Health Care Reform
2013 Archive

December 17, 2013

CMS Provides Instruction for Brokers Assisting Consumers with Exchange Enrollment

CMS recently released a series of FAQs for brokers and agents assisting individuals with enrollment in the federally facilitated marketplace (FFM). The guidance states that there are two online options for assisting an individual who has not previously started an application. Those options are using an issuer’s website (known as the direct enrollment pathway) or using www.healthcare.gov (known as the marketplace pathway) to assist the consumer. Step-by-step instructions are provided for both options. Alternatively, the broker may initiate a three-way call with the Marketplace Call Center (800-318-2596). The client must be on the phone with the broker to complete the application process. Guidance is also provided for consumers who have already started the application process but still require assistance.

Further, CMS has provided additional guidance that will be helpful for brokers assisting small employers with enrollment in the federally facilitated Small Business Health Options Program (FF-SHOP). As announced in the Dec. 3, 2013, edition of Compliance Corner, the online enrollment for the FF-SHOP has been delayed until November 2014. However, paper applications and telephonic enrollments are still being accepted. A slide presentation is available that includes step-by-step instructions for enrollment, including a link to the FF-SHOP employer application.

FFM FAQs
FF-SHOP Slide Presentation
FF-SHOP Employer Application

Interim Final Regulations Clarify Marketplace Enrollment Deadline for Jan. 1 Effective Date

On Dec. 17, 2013, HHS published interim final regulations to formalize the extension of the time frame to enroll for coverage with a Jan. 1, 2014, effective date in the health care marketplace. The regulations address coverage through both the federally facilitated individual and small business marketplaces, as well as federal and state partnership individual and small business marketplaces. The previous deadline of Dec. 15, 2013, has now been extended eight days to Dec. 23, 2013, for those attempting to enroll for coverage effective Jan. 1, 2014.

This is a one-time extension that is not intended to apply for coverage effective in future months. For example, if a plan selection is made between Dec. 24, 2013, and Jan. 15, 2014, the coverage effective date will be no later than Feb. 1, 2014, which follows the time frame in the original regulations. That being said, the rule leaves open the possibility for issuers to allow for coverage with an effective date of Jan. 1, 2014, even if it is selected after Dec. 23, 2013, given the newness of the enrollment process. In some cases, this could mean coverage is retroactive. This is a decision left to issuers.

Importantly, the regulations permit state-run health insurance exchanges to select a different deadline for Jan. 1 enrollment. The regulations further provide that consumers need to pay the initial premium no later than Dec. 31, 2013, to ensure coverage becomes effective on a timely basis, although issuers may again provide more generous policies and allow premiums to be paid after Jan. 1, 2014, for a retroactive effective date. In some cases, a full payment of the total premium due may not be required. Future rulemaking will clarify the payment policies beyond this initial open enrollment period. Finally, this extended deadline has no effect on coverage purchased outside of a publically run marketplace. The regulations are effective Dec. 15, 2013.

Regulations

IRS Releases Final Regulations on PPACA’s Health Insurance Tax

On Nov. 29, 2013, the IRS issued final regulations, Rev. Rul. 2013-27 and Notice 2013-76, which all relate to PPACA’s health insurance tax (HIT). The HIT is an annual tax that health insurance carriers must pay beginning in 2014. The total HIT amount is $8 billion in 2014 (increasing thereafter), and each carrier is responsible for paying its proportionate share of the total HIT amount (based on the carrier’s share of the U.S. health insurance market as expressed in premiums written). As a result, carriers will have to begin paying the HIT in 2014, and will likely pass the related cost on to the policyholders of insured plans (i.e., employers in the group plan context). Self-insured plans are not subject to the HIT.

Back in March 2013, the IRS issued proposed regulations on the HIT (covered in the March 12, 2013, edition of Compliance Corner). The final regulations and additional ruling and notice primarily adopt the proposed regulations, but do make some minor modifications as it relates to employers.

Previously, it was not clear whether employee assistance programs, wellness programs and stop-loss insurance policies would be subject to the HIT. The final regulations note that future guidance will address that issue, and that until the future guidance is released, such programs and policies will not be subject to the HIT.

The final regulations and related guidance outline the due date for reporting premiums written and the procedure for determining the fee. Insurers will be notified of their final HIT amount due by Aug. 31 each year, and must pay the HIT by Sept. 30 of that year. Importantly, Rev. Rul. 2013-27 clarifies that carriers must include in their gross income any separate amounts (i.e., line item amounts outside of the premium) that they collect from policyholders to offset the cost of the HIT.

Since the HIT applies directly to the carrier, employers need not concern themselves with calculating, reporting and paying the HIT. But employers will want to be aware of the HIT regulations and how the HIT will affect their fully insured plans.

Regulations
Rev. Rul. 2013-27
Notice 2013-76


December 3, 2013

HHS Announces Delay of Online FF-SHOP Enrollment

On Nov. 27, 2013, HHS announced that the online enrollment feature in the federally facilitated Small Business Health Options Program (FF-SHOP) is delayed until November 2014. Small employers may still use www.healthcare.gov to view carriers and plan options. To enroll, the employer may contact an agent or broker and complete a paper application. As a reminder, a small employer wanting to claim the Small Business Health Care Tax Credit must purchase coverage through an exchange to continue to be eligible for that credit. HHS also announced that in order for FF-SHOP coverage to begin by Jan. 1, 2014, the enrollment application must be submitted by Dec. 23, 2013, which is extended from the previous deadline of Dec. 15, 2013.

HHS Announcement
CMS FAQs

U.S. Supreme Court Accepts Review of Challenges to PPACA’s Contraceptive Coverage Mandate

On Nov. 26, 2013, the U.S. Supreme Court agreed to hear religious constitutional challenges to the PPACA requirement that employers provide health insurance that includes birth control and related medical services at zero cost sharing. As background, PPACA requires non-grandfathered, non-excepted group health plans to provide certain women’s preventive services – including contraceptive coverage and services – without cost-sharing when services are delivered by in-network providers. The contraceptive coverage requirement applied for plan years beginning on or after Aug. 1, 2012. The government did provide an exemption for qualifying religious employers, as well as a temporary safe harbor for non-exempt, nonprofit organizations with religious objections (for plan years beginning before Aug. 1, 2013). There have been many challenges to the contraceptive coverage mandate, claiming that the mandate violates the First Amendment of the Constitution (free exercise of religion) and the Religious Freedom Restoration Act (RFRA, which provides protection from governmental burden on a person’s exercise of religion).

In agreeing to hear the challenges, the Supreme Court accepted appeals from the U.S. Courts of Appeals for the Third and Tenth Circuits. The employers in these cases are for-profit companies that do not qualify for the exemption available to qualifying religious employers or the temporary safe harbor for non-exempt, nonprofit organizations with religious objections. The Third and Tenth Circuits reached different conclusions on the First Amendment and RFRA challenges, paving the way for the Supreme Court to weigh in on the case. In doing so, the Supreme Court is expected to consider the religious rights claims of for-profit employers, and their individual business owners, under both the First Amendment and the RFRA. The Supreme Court will hear arguments this spring, with a decision coming most likely in early summer 2014.

Supreme Court Order Granting Petitions

HHS Issues Proposed Rules Related to Benefit and Payment Parameters

On Nov. 25, 2013, HHS issued proposed rules related to benefit and payment parameters for 2015. Included in the proposed rules were the reinsurance fee rates for 2015 as well as information about the actuarial value (AV) calculator for 2015.

