopping for coverage: In the past, consumers shopping for health coverage might only be able to obtain marketing materials about a policy, offering consumers only a limited understanding of what they’d be buying. Now, consumers will be able to receive critical information on their choices upfront, before they buy coverage, helping them to choose the coverage that best meets their needs.
Information when coverage is renewed: Consumers will receive the SBC before each new plan or policy year so they can see how their coverage is changing before deciding whether to renew or reenroll in coverage.
Information when coverage changes: If there are any significant changes in coverage in the middle of the plan or policy year, health plans and insurers will be required to notify their enrollees and policyholders at least 60 days before the changes take effect.
Information on demand: Whether shopping for health insurance or already enrolled in coverage, consumers will be able to request the SBC at any time, and health plans will have to provide it within seven business days. Consumers will also be able to request and receive the uniform glossary within seven business days. In addition, the glossary will be publicly displayed on www.HealthCare.gov, www.cciio.cms.gov, and www.askebsa.dol.gov/.
Use of Information Technology and Reducing Burden on Employers and Insurers
To view the final template for the summary of benefits and coverage, visit:
Waiting Periods
Source: U.S. Department of Labor
If the plan has a waiting period for coverage, ensure that any pre-existing condition exclusion period runs concurrently with the waiting period, rather than beginning after the waiting period ends.
Example: A group health plan imposes a 30-day waiting period from an individual’s date of hire before coverage becomes effective. Then, after an individual has satisfied this waiting period, the plan imposes a 12-month pre-existing condition exclusion from the individual’s effective date of coverage (offset by creditable coverage).
Tip: The pre-existing condition exclusion period is required to begin on the first day of the waiting period.
HIPAA requires that the maximum pre-existing condition exclusion period begin on an individual’s enrollment date. For plans that impose a waiting period, the enrollment date is generally the first day of the waiting period. (Under HIPAA, an individual’s enrollment date is the first day of coverage or, if there is a waiting period, the first day of the waiting period.)
In this example, the plan must begin counting the 12-month pre-existing condition exclusion period from the individual’s enrollment date, which in this case is the first day of the waiting period.
Employee Benefit Plans
A Brief Background
Employee Benefit Plans
A Brief Background
Group Health and Medical Insurance
Ancillary & Voluntary Benefits, and Worksite Plans
Many advisors design the benefit package around the group health plan providing ancillary benefits which either fill in the gaps or dovetail the coverage of the group health plan. This strategy allows the employer to implement plans that may cover the cost of hospitalization while tacking on high deductibles on the medical insurance or provide comprehensive dental and vision to offset what medical insurance typically limits.
Since medical insurance care costs have spiraled out of control in the last 30 years, employers seek ways of controlling costs and many of these ancillary lines of coverage created new products and launched an entirely new industry of voluntary and worksite benefits.
Group Life, Disability, Hospitalization, and Accident & Sickness
Group life, long term disability, short term disability, hospitalization, and accident & sickness plans can be offered on a voluntary or employer paid basis. A hybrid model can also be established to promote employees to participate. These plans are designed to provide coverage for a financial loss in the event of an emergency, accident, loss of life or limb, and to provide an income stream when the employee retires or when needed during a life-changing event, such as the birth of a child or the purchase of a first home.
The financial impact on the family of a disabled or deceased employee can be devastating depending on the severity. A loss of life, without life insurance to replace the loss of income of the worker may be limited to what the Social Security Benefits provide, as most medical insurance policies exclude this coverage. The loss due to disability related to a worksite injury can be covered by workers’ compensation, but a disability outside work is generally covered by short term disability and currently only about a half a dozen states require the employer to provided statutory disability coverage, or DBL or STD. Generally, these policies provide nominal benefits and are limited in duration.
The loss of income can be greater than that of medical care depending on how much income is lost due to the employee’s inability to work. The ongoing expense to care for the disabled worker can be ongoing and may require environmental modifications in the home to meet the needs of the injured individual. These expenses are generally limited by medical insurance or not covered at all.