As background regarding the reinsurance fee, beginning in 2014, each state that operates a health insurance exchange is required to establish a temporary reinsurance program for the individual market, to which health insurers and group health plans are required to contribute. The reinsurance program will be in operation from 2014 through 2016, operating basically as insurance for insurers; that is, it will shift the risk of covering high expenses from the primary insurer to a reinsurer. Beginning in 2014, all health insurers and third-party administrators (referred to in the regulations as "contributing entities") must make contributions to support reinsurance payments to non-grandfathered plans of individual market insurers that cover high-cost individuals. HHS had previously established that the fee for 2014 would be $63 per covered life. These proposed rules set the reinsurance fee at $44 for 2015.

Also introduced in these proposed rules is a 2015 AV Calculator, with associated methodology. The proposed methodology and AV Calculator remain largely the same as the 2014 versions. However, some minor changes were made to increase functionality. These minor changes include allowing more plan designs (i.e., those with separate medical/drug deductibles and separate medical/drug maximum out-of-pocket limits) to use the AV Calculator and adjusting the way services are applied to deductibles (allowing services to be applied to the deductible first, and then copayments).

Fact Sheet
Regulations
Proposed 2015 AV Calculator
Proposed 2015 AV Calculator Methodology
Draft User Guide to Proposed 2015 AV Calculator

More Guidance on Transition to PPACA-compliant Policies

On Nov. 21, 2013, CMS Director Cohen issued a bulletin and memo further explaining the department’s Market Transition Policy previously announced on Nov. 14, 2013. See the Nov. 19, 2013, edition of Compliance Corner for background on this policy.

This most recent guidance provides standardized notices for insurers to use if the insurer is choosing to continue coverage into 2014 that would otherwise have been terminated or cancelled due to being out of compliance with certain mandated health care reform requirements going into effect beginning Jan. 1, 2014. The notices are only applicable to non-grandfathered plans renewed for policy years starting between Jan. 1, 2014, and Oct. 1, 2014, in the individual and small group markets. Further, in order for an insurance carrier to extend the policies under this transition policy, the state insurance commissioner must permit the continuation of such policies.

As of Dec. 2, 2013, the following states have determined that they will allow insurers to make the transition policy available to policyholders. Insurers may still choose to discontinue the pre-2014 policies if they wish. The states allowing the transition relief include: Florida, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Nebraska, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Virginia and Wisconsin.

As of Dec. 2, 2013, the following states have determined that they will not allow insurers to make the transition policy available to policyholders. Insurers do not have the option of continuing pre-2014 policies due to the decision made by the state insurance commissioner in these states. The states not allowing the transition relief include: California, Connecticut, District of Columbia, Georgia, Indiana, Massachusetts, Minnesota, Nevada, New York, Oklahoma, Rhode Island, Vermont, Washington and West Virginia.

States not listed have not made a determination as of Dec. 2, 2013.

Bulletin


November 19, 2013

CMS Issues Letter to State Insurance Commissioners on Market Transitional Policy

On Nov. 14, 2013, President Obama held a White House Press briefing to announce a transitional policy directed toward consumers and small groups who have lost or will be losing the health insurance coverage they have today. The president said he considers the policy to be an extension of PPACA’s grandfather provision, which exempts plans that existed on March 23, 2010, from certain provisions of PPACA so long as significant changes to benefits and cost sharing are not made.

Following the briefing, the transitional policy was formally laid out in a letter from Gary Cohen, director of the CCIIO within HHS, to state insurance commissioners. The letter encourages state agencies responsible for enforcing insurance market reforms to “adopt the same transitional policy with respect to this coverage.” He outlined a plan under which health insurers may choose to continue coverage to individuals and small businesses that would otherwise be terminated or cancelled because it does not comply with market reforms that are scheduled to take effect for plan years starting on or after Jan. 1, 2014.

The transitional policy states that health insurance coverage in the individual or small group market that is renewed for a policy year starting between Jan. 1, 2014, and Oct. 1, 2014, and associated group health plans of small businesses will not be considered to be out of compliance with the following market reforms:

  • Community rating to determine premiums
  • Guaranteed issue of coverage
  • Guaranteed renewability of coverage
  • Prohibition of coverage exclusions based on pre-existing conditions
  • Non-discrimination based on health status
  • Non-discrimination regarding health care providers
  • Comprehensive coverage (i.e., coverage of essential health benefits and maximum out-of-pocket limits)
  • Coverage for participation in clinical trials

Coverage that was in effect on Oct. 1, 2013, is eligible for the transitional policy. In addition, to utilize the transitional policy, insurers will have to send a notice to individuals or small businesses who otherwise would have received cancellation notices informing them of:

  • Any changes in the options that are available to them
  • Which of the market reforms listed above would not be reflected in any continuing coverage
  • The potential option to enroll in coverage available through an exchange and the possibility to receive premium assistance tax credits to help pay premiums
  • How to access such coverage through an exchange
  • Their right to enroll in coverage outside of the exchange that complies with the specified market reforms

For individuals and small businesses to whom cancellation notices already have been sent, insurers must send this notice “as soon as reasonably possible.” The letter directs insurers to send the notice to other individuals or small businesses by the time the insurer otherwise would have sent the cancellation notice.

The letter indicates that the administration “will consider the impact of this transitional policy in assessing whether to extend it beyond the specified time frame.” To help address any changes in premium revenue for health insurers, the administration also said it would “explore ways to modify the risk corridor program final rules to provide additional assistance.”

Some state regulators have stated that they will move ahead to try and implement the policy even though in many cases policies have already been cancelled. There is uncertainty as to how rates, risk pooling and many other details will be handled in these cases. Regulators in Arkansas, Georgia and Washington state have announced that they will not follow the transitional policy. Employers with cancelled plans should reach out to their state insurance department or insurer to determine if their cancelled plans might continue into 2014.

HHS Policy Letter

CMS Publishes Key Facts for FF-SHOPs

In October 2013, CMS released key facts about the federally facilitated Small Business Health Options Program (FF-SHOP) Marketplace. This guidance is applicable to the FF-SHOP Marketplace, and may be different in states that run their own SHOP Marketplace. The guidance is in the form of 45 questions with corresponding answers from CMS. The guidance includes a description of the FF-SHOP’s services, eligibility for the program and enrollment periods applicable for SHOP coverage. Also covered is how to participate in the FF-SHOP Marketplace (as a small employer), among many other issues.

Key Facts for FF-SHOPs


November 5, 2013

HHS Provides Penalty Exemption for Individuals Timely Enrolling in an Exchange

HHS issued guidance providing an exemption from the individual mandate penalty for individuals who enroll in an exchange during the initial open enrollment period for 2014. As background, starting in 2014, the individual shared responsibility provision requires each individual to maintain essential coverage, qualify for an exemption from the requirement to maintain minimum essential coverage or make a shared responsibility payment when filing a federal income tax return. One of the exemptions to the penalty applies to individuals with a single gap in coverage during the year, which is no greater than a continuous three-month period. The shared responsibility payment generally applies to people who have access to affordable coverage during a taxable year but who nonetheless remain uninsured for a substantial portion of that year. The guidance creates a limited exemption to address the coverage gap that may arise during the initial open enrollment period, thereby exposing individuals to a shared responsibility payment.

Individuals who enroll in a plan between the first and 15th day of a given month will be covered as of the first day of the immediately following month. Individuals enrolling between the 16th day and the end of a given month, however, will be covered as of the first day of the second following month. Due to the interaction between the initial open enrollment period of Oct. 1, 2013, and March 31, 2014, and the coverage effective dates, individuals enrolling between Feb. 16, 2014, and the close of the initial open enrollment period will not have exchange coverage in effect until at least April 1, 2014. This means they may have a gap in coverage of three months or more and be subject to an individual shared responsibility penalty, unless they are otherwise exempt.

To remedy this situation, HHS has established an additional hardship exemption so that anyone who enrolls in an exchange prior to the close of the initial open enrollment period will not face a penalty for the months prior to the coverage effective date. More details will be provided in 2014 about how to claim this exemption when filing a federal income tax return in 2015.

HHS Announcement and FAQs

IRS Provides Additional Guidance on Midyear Election Changes for Non-calendar-year Plans

On Oct. 31, 2013, the IRS issued Notice 2013-71, which (among other things) provides further guidance on a previously announced special transition rule for non-calendar-year plans and midyear election changes. Under the transition rule generally, a non-calendar-year plan could be amended to allow for one mid-plan-year election change. That rule was meant to provide an election change opportunity in connection with the exchange coverage effective date of Jan. 1, 2014, and allows employees a one-time mid-plan-year change without regard to whether there has been a change in status event under the regulations.

According to the additional guidance, this transition rule applies regardless of whether the employer is an applicable large employer (i.e., one that is subject to the employer mandate, meaning the employer employs 50 or more full-time employees and full-time equivalent employees) or applicable large employer member (i.e., a member of a controlled group that is subject to the employer mandate). The original transition rule had referenced only “applicable large employer members.” As a result of the clarification, the only requirements to use this special transition rule are that the plan be a non-calendar-year plan and that the employer has a cafeteria plan.

IRS Notice 2013-71

Final Regulations Address Exchange Program Integrity, Reinsurance Contributions and Guaranteed Availability and Renewability

On Oct. 30, 2013, HHS published final regulations related to program integrity, exchange, premium stabilization programs and market standards. The regulations are mostly technical in nature and primarily affect insurers and exchange operators. However, there are two issues with direct impact on employer plan sponsors.

For years 2014 through 2016, group health plans are subject to a reinsurance fee on each covered life. In 2014, that fee is $63 per year. The regulations clarify that if a plan is partially insured and partially self-funded, the reinsurance fee does not apply to an insurer that does not provide major medical coverage. For example, if the medical coverage is self-funded and the prescription coverage is fully insured, the fee would not apply to the prescription drug coverage. The fee only applies once per covered life. The preamble to the regulations also states that HHS intends to propose regulations that would exempt self-funded self-administered plans from the fee in 2015 and 2016. HHS also intends to propose that the fee would be payable in two installments: at the beginning and end of the calendar year following the applicable benefit year. For example, the fee would be payable in January and December 2015 for lives covered in 2014.

In regards to guaranteed availability, the final regulations clarify that an insurer must accept any employer that applies for a group product the insurer offers in that state for that particular sized employer (rather than any group product). In regards to renewability, an insurer is required to renew or continue in force the coverage at the option of the plan sponsor regardless of whether the employer’s size has changed between the small and large group market. Certain provisions within the policy, however, must change to comply with PPACA’s requirements on small and large markets (for example, the small group market must provide coverage for essential health benefits). In states that have merged the individual and small group risk pools, non-grandfathered small group policies issued on or after Jan. 1, 2014, must be offered on a calendar-year basis.

Regulations


October 22, 2013

CMS Publishes Operational Manual Describing Processes for Federally Facilitated Exchanges

On Oct. 3, 2013, CMS published a manual titled “Federally Facilitated Marketplace Enrollment Operational Policy & Guidance,” which details the enrollment process, minimum participation rules and premium payment process for federally facilitated exchanges (FFEs) and federally facilitated small business health options programs (FF-SHOPs). The manual is intended to assist FFEs and FF-SHOPs in the enrollment process, but is also of interest to other entities, including agents, brokers and employers.

According to the manual, on enrollment, FF-SHOP coverage will first become effective Jan. 1, 2014, so long as qualified employers complete the enrollment process by Dec. 15, 2013. Employer plan years will generally be 12 months, and the FF-SHOP will send renewal notices approximately three months before an applicable renewal date (which the FF-SHOP determines). Employers will then have 30 days to review the renewal offer, and the FF-SHOP will then communicate coverage options to employees (who have 30 days to accept the offer of coverage).

On participation, generally speaking, the FF-SHOP minimum participation rate is set at 70 percent — unless a state requires a different rate. According to the manual, minimum participation rules generally apply in accordance with state law to SHOP employers initially enrolling outside of the annual FF-SHOP enrollment period (which is Nov. 15 through Dec. 15) and to all SHOP employers at renewal. If an employer is not able to meet the FF-SHOP’s 70 percent participation rate, that employer would have to reapply for coverage at either another time when it did satisfy the minimum participation rate or at the next open enrollment period. Importantly, with respect to calculating the participation rate, employees covered by a separate group health plan or by a public or military health plan (e.g., Medicare, Medicaid, TRICARE) are excluded from the minimum participation calculation. All other employees would be included in that calculation, including those with individual private or exchange coverage, which may reduce the employer’s participation rate.

On premium payments, for 2014, employers may pay premiums directly to the insurer that is providing coverage using a payment redirect from the FF-SHOP to the insurer’s website. Beginning in 2015, payment redirects will go to a separate vendor, since employees at that point will be able to choose among multiple insurers’ plans.

The manual also describes the processes for special enrollments, coverage cancellations and coverage terminations. CMS intends for the manual (which currently is stamped “Draft”) to be a living document, meaning that future updates may provide additional guidance relating to the FFE and FF-SHOP.

CMS Operational Manual

Appropriations Act Includes Premium Tax Credit Verification Provision

On Oct. 17, 2013, Pres. Obama signed into law HR 2775, the “Continuing Appropriations Act, 2014.” The act ended the governmental shutdown, which began on Oct. 1, 2013. It provides funding for the government until Jan. 15, 2014. It also includes a provision regarding income verification for individuals applying for a premium tax credit through the exchange. As a reminder, individuals are eligible for a premium tax credit if they have household income between 100 percent and 400 percent of the federal poverty level and are not eligible for other qualifying coverage such as Medicare or employer-sponsored coverage (which is both affordable and provides minimum value). In July 2013, CMS issued final regulations that relaxed the income verification process related to premium tax credit eligibility. The rules provided that the federally facilitated exchanges may perform random sampling of verification when an individual’s income is significantly lower than in previous tax filings. HR 2775 requires HHS to verify eligibility for individuals applying for premium tax credits through the exchange. HHS is required to submit a report to Congress by Jan. 1, 2014, detailing the verification procedures. HHS is further required to submit a report to Congress by July 1, 2014, detailing the effectiveness of the procedures.

HR 2775


October 22, 2013

CMS Publishes Operational Manual Describing Processes for Federally Facilitated Exchanges

On Oct. 3, 2013, CMS published a manual titled “Federally Facilitated Marketplace Enrollment Operational Policy & Guidance,” which details the enrollment process, minimum participation rules and premium payment process for federally facilitated exchanges (FFEs) and federally facilitated small business health options programs (FF-SHOPs). The manual is intended to assist FFEs and FF-SHOPs in the enrollment process, but is also of interest to other entities, including agents, brokers and employers.

According to the manual, on enrollment, FF-SHOP coverage will first become effective Jan. 1, 2014, so long as qualified employers complete the enrollment process by Dec. 15, 2013. Employer plan years will generally be 12 months, and the FF-SHOP will send renewal notices approximately three months before an applicable renewal date (which the FF-SHOP determines). Employers will then have 30 days to review the renewal offer, and the FF-SHOP will then communicate coverage options to employees (who have 30 days to accept the offer of coverage).

On participation, generally speaking, the FF-SHOP minimum participation rate is set at 70 percent — unless a state requires a different rate. According to the manual, minimum participation rules generally apply in accordance with state law to SHOP employers initially enrolling outside of the annual FF-SHOP enrollment period (which is Nov. 15 through Dec. 15) and to all SHOP employers at renewal. If an employer is not able to meet the FF-SHOP’s 70 percent participation rate, that employer would have to reapply for coverage at either another time when it did satisfy the minimum participation rate or at the next open enrollment period. Importantly, with respect to calculating the participation rate, employees covered by a separate group health plan or by a public or military health plan (e.g., Medicare, Medicaid, TRICARE) are excluded from the minimum participation calculation. All other employees would be included in that calculation, including those with individual private or exchange coverage, which may reduce the employer’s participation rate.