We recommend offering these lines of coverage at least on a voluntary basis which empowers the employee to decide whether the protection is needed. Payment of premium can often be made by payroll deduction.
Dental and Vision Insurance
Dental insurance seems to be more popular and requested by employees than other types of ancillary products, probably because of the frequency of utilization, especially with children. Usually, the financial impact of dental claims is not as great as medical, and most dental plans have limits on how much is available for all dental care each ear. Recent studies have linked poor dental hygiene and gum disease with heart related medical conditions, so prevention is crucial to the long-term health of the worker, and many think the annual dental check-up is as important as annual medical exam, which may be the reason why pediatric dental insurance is mandated under the Affordable Care Act.
Coverage for dental insurance can be comprehensive or designed to cover preventative and basic services. As with health insurance, the cost can vary substantially between plans based on the level of coverage, the network, and out of pocket expenses to the user. Preventative dental is recommended at the very least and as with medical, exams for vision are also recommended.
Dental and Vision Insurance
Dental insurance seems to be more popular and requested by employees than other types of ancillary products, probably because of the frequency of utilization, especially with children. Usually, the financial impact of dental claims is not as great as medical, and most dental plans have limits on how much is available for all dental care each ear. Recent studies have linked poor dental hygiene and gum disease with heart related medical conditions, so prevention is crucial to the long-term health of the worker, and many think the annual dental check-up is as important as annual medical exam, which may be the reason why pediatric dental insurance is mandated under the Affordable Care Act.
Coverage for dental insurance can be comprehensive or designed to cover preventative and basic services. As with health insurance, the cost can vary substantially between plans based on the level of coverage, the network, and out of pocket expenses to the user. Preventative dental is recommended at the very least and as with medical, exams for vision are also recommended.
Pension Plans, 401k’s, 403b’s, Tax Deferred Annuities, and other Employer Sponsored Saving Plans
What we can do to help…
What we can do to help…
What You Need to Know if You Administer a Group Benefit Plan
Due to the recent decision by the Supreme Court to uphold many of the changes in the Affordable Care Act, employers need to know important mandates or face strict repercussions and/or penalties. There are several mandates that have already passed such as raising the dependent age to 26, eliminating pre-existing condition exclusions for minors, and banishing lifetime benefit caps. These mandates greatly affected the way the carriers provide coverage, but what about the employer? What are the mandates plan sponsors must follow?
There have been discussion and debates regarding the non-discrimination issues, or Section 105-h, which essentially prohibits employers for carving out high option plans to their rank and file and even more concerning–having an equal employer contribution level across the board. Thus far, this has been postponed by the IRS until further notice, however plan sponsors still face a myriad of mandates and requirements which loom on the horizon.
What You Need to Know if You Administer a Group Benefit Plan
Due to the recent decision by the Supreme Court to uphold many of the changes in the Affordable Care Act, employers need to know important mandates or face strict repercussions and/or penalties. There are several mandates that have already passed such as raising the dependent age to 26, eliminating pre-existing condition exclusions for minors, and banishing lifetime benefit caps. These mandates greatly affected the way the carriers provide coverage, but what about the employer? What are the mandates plan sponsors must follow?
There have been discussion and debates regarding the non-discrimination issues, or Section 105-h, which essentially prohibits employers for carving out high option plans to their rank and file and even more concerning–having an equal employer contribution level across the board. Thus far, this has been postponed by the IRS until further notice, however plan sponsors still face a myriad of mandates and requirements which loom on the horizon.
The first major change since the Supreme Court decision is the requirement for employers to provide a Summary of Benefit and Coverage (SBC) along with a Health Care Glossary to their employees. This requirement commences on September 23, 2012, for new groups and all groups renewing thereafter.