On premium payments, for 2014, employers may pay premiums directly to the insurer that is providing coverage using a payment redirect from the FF-SHOP to the insurer’s website. Beginning in 2015, payment redirects will go to a separate vendor, since employees at that point will be able to choose among multiple insurers’ plans.

The manual also describes the processes for special enrollments, coverage cancellations and coverage terminations. CMS intends for the manual (which currently is stamped “Draft”) to be a living document, meaning that future updates may provide additional guidance relating to the FFE and FF-SHOP.

CMS Operational Manual

Appropriations Act Includes Premium Tax Credit Verification Provision

On Oct. 17, 2013, Pres. Obama signed into law HR 2775, the “Continuing Appropriations Act, 2014.” The act ended the governmental shutdown, which began on Oct. 1, 2013. It provides funding for the government until Jan. 15, 2014. It also includes a provision regarding income verification for individuals applying for a premium tax credit through the exchange. As a reminder, individuals are eligible for a premium tax credit if they have household income between 100 percent and 400 percent of the federal poverty level and are not eligible for other qualifying coverage such as Medicare or employer-sponsored coverage (which is both affordable and provides minimum value). In July 2013, CMS issued final regulations that relaxed the income verification process related to premium tax credit eligibility. The rules provided that the federally facilitated exchanges may perform random sampling of verification when an individual’s income is significantly lower than in previous tax filings. HR 2775 requires HHS to verify eligibility for individuals applying for premium tax credits through the exchange. HHS is required to submit a report to Congress by Jan. 1, 2014, detailing the verification procedures. HHS is further required to submit a report to Congress by July 1, 2014, detailing the effectiveness of the procedures.

HR 2775


October 8, 2013

The Exchanges Are Open!

On Oct. 1, 2013, the health care exchanges, established under PPACA, opened for business and began taking applications. HHS has provided that the initial open enrollment period will run from Oct. 1, 2013, through Mar. 31, 2014. This is the same for all states. Coverage must be offered effective Jan. 1, 2014, for qualified individuals whose qualified health plan selections are received by the exchange on or before Dec. 15, 2013. For selections received between the first and 15th day of January, Febuary or March 2014, coverage must be provided effective the first day of the following month. For those received between the 16th day of the month and the last day of the month of December, January, February or March, the exchange must ensure coverage effective the first day of the second following month.

As mentioned in the Mar. 26, 2013, Compliance Corner article introducing the exchange application for coverage, the paper application contains an employer coverage form to assist individuals with gathering the requested information on employer-sponsored coverage from their employees. Now that the exchanges are open, some employees will be coming to their human resources department to get information they need to complete the application. The application includes a one-page employer coverage tool that an employer can fill out to help an individual complete their portion. Please note that the information provided on Page 3 of the Exchange Notice supplies this requested information.

Application
Health Insurance Marketplace

HHS Announces Delay in Online Enrollment in FF-SHOPs Until November

HHS recently announced that small employers will experience a short delay in their ability to enroll through the federally facilitated exchanges’ online Small Business Health Options Program (FF-SHOP) marketplace. Although employers and their agents and brokers are able to “preview” approved FF-SHOP carriers and plan descriptions, online federal FF-SHOP marketplaces will not have full enrollment capability until at least November 2013. HHS is phasing in online capability over the next few weeks. In the meantime, employers who want to sign up for FF-SHOP coverage are encouraged to complete a paper application available on healthcare.gov. It is important to note that the delay is for full rates and online enrollment in the federally facilitated and partnership FF-SHOP exchanges only.

HHS Announcement 

CMS Answers FAQs Related to FF-SHOP Premium Calculations and Employer Contributions

On Oct. 2, 2013, CMS released technical guidance in the form of frequently asked questions (FAQs) on the FF-SHOP. The questions addressed in the FAQs largely pertain to premium rates and contribution determinations. Specifically, how premiums will be calculated in the FF-SHOPs,  whether composite premiums may be used in the FF-SHOPs, how employers will contribute to e mployee and dependent premiums, whether an employer may contribute different amounts based on employee classifications (part-time vs. full-time) and how employees will contribute toward their coverage in an FF-SHOP, among other FAQs. The technical guidance also includes examples depicting the various ways in which an employer may determine its contribution amounts.

The guidance clarified that employers in all FF-SHOPs will be able to have their employees contribute the same amount toward premiums (i.e., composite rating) for employee-only coverage, subject to the imposition of a tobacco surcharge, as applicable. In addition, in most FF-SHOP states, employers will have the option to have employees contribute to premiums based on age, also subject to the imposition of a tobacco surcharge, as applicable. When a state allows both methodologies, the FF-SHOPs will make both options available to employers. However, employees in the FF-SHOPs will always contribute to dependent coverage on a per-member basis. Thus, dependent contributions will not be based on a composite dependent rate.

CMS FAQs

Excise Tax Form Revised to Include Upcoming 2014 Mandates

The IRS recently released a new version of Form 8928 and the accompanying instructions, both of which reflect a revision date of December 2013.

Employers sponsoring group health plans complete and submit this form for payment of applicable excise taxes for compliance failures relating to COBRA, HIPAA and other group health plan mandates. Importantly, the form also references many important health care reform requirements.

A number of health care reform mandates with the potential to trigger excise taxes generally become applicable for plan years beginning on or after Jan. 1, 2014, including the required coverage of expenses in connection with clinical trials; cost-sharing limitations; prohibition on excessive waiting periods; nondiscrimination against health care providers; and complete prohibition of annual dollar limits on essential health benefits and pre-existing condition exclusions. Employers needing assistance to complete this tax form in the event of a compliance failure should work with their accountant or legal counsel.

IRS Web page
Form 8928
Form 8928 Instructions


September 24, 2013

Agencies Issue Guidance Addressing Stand-alone HRAs, Health FSAs, EAPs and Purchasing Individual Policies

On Sept. 13, 2013, the U.S. Departments of Treasury and Labor jointly issued guidance in the form of IRS Notice 2013-54 and DOL Technical Release 2013-03 (which are substantially identical). HHS later issued guidance stating its agreement with the other agencies. Significantly, the guidance clarifies that stand-alone HRAs will not meet PPACA’s requirements relating to annual limits and preventive services. To meet these requirements, HRAs and other arrangements must be integrated with a group health plan (more on what it means to be “integrated” below).

In the past, there have been many questions about stand-alone HRAs as a vehicle for employees to purchase individual coverage on the health insurance exchanges. Previously, an automatic waiver was available for stand-alone HRAs that were established prior to Sept. 23, 2010. These waivers are set to expire on Dec. 31, 2013, providing for uncertainty with respect to whether employers should structure plan designs for 2014 to include stand-alone HRAs. It was also unclear whether new stand-alone HRA plans were permitted to be implemented on or after Sept. 23, 2010.

Importantly, the Sept. 13, 2013, guidance clarifies that employers are prohibited from reimbursing or directly paying employee premiums for individual health insurance policies, that stand-alone HRAs are no longer permitted, and that the waivers will expire as intended on Dec. 31, 2013. Therefore it is now clear that HRAs cannot pay for individual health insurance policies purchased through the exchange or otherwise. 

The guidance also clarifies the meaning of “integrated” for purposes of HRAs in order for employers to comply with the law. Specifically, the guidance stated that there are two methods for an HRA to be considered integrated:

  • Under the first method, an HRA is integrated with a group health plan if: 1) the employer offers another group health plan that is not an excepted benefit; 2) the employee receiving the HRA is enrolled in a group health plan (although it may be the spouse’s group health plan); 3) the HRA is available only to employees who are enrolled in a group health plan; 4) the HRA only reimburses copayment, coinsurance, deductibles and premiums as well as medical care that does not constitute essential health benefits; and 5) under the terms of the HRA an employee is permitted to waive future reimbursement annually, and upon termination of employment the remaining amounts are either forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA. Under this method, minimum value of the employer-sponsored plan is not relevant.
  • The second method is for HRAs that are not limited with respect to reimbursements outlined above. Under this method, all of the requirements for integration are the same as above, except the HRA must be available only to employees who enroll in a group health plan that provides minimum value, whether through their own employer or a spouse's employer.

The guidance also confirms that group health plans that provide only excepted benefits are exempt from the annual limit and preventive services requirements. This includes health FSAs that constitute an excepted benefit, as well as retiree-only plans and stand-alone dental and vision plans. The guidance reserves the question of whether HRAs that are not integrated with non-HRA coverage can claim exemption from PPACA’s annual limit prohibition as health FSAs within the meaning of IRC Section 106(c)(2), but then appears to nullify the point in two ways: first, by noting that non-integrated, non-excepted HRAs will fail the preventive services mandate; and second, by limiting the annual limit exemption to health FSAs that are offered through a cafeteria plan. The guidance states that the annual limit regulations will be amended to retroactively apply the cafeteria-plans-only restriction as of Sept. 13, 2013.

If an employer provides a health FSA that does not qualify as excepted benefits, the health FSA will be subject to the market reforms, including the preventive services requirements. Because a non-excepted health FSA is not integrated with a group health plan, it will fail to meet these requirements.

The guidance also addresses employee assistance programs (EAPs). Until rulemaking is finalized, through at least 2014, the administration will consider EAPs to constitute “excepted benefits” only if the EAP does not provide significant benefits in the nature of medical care or treatment. For this purpose, employers may use a reasonable, good faith interpretation of whether an EAP provides significant benefits in the nature of medical care or treatment.

Finally, the guidance states that coverage provided through cafeteria plans, employer payment plans, health FSAs and HRAs are eligible employer-sponsored plans and, therefore, are minimum essential coverage, unless the coverage consists solely of excepted benefits. Individuals, including retirees, who enroll in such coverage will not be eligible for exchange-based subsidies.

The guidance applies for plan years beginning on or after Jan. 1, 2014, but may be relied upon for guidance for all prior periods. An effective date of Sept. 13, 2013, separately applies for stand-alone HRAs that have relied on the health FSA exemption. Employers may need to amend their plan documents in light of this guidance to ensure existing stand-alone HRAs, regardless of whether the plan was established prior to Sept. 23, 2010, or since Sept. 23, 2010, meet the criteria to be considered integrated going forward.

DOL Technical Release 2013-03
IRS Notice 2013-54
HHS Notice


IRS Issues Guidance on Preventive Care Coverage for Purposes of HSAs and PPACA

On Sept. 9, 2013, the IRS issued Notice 2013-57 related to the provision of preventive health services under a high deductible health plan (HDHP) and its effect on HSA eligibility. As background, to be eligible to receive or make a contribution to an HSA, an individual must have coverage under a qualified HDHP, which does not provide for any benefits until the statutory annual deductible has been met. There is an exception, however, for certain preventive care expenses (as well as other permissible expenses related to dental and vision services). The HDHP may provide coverage for these services before the deductible has been met, while preserving the individual’s eligibility for an HSA.

Previous guidance issued in IRS Notices 2004-23 and 2004-50 identified preventive care expenses as including periodic health evaluations, routine prenatal and well-child care, child and adult immunizations, tobacco cessation programs, obesity weight-loss programs and certain screening services. Additionally, treatment services that are incidental to preventive care services, such as removal of polyps during a diagnostic colonoscopy, are also considered permissible preventive care services for this purpose. IRS Notice 2013-57 clarifies that coverage provided for preventive care services as required under PPACA Section 2713 is also considered permissible preventive care for this purpose. This means that a HDHP that provides coverage for certain preventive care services with no cost-sharing for participants, as required under PPACA for non-grandfathered plans, will continue to be a qualified HDHP and its participants will continue to be eligible for HSA contributions.

IRS Notice 2013-57


September 10, 2013

CMS Releases Health Insurance Marketplace Navigator Standard Operating Procedures Manual

On Aug. 26, 2013, CMS released a manual designed to educate navigators on the standard operating procedures (SOP) of their roles in federally-facilitated exchanges (FFEs). PPACA enlists navigators to provide information and guidance on the plans available to consumers within health insurance exchanges. The SOP manual, which is 217 pages in length, explains how navigators should carry out their prescribed duties under PPACA, including procedures regarding:

  • outreach and education;
  • impartial selection, completion and submission of a qualified health plan (QHP); and
  • communication and customer service strategies to meet the needs of the navigator’s target enrollment population.

Additionally, the SOP manual outlines specific means by which navigators can protect the personally identifiable information of their consumers and prevent fraudulent activities.

SOP Manual

IRS Issues Proposed Rule on the Small Business Health Care Tax Credit for SHOP Coverage in
2014 and Beyond

On Aug. 26, 2013, the IRS issued proposed regulations addressing the small business health care tax credit in 2014 and beyond, which incorporate previously issued guidance from previous years. The IRS webpage dedicated to the tax credit has been updated, including revised Q&As.

As background, the small business health care tax credit applies to certain small employers that offer health insurance coverage to their employees. The tax credit has been available since 2010, but some important changes occur starting in 2014:

  • The maximum credit amount increases from 35 percent to 50 percent of premiums paid (from 25 percent to 35 percent for eligible small tax-exempt employers);
  • The coverage must be offered through a Small Business Health Options Program (SHOP) exchange (employers must contribute a uniform percentage of at least 50 percent of premiums);
  • The credit can be claimed for only two consecutive years beginning on or after 2014, and cost-of-living adjustments may be made to the average annual wage phase-out amounts.

Here are some highlights of the proposed regulations:

Eligible Small Employers
The tax credit is available only for eligible small employers, which are those with no more than 25 full-time equivalent (FTE) employees whose average annual wages are less than $50,000, as adjusted for inflation starting in 2014. Controlled group rules apply to aggregate employers under common control.

Two-Consecutive-Year Limit
Starting in 2014, an employer may claim the credit for only two consecutive taxable years, starting with the first year for which the employer files a Form 8941 claiming the credit, even if the employer is only eligible to claim the credit for part of the first year. There is a transition rule for an employer with a non-calendar-year plan that allows the 2014 credit to be calculated for the entire 2014 taxable year so long as the employer switches to SHOP coverage as of the first day of the plan year beginning in 2014. Years prior to 2014 for which the employer claimed the credit do not count in determining the two-year limit. The proposed regulations incorporate employment tax rules to prevent avoidance of the two-year limit through the use of successor entities.

Determining Employees Taken Into Account
All employees are generally taken into account when determining FTE employees and average annual wages, including part-time employees, former employees who terminate midyear, and employees who are not offered, or do not enroll in, health coverage. Certain individuals are excluded for purposes of the credit, including independent contractors, sole proprietors, partners in a partnership, more-than-2 percent shareholders in an S corporation, and more-than-5 percent owners of other businesses (and certain family members of some owners). Seasonal workers are not counted for determining FTE employees and wages, but premiums paid on behalf of a seasonal worker are counted in determining the amount of the credit. The rules for determining FTEs are generally the same as those in earlier IRS notices—employers choose among counting actual hours or using an equivalency and divide all aggregated hours by the number of employees. The proposed regulations and the IRS Q&As provide detailed examples.