For the most part, the insurance carriers will bear most of the responsibility by preparing this document unless the plan sponsor offers a self-insured program or is subject to prepare it own SBC’s. However, the employer is still responsible to notify their employees prior to any major change in the plan, provide all the SBCs for each plan offered on renewal & for new hires, and facilitate their employees with the accessibility of the summaries which includes an employee request for the document. If electronic means of communication is the preferred method of disseminating benefit information, then the employer is required to provide computer access to this information. See Summary of Benefit of Coverage for more information.
ERISA and HIPAA requirements are not eliminated; in fact, they will undoubtedly be more regulated and enforced. The privacy act requires employers to maintain confidential information in a manner that protects employees’ information from fraudulent sharing. This includes the storage, sharing, and transmissions of information. Hence, no longer is it safe to send information containing social security numbers by standard e-mail.
Some other mandates that are now required or will be shortly include:
- Groups with over 250 lives, plan sponsors will have to report group health plan costs on box 12 of the W-2 form using Code DD and for groups with less, provide a method for reporting the aggregate value of the benefits, even though the information is for statistical purposes.
- FSA’s will have a $ 2500 limit starting on January 1, 2013, although there are inflation indexing measures and time frames that can affect the actual amount.
- In March of 2013, employers will be required to notify their employees of the Health Care Exchanges.
- Increase Medicare payroll tax withholding by 0.9% on high-income individuals beginning January 1, 2013.
- Report on the distribution of any Medical Loss Ratio rebates for group health plan.
- Limit the waiting period for new hires to 90 days.
- Provide the Department of Health & Human Services with certification of the minimum essential health benefits. See Essential Health Benefits for more information.
By William F. Schaake, CIC, CRM, CLCS, ACA Certified © 2011- 2023 All rights reserved.
Important Plan Sponsor Requirements – What Employers Need to Do to Comply
Age 26 Coverage for Young Adults
What plans are required to extend dependent coverage up to age 26? Source: US Department of Labor
The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until a child reaches the age of 26. Both married and unmarried children qualify for this coverage. This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parent’s employer plan even if they have another offer of coverage through an employer.
Model Language of Notice for Opportunity to Enroll – DOL FAQ’s
Children’s Health Insurance Program Reauthorization Act (“CHIPRA”) – Notice
• losing eligibility for coverage under a State Medicaid or CHIP program, or
• becoming eligible for State premium assistance under Medicaid or CHIP.
The employee or dependent must request coverage within 60 days of being terminated from Medicaid or CHIP coverage or within 60 days of being determined to be eligible for premium assistance.
There are also new notice and disclosure requirements associated with CHIPRA.
Read More >>
Continuation of Health Coverage — COBRA
NYS Continuation of Coverage
Source: New York State Department of Financial Services
Continuation Coverage Extension to 36 Months
On July 29, 2009, Governor Paterson signed into law Chapter 236 of the Laws of 2009, which improves access to health insurance for New Yorkers by making state continuation coverage (“mini-COBRA”) available for a total of 36 months. Under the law, people eligible for federal COBRA or state continuation coverage may receive a total of 36 months of coverage.
Creditable Coverage
The Medicare Modernization Act (MMA) requires entities (whose policies include prescription drug coverage) to notify Medicare eligible policyholders whether their prescription drug coverage is creditable coverage, which means that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. For these entities, there are two disclosure requirements:
The first disclosure requirement is to provide a written disclosure notice to all Medicare eligible individuals annually who are covered under its prescription drug plan, prior to October 15th each year and at various times as stated in the regulations, including to a Medicare eligible individual when he/she joins the plan. This disclosure must be provided to Medicare eligible active working individuals and their dependents, Medicare eligible COBRA individuals and their dependents, Medicare eligible disabled individuals covered under your prescription drug plan and any retirees and their dependents. The MMA imposes a late enrollment penalty on individuals who do not maintain creditable coverage for a period of 63 days or longer following their initial enrollment period for the Medicare prescription drug benefit. Accordingly, this information is essential to an individual’s decision whether to enroll in a Medicare Part D prescription drug plan. For more information go to the “Creditable Coverage Guidance and Model Disclosure Notices to be used after January 1, 2009” Section on the left-hand side of this page.