Uniform Percentage Requirement
Employers must pay a “uniform percentage” of at least 50 percent of the premium for each employee enrolled in SHOP coverage. The proposed regulations explain the rules (with examples) for a variety of situations, including both list billing and composite billing arrangements for QHP premiums, offering tiers of coverage in addition to self-only coverage (such as self-plus-one or family coverage) and offering more than one QHP. Premiums paid through salary reductions or employer-provided flex credits under a cafeteria plan are not treated as employer-paid premiums for purposes of the tax credit. Amounts made available by an employer under an HRA or health FSA, or contributed by an employer to an HSA, are also not counted as employer-paid premiums.

Proposed Regulations

IRS Webpage

HHS Releases Final Regulations on Exchange Standards, Employer and Employee Appeals

On Aug. 30, 2013, a final regulation was published in the Federal Register finalizing a number of policies related to the implementation of PPACA, including provisions affecting exchange standards, eligibility appeals for both employers and employees, exchange “program integrity,” information on the SHOP exchange, and agent and broker issues. The exchanges are scheduled to begin accepting enrollment on Oct. 1, 2013.

Program Integrity
The regulations did not finalize all of the general exchange program integrity and oversight rules, such as the proposed rules creating new recordkeeping, annual reporting and auditing requirements for exchanges. They did, however, finalize specific rules making QHP insurers responsible for compliance with applicable FFE standards by agents, brokers, and others with whom they have agreements for administrative or health care services. They also finalized certain financial integrity rules related to the temporary federal risk corridor program, modified to allow certain QHPs outside of the exchanges that are “substantially the same” as certain QHPs in the exchanges to receive risk corridor program payments to protect against inaccurate rate setting. The regulations also address requirements for QHP insurers, including civil money penalties assessable by the FFE for an insurer’s violation of the QHP standards (such as charging excessive premiums or denying enrollment based on health status).

SHOP Exchanges
HHS also has finalized guidance that permits a state that has already received conditional approval to operate a state-based exchange for 2014 to request permission to operate a SHOP-only exchange instead (while the individual market operates under a FFE). A modification in the final rules permits a state to have a SHOP-only exchange based on reasonable assurance to HHS that the state will be in a position to establish and operate just a SHOP in 2014—the state is not required to have already obtained conditional approval.

Eligibility Appeals
Finally, the regulations finalize the process for individuals to appeal exchange decisions denying eligibility for premium tax credits, cost-sharing reductions, and certain exemptions from the individual mandate. The regulations also finalize the appeals process that employers will use to challenge an exchange’s determination that an employee (or group of employees) is eligible for premium tax credits through the exchange (which would indicate that the employer does not offer affordable, minimum value coverage to the affected employees). A state-based exchange can provide the appeals process, or it can defer to HHS to provide the process. The regulations describe the notice, procedural, evidentiary and decision-making requirements for appeals—emphasizing, however, that the amount of personal information employers will have access to during the appeals process is limited and prohibiting employers from seeing employees’ tax return information. Also, if the employer’s appeal is successful (resulting in a determination that an employee is not eligible for the premium tax credit), the employee will have an opportunity to appeal the redetermination. (Any further appeal by the employer would be through the IRS appeal process as part of its assessment of employer shared responsibility penalties). The regulations also finalize the process for employers and employees to appeal SHOP denials of eligibility, mostly tracking the appeal procedures for eligibility for premium tax credits.

Summary
Employers will want to study the process for appealing exchange determinations that their employees are eligible for premium tax credits—beginning in 2015 these employees may trigger shared responsibility penalties for the employer. Employers and employees will both benefit from accurate eligibility determinations since employees can avoid having to repay unearned advance tax credits and employers can avoid the hassle of erroneous assessments of shared responsibility penalties. Clear communications by employers to employees regarding the affordability and extent of employer coverage, such as through the required exchange notice, is encouraged.

Final Regulations
CMS Fact Sheet

IRS Releases Proposed Regulations on PPACA’s Employer Information Reporting Requirements

On Aug. 5, 2013, the IRS released proposed regulations relating to PPACA’s employer information reporting requirements. As background, PPACA adds IRC section 6055, which requires information reporting by insurers, self-insuring employers and other parties that provide health insurance coverage, also known as minimum essential coverage (MEC). Under 6055, employers are required to report information about the employer (including contact information) and include a list of individuals with identifying information and the months they were covered. Employers must also send a report to employees relating to the coverage provided.

PPACA also adds IRC section 6056, which requires information reporting by employers that are subject to PPACA’s employer mandate (i.e., those employers that have 50 or more full-time employees or full-time equivalent employees). Under 6056, such employers must report information about the employer and provide detailed information on the coverage provided, including (among other things) a list of the full-time employees offered coverage, whether the coverage is of minimum value, and the cost of self-only coverage. Employers must also send a report to employees relating to the coverage provided.

Both 6055 and 6056 were originally effective beginning in 2014. Earlier this year, though, the IRS delayed that effective date until 2015. The proposed regulations describe a variety of options to potentially reduce or streamline the information reporting. These options include:

  • Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees
  • Permitting employers to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount
  • Permitting self-insured plans to furnish a substitute statement (rather than employee statements)
  • Limiting reporting for certain self-insured employers offering no-cost coverage to employees and their families
  • Permitting employers under 6055 to forego reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions or the portion of the premium paid by an employer
  • Replacing section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage

The proposed regulations provide for a comment period, which is meant to run through the beginning of November. The IRS will take the comments into consideration as they finalize the regulations.

Proposed Regulations on IRC Section 6055

Proposed Regulations on IRC section 6056

Press Release

IRS Issues Final Regulations on Individual Mandate, Minimum Essential Coverage Requirements

On Aug. 30, 2013, the IRS issued final regulations regarding the shared responsibility for not maintaining MEC. This is also known as the individual mandate. An individual who does not maintain MEC will be subject to a penalty, which will be payable on Form 8965. A taxpayer is liable for the penalty amount if any nonexempt individual who may be claimed by the taxpayer as a dependent for a tax year does not have MEC. This is true regardless of whether the taxpayer actually claims the individual as a dependent for the year, including both children and qualifying relatives.

MEC includes:

  • Employer sponsored coverage (This includes COBRA continuation coverage, retiree coverage, coverage under a self-insured group health plan and coverage under certain grandfathered group health plans. It also includes plans offered “on behalf of an employer” such as multiemployer and single employer collectively bargained plans and those offered by a professional employer organization (PEO))
  • Individual coverage offered inside or outside the marketplace
  • Medicare Part A
  • Medicaid (Note: pregnancy related Medicaid is not MEC for years 2015 and after)
  • State Children’s Health Insurance Programs (CHIP)
  • Certain types of veterans health coverage
  • TRICARE

Coverage issued in a U.S. territory is not MEC unless it is provided through an exchange. Additionally, time spent in a waiting period is not counted as MEC.

An exemption from the individual mandate is available to:

  • Individuals who cannot afford coverage
  • Taxpayers with income below the filing threshold
  • Members of Indian tribes (A hardship exemption is available for an individual who is not a member of a federally-recognized Indian tribe, but who is eligible for services through an Indian health care provider)
  • Hardship
  • Those with a short coverage gap (up to 3 months)
  • Religious conscience
  • Members of a health care sharing ministry
  • Incarcerated individuals
  • Those who are not lawfully present in the U.S

Further guidance is expected regarding how wellness incentives and HRA contributions will affect affordability, as well as whether an employer providing subsidies or funding a pre-tax arrangement for employees to purchase individual coverage will be considered an employer sponsored plan.

Final Regulations

DOL Issues Affordable Care Act Implementation FAQs Part XVI

On Sept. 4, 2013, the DOL issued Part XVI of the FAQs about the Affordable Care Act implementation. There were two frequently asked questions (FAQs) included. The first is related to the Exchange Notice requirement. The DOL clarifies that another entity (such as an insurance carrier, multiemployer plan or a third party administrator) may distribute the notice on behalf of the employer. Employers are reminded that the notice should be distributed to all employees. If the other entity only distributes the notice to a subset of employees (e.g. only employees enrolled in the plan), the employer would still be responsible for distributing the notice to the remaining employees.

The second question is related the 90-day waiting period limitation, which is effective for plan years beginning on or after Jan. 1, 2014. The DOL clarifies that the proposed rules issued in March 2013 may be relied upon for guidance through at least 2014. When final regulations are released, any provisions that are more restrictive on plans will not be effective prior to Jan. 1, 2015 and plans would be given sufficient time to comply.

FAQs


August 27, 2013

IRS Finalizes Regulations on Disclosure of Tax Return Information for Exchange Income Verification

On Aug. 14, 2013, the IRS finalized regulations and issued frequently asked questions (FAQs) describing the tax return information that it can disclose to HHS in order to assist exchanges in verifying the income of individuals for eligibility determinations. The final regulations adopted the proposed rules issued last year with just two changes.

Individuals seeking premium tax credits or cost-sharing reductions in connection with exchange coverage must have household income below certain thresholds, and the IRS is permitted to disclose to HHS, upon written request, modified adjusted gross income (MAGI) and other specified information about a taxpayer for purposes of making these eligibility determinations and verifying the amount of the credit or reductions. HHS may then disclose the information to the exchange or state agency processing the individual’s application. In addition, the FAQs indicate that the return information may also be used for purposes of establishing eligibility for exemptions from PPACA’s individual shared responsibility requirement (also known as the “individual mandate”).

The regulations elaborate on the information that can be disclosed, including, for example, the amount of social security benefits included in gross income. They also provide that the IRS may disclose information on any individual listed (by name and social security number) on a submitted application for purposes of determining eligibility for an advance payment of a premium tax credit, a cost-sharing reduction or eligibility for certain other programs.

As a reminder, eligibility for the premium tax credit is based on the household income of the applicant, which is the sum of the MAGI of the individuals in the household. Strict privacy and security standards apply to HHS (as well as other entities such as exchanges, state agencies and their contractors), including recordkeeping and handling, storage, and disposal requirements to protect the confidentiality of tax records. Finally, the FAQs explain that the information may not be disclosed to any other entity, including individuals applying for coverage, navigators, agents and brokers, or others assisting in the application process. The regulations became effective Aug. 14, 2013.

Final regulations

IRS FAQs

White House Blog Clarifies Recent Media Activity Relating to “Delay” of PPACA Cost-sharing Limits

NFP Benefits Compliance has received several questions relating to recent media reports on a supposed delay of the provision of PPACA that restricts cost-sharing limits. As background, PPACA restricts out-of-pocket (OOP) maximum limits for non-grandfathered group health plans (including both small and large fully insured plans sold inside and outside the exchanges and self-insured plans) to $6,350 for single coverage and $12,700 for family coverage (those amounts will be adjusted in future years). PPACA also restricts the annual deductible amount for small fully insured group plans (both inside and outside the exchanges) to $2,000 and $4,000 for single and family coverage, respectively. Both limits apply for plan years beginning on or after Jan. 1, 2014.

Last week, several different national publications and media outlets reported that PPACA’s cost-sharing limits had been delayed by the government. The White House on its blog responded to the media reports, stating that the government in February “put out public guidance to implement [the PPACA cost-sharing provision], on time,” and also indicated that the general requirement has not been delayed.

The supposed and reported delay relates to a transitional relief provision that affects only certain plans. That transitional relief provision was published by the DOL in February 2013, in a set of FAQs titled “FAQs About Affordable Care Act Implementation Part XII,” and provides a one-year delay in the effectiveness of the cost-sharing limits for certain plans with multiple service providers. Recognizing the difficulties inherent in such a plan structure (e.g., different levels of OOP maximums, different methods for crediting participants’ expenses against such OOP maximums, etc.), the transitional relief was meant to give such plans more time to coordinate communications between service providers.

Specifically, FAQ 2, which outlines the one-year transitional rule, states:

“The Departments have determined that, only for the first plan year beginning on or after January 1, 2014, where a group health plan or group health insurance issuer utilizes more than one service provider to administer benefits that are subject to the annual limitation on out-of-pocket maximums under section 2707(a) or 2707(b), the Departments will consider the annual limitation on out-of-pocket maximums to be satisfied if both of the following conditions are satisfied:

  1. The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); and
  2. To the extent the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), such out-of-pocket maximum does not exceed the dollar amounts set forth in section 1302(c)(1).”

Some news and media outlets reported this as a recent delay in PPACA. While it is a delay in one portion of one provision of PPACA, it is not recent; the special transition relief for multiple service providers was announced in February (and reported in the Feb. 26, 2013 edition of Compliance Corner) .

The White House blog confirmed that the February transition relief was meant to allow plans with multiple service providers more time to coordinate communications between such providers, and that the PPACA provision on cost-sharing limits had not otherwise been recently delayed.

White House Blog

IRS Launches New Educational Website on PPACA’s Tax Provisions

The IRS has launched a new website addressing tax provisions related to PPACA. The website is meant to educate individuals and businesses on how PPACA may affect them. It is broken into three sections, which explain the tax benefits and responsibilities as it relates to employers, as to individuals and families, and as to other organizations. Links and information pertinent to each group are included. The website has information both about tax provisions that are currently in effect as well as those that will go into effect in future years.

IRS Educational Website

Kaiser Introduces State-by-State Health Exchange Premium Watch List

On Aug. 4, 2013, the Kaiser Family Foundation started tracking premiums and other details about individual and small group insurance plans available through the health insurance exchanges for each state. That information is posted on Kaiser’s website and is updated as more states release this information. One of the biggest outstanding questions regarding PPACA is how much coverage will cost. This website provides updated information from the states as it is released. While NFP has not verified the accuracy of this information, it may be a helpful resource to employers.

Kaiser State Premium Watch

August 13, 2013

CMS Publishes FAQ on Health Insurance Exchanges and Income Verification

On Aug. 5, 2013, CMS published a frequently asked question (FAQ) relating to the health insurance exchanges (sometimes also called “marketplaces”) and income verification, which also addressed advance payments of the premium tax-credit and cost-sharing reductions. According to the FAQ, on their application, an individual must provide a projected annual household income. An exchange will use an individual’s federal income tax return and Social Security Administration (SSA) data to verify an individual’s household income. If the exchange is unable to verify that information, then the individual’s income claimed on the application will be compared with wage information from employers (provided by Equifax, a consumer credit reporting agency). If the information is not verified or substantiated by Equifax, then the exchange will request from the individual an explanation or additional documentation. The individual remains eligible for the affordability program for 90 days, based on the submitted income and subject to reconciliation at a later date. If the requested documentation is not provided, the exchange will use IRS and SSA data to determine eligibility (but if that data is unavailable, the exchange must discontinue any advance payments of the premium tax credit and cost-sharing reductions).

The FAQ does not discuss exchange verification of employer-sponsored coverage, and relates more to the exchanges themselves. However, the FAQ is helpful for employers that want to better understand the exchanges and for employees who may have questions relating to the exchanges and income verification.

CMS FAQ

CMS Releases 2013 Culturally and Linguistically Appropriate Services County Data

CMS' Center for Consumer Information and Insurance Oversight (CCIIO) recently released the 2013 list of counties that meet or exceed the 10 percent threshold of people who are literate only in the same non-English language—known as the “Culturally and Linguistically Appropriate Services County” (CLAS) data. This list is important for two separate PPACA requirements:

1. Internal and external appeals notifications provided by non-grandfathered group health plans.
A non-grandfathered plan sending an internal or external appeals notification to an address found within one of the counties listed (that meets the 10 percent threshold for the population being literate only in the same non-English language) must be aware that the claimant is entitled to certain accommodations. These include a one-sentence statement in the English version of the notice in their non-English language indicating how to access the language services provided by the plan, asking questions and receiving answers orally (such as through telephone assistance) and receiving assistance with filing claims and appeals in their non-English language, and upon request, receiving the entire notice in the applicable non-English language. On the model notices applicable to the internal and external appeals notifications, HHS included the one-sentence statement available in each of the four languages: Spanish, Chinese, Tagalog and Navajo. The model notices are available below.