The second disclosure requirement is for entities to complete the Online Disclosure to CMS Form to report the creditable coverage status of their prescription drug plan. The Disclosure should be completed annually no later than 60 days from the beginning of a plan year (contract year, renewal year), within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status. For more information go to the “Disclosure to CMS Form” Section on the left-hand side of this page. — This requirement does not pertain to the Medicare beneficiaries for whom entities are receiving the Retiree Drug Subsidy (RDS).
This page provides guidance documents relating to Creditable Coverage requirements for employers and union-sponsored plans and model notice documents.
CMS.gov: More Information on Medicare D Credible Coverage and Employers Responsibilities
United Healthcare: Medicare D Credible Coverage Frequently Asked Questions
Modal Notice Letters
Family and Medical Leave Act
Source: U.S. Department of Labor
Overview
The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are entitled to:
Twelve workweeks of leave in a 12-month period for:
• the birth of a child and to care for the newborn child within one year of birth.
• the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement.
• to care for the employee’s spouse, child, or parent who has a serious health condition.
• a serious health condition that makes the employee unable to perform the essential functions of his or her job.
• any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or
Twenty-six workweeks of leave during a single 12-month period to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin (military caregiver leave).
For more information from DOL including forms, posters, and tools go to:
Involuntary Loss of Coverage
Source: U.S. Department of Labor
Ensure that the plan’s special enrollment provisions permit individuals to enroll when a loss of eligibility for other group health plan or health insurance coverage occurs and when employer contributions toward other coverage cease.
Example: A group health plan allows individuals to enroll through special enrollment for loss of other coverage only if the loss was due to an involuntary termination of employment.
Tip: The plan is required to permit individuals who declined health coverage under the plan because they had other group health plan or health insurance coverage to enroll in the plan through special enrollment upon any loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.
Under HIPAA, individuals who are otherwise eligible, but had declined health coverage because they had other group health plan or health insurance coverage, must be permitted to enroll in the plan (regardless of any late enrollment provisions) upon loss of eligibility for the other coverage or if employer contributions toward the other coverage cease.
Loss of eligibility includes loss of coverage due to legal separation, divorce, voluntary or involuntary termination of employment, reduction in hours, children aging out of coverage, or moving out of an HMO service area. It does not include loss of coverage due to the failure of the individual to pay premiums on a timely basis or termination of coverage for cause.
Under HIPAA, special enrollment rights are also triggered when employer contributions toward an individual’s other coverage cease, regardless of whether the individual is still eligible for coverage under the other plan.
Qualifying Event – Special Enrollment Period
Source: U.S. Department of Labor
A plan’s special enrollment provisions must also permit employees and dependents (who are otherwise eligible) to enroll upon marriage, birth, adoption, or placement for adoption.
Example: A group health plan allows employees who are already enrolled for coverage to add dependents upon marriage, birth, adoption, and placement for adoption. However, if an employee is not already enrolled, the plan does not permit any enrollment when these events occur.
Tip: HIPAA allows eligible employees and dependents to enroll upon marriage, birth, adoption, or placement for adoption.
Group health plans are required to offer special enrollment to otherwise eligible employees, spouses and any new dependents upon marriage, birth, adoption, or placement for adoption. Accordingly, an employee who is otherwise eligible, but not enrolled for coverage, can enroll (and can also enroll a spouse and any new dependents, if they are otherwise eligible under the plan) when any of these events occur.
The plan should amend its special enrollment provisions to allow employees and dependents who are otherwise eligible to enroll at these events.
For individuals who enroll through special enrollment, ensure that the effective date of coverage complies with HIPAA.
Example: After an individual enrolls through special enrollment, a group health plan makes coverage effective on the first day of the first calendar month following the date a completed request for enrollment is received.
Tip: HIPAA sets forth specific dates when coverage is required to be made effective for special enrollees. In this case, the plan is not making coverage effective early enough for some individuals.
For special enrollment upon birth, adoption or placement for adoption, group health plans are required to make coverage effective as of the date of the birth, adoption or placement for adoption. For these events, this plan, in this example, is not making coverage effective early enough. Therefore, the plan should change the effective date of coverage provision to comply with HIPAA.
Summary of Benefits and Coverage (SBC)
Source: Healthcare.gov
As directed by the Affordable Care Act, health insurance companies and group health plans will soon provide consumers with a concise document detailing, in plain language, simple and consistent information about health plan or individual insurance policy benefits and coverage. The SBC will help consumers better understand the coverage they have and allow them to easily compare different coverage options. It will summarize the key features of the plan or coverage, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. The SBC will be available to consumers at important points in the enrollment process, such as when they are shopping for coverage, when they apply for coverage, at each new plan year, and at any time upon request.
The SBC will include a new, standardized health plan comparison tool for consumers known as “coverage examples” – using a format modeled on the Nutrition Facts label required for packaged foods. The coverage examples will illustrate, for comparison purposes, what proportion of the cost of care a health insurance policy or plan would cover for a sample patient for two common medical situations—having a baby and managing type 2 diabetes. Additional scenarios will be added in the future as feedback is gathered from consumers. These examples will help consumers understand and compare a sample patient’s share of the costs of care under a particular plan and have a better idea of how valuable the health plan will be at times when they may need the coverage.
The SBC will make it easier for health insurance consumers to find the best coverage for themselves and their families – and for employers to find the best coverage for their business and their employees.
Uniform Glossary of Health-Coverage and Medical Terms
Accessing this Information
Information when shopping for coverage: In the past, consumers shopping for health coverage might only be able to obtain marketing materials about a policy, offering consumers only a limited understanding of what they’d be buying. Now, consumers will be able to receive critical information on their choices upfront, before they buy coverage, helping them to choose the coverage that best meets their needs.
Information when coverage is renewed: Consumers will receive the SBC before each new plan or policy year so they can see how their coverage is changing before deciding whether to renew or reenroll in coverage.
Information when coverage changes: If there are any significant changes in coverage in the middle of the plan or policy year, health plans and insurers will be required to notify their enrollees and policyholders at least 60 days before the changes take effect.
Information on demand: Whether shopping for health insurance or already enrolled in coverage, consumers will be able to request the SBC at any time, and health plans will have to provide it within seven business days. Consumers will also be able to request and receive the uniform glossary within seven business days. In addition, the glossary will be publicly displayed on www.HealthCare.gov, www.cciio.cms.gov, and www.askebsa.dol.gov/.
Use of Information Technology and Reducing Burden on Employers and Insurers
To view the final template for the summary of benefits and coverage, visit:
Waiting Periods
Source: U.S. Department of Labor
If the plan has a waiting period for coverage, ensure that any pre-existing condition exclusion period runs concurrently with the waiting period, rather than beginning after the waiting period ends.
Example: A group health plan imposes a 30-day waiting period from an individual’s date of hire before coverage becomes effective. Then, after an individual has satisfied this waiting period, the plan imposes a 12-month pre-existing condition exclusion from the individual’s effective date of coverage (offset by creditable coverage).
Tip: The pre-existing condition exclusion period is required to begin on the first day of the waiting period.
HIPAA requires that the maximum pre-existing condition exclusion period begin on an individual’s enrollment date. For plans that impose a waiting period, the enrollment date is generally the first day of the waiting period. (Under HIPAA, an individual’s enrollment date is the first day of coverage or, if there is a waiting period, the first day of the waiting period.)
In this example, the plan must begin counting the 12-month pre-existing condition exclusion period from the individual’s enrollment date, which in this case is the first day of the waiting period.