2. Summary of Benefits and Coverage (SBC), regardless of grandfathered status.
PPACA requires the SBC to be presented in a “culturally and linguistically appropriate manner.” The regulations require plans or insurers, regardless of grandfathering status, to follow the analogous rules for providing appeals notices in a culturally and linguistically appropriate manner described above, which requires the English versions of SBCs sent to individuals residing in specified counties to include a one-sentence statement clearly indicating how to access the language services provided by the plan or insurer.

The counties in which this must be done are those in which at least 10 percent of the population residing in the county is literate only in the same non-English language. The 2013 CLAS data is the list of all such U.S. counties. This determination is based on U.S. Census data and includes four languages: Spanish, Chinese, Tagalog and Navajo.

Written translations of the SBC must be provided upon request in the applicable non-English languages. To assist with compliance with this language requirement, HHS has provided written translations of the SBC template, sample language and uniform glossary in the four applicable languages (Spanish, Tagalog, Chinese and Navajo) and may also make these materials available in other languages.

Finally, on July 24, 2013, HHS simultaneously issued Technical Guidance addressing the fact that plans and insurers are permitted to calculate the 10 percent threshold for any county on their own, if they so choose, although there is no need to do so as the 2013 CLAS data can be relied on as a “safe harbor.” To facilitate such calculations, and for transparency purposes, HHS provided technical guidance.

2013 CLAS Data
Revised Model Notice of Adverse Benefit Determination
Revised Model Notice of Final Internal Adverse Benefit Determination
Revised Model Notice of Final External Review Decision
Chinese SBC
Navajo SBC
Spanish SBC
Tagalog SBC
Additional SBC Resources (such as Uniform Glossary and Word format) for non-English language SBCs
CMS Technical Guidance—July 24, 2013

Third Circuit Denies Employer’s Request for Relief from Contraceptive Coverage Mandate

In Conestoga Wood Specialties Corp. v. HHS, 2013 WL 3845365 (3d Cir. 2013), the U.S. Court of Appeals for the Third Circuit denied a for-profit employer’s request for a preliminary injunction to temporarily block enforcement of the contraceptive coverage mandate while it would litigate the merits of the claim. Previously, the trial court denied the preliminary injunction and, on appeal, the Third Circuit upheld the denial.

As background, effective for plan years beginning on or after Aug. 1, 2012, PPACA requires non-grandfathered group health plans to provide coverage for women’s preventive services—including contraceptive services—with no cost to the participant. On the contraceptive services, there is an exception for religious employers, and a temporary enforcement safe harbor is available to nonexempt, nonprofit organizations with religious objections (see our article in the July 2nd edition of Compliance Corner). In the Conestoga case, the for-profit family-owned employer is a manufacturer that runs its business in accordance with the owners’ religious beliefs. The employer sought a preliminary injunction on the basis that providing certain contraceptive coverage is contrary to the owners’ religious teachings and violates the First Amendment of the U.S. Constitution and the Religious Freedom Restoration Act. A preliminary injunction is to restrain a party from going ahead with a course of conduct until the case has been decided on its merits. In this case, the course of conduct that Conestoga wanted was to stop enforcement of the contraceptive coverage mandate until the case has been fully resolved by the court.

The Third Circuit upheld the trial court’s denial of a preliminary injunction, ruling that the employer had failed to demonstrate a likelihood of success on the merits (one of the requirements of a preliminary injunction). The Court reasoned that the free exercise of religion clause of the First Amendment does not apply to secular, for-profit corporations because they cannot “exercise” religion. What makes this type of case different from other cases where a secular corporation has been found to possess First Amendment rights (specifically freedoms of speech and religion), the Court called the free exercise of religion a “uniquely human” right, which could not extend to a secular, for-profit corporation. Finally, the Court did not allow the business owners’ free exercise rights to be “passed through” to the corporation, since the business owners have chosen to take advantage of the benefits of incorporating their business.

The Third Circuit’s decision is in direct conflict with the Hobby Lobby case recently ruled upon in the Tenth Circuit (see our article in the July 2nd edition of Compliance Corner). The Tenth Circuit ruled that some for-profit corporations can be considered “persons” that can have their own religious beliefs and exercise them. Because of the conflict, it would seem that this issue is ultimately headed to the U.S. Supreme Court for resolution. However, as there has yet to be a decision on the merits in the Conestoga case, it is unknown when that might occur.

Conestoga Wood Specialties Corp. v. HHS


July 30, 2013

IRS Answers PCOR Questions

On July 25, 2013, the IRS posted answers to several questions on its website regarding the Patient-centered Outcomes Research (PCOR) fee. The guidance does not provide for any changes to the reporting rules, but serves more as a guide for frequently asked questions. The IRS provides:

  • The PCOR fee applies to plan years ending on or after Oct. 1, 2012 and before Oct. 1, 2019.
  • Stand-alone dental or vision plans are not subject to the fee.
  • The fee is due on the average number of lives covered for that plan year, which includes a covered employee, spouse, and children, including those covered under COBRA continuation coverage. An HRA and health FSA need only count single lives (no spouses or dependents). 
  • Plans sponsored by tax-exempt organizations and governmental entities are subject to the fee.

PCOR Guidance

DOL Issues Modifiable Notices to Employees of Coverage Options

The DOL has issued modifiable Microsoft Word versions of the model notices that can be used to satisfy the PPACA requirement that employees receive notice of their options under state and federally-facilitated health insurance exchanges (now called “Marketplaces”). This requirement is also commonly referred to as the “Exchange Notice” requirement.

The following modifiable notices are now available:

These notices, along with non-modifiable English and Spanish-language PDF versions, are also available on the DOL Website

CMS Issues FAQs on FF-SHOP Minimum Participation and COBRA

On July 5, 2013, CMS released a set of selected responses to insurer FAQs relating to the federally-facilitated (FF) small business health options program (SHOP). Employers that may be interested in enrolling in FF-SHOPs will want to be aware of several FAQs relating to FF-SHOP minimum participation requirements and COBRA administration.

On minimum participation, as background, SHOPs may impose minimum participation requirements (default of 70 percent) on employers, so long as the requirements are based on the rate of employee participation in the SHOP as a whole (not on the rate of participation in any particular qualified health plan) of a particular insurer. Regulations describe which employees should be included in the participation rate calculation and also allow health insurers in the small group market to apply minimum participation rules (except during an annual open enrollment period from Nov. 15 to Dec. 15 of each year).

The FAQs clarify that outside the annual open enrollment period, the FF-SHOP will hold an employer’s application (and not forward it to an insurer) until the employer meets the 70 percent minimum participation requirement. A group that falls below the minimum participation requirement during a plan year will be allowed to continue participation in the FF-SHOP through the plan year (the FF-SHOP will only check minimum participation rates at initial enrollment and then again at renewal). In addition, retirees offered coverage and COBRA enrollees must be included in the participation rate count. Importantly, the FAQs clarify that employer participating in the FF-SHOP must offer coverage to all full-time employees (those averaging 30 hours or more per week) and cannot vary coverage for different employee classifications (but may impose waiting periods of up to 60 days).

On COBRA, the FAQs clarify that for 2014, current insurance market standards for notifying employees and paying for COBRA coverage will remain unchanged in the FF-SHOP. For 2015, when the FF-SHOP is anticipated to provide billing and payment services for FF-SHOP employers, COBRA premiums will be included on a single employer invoice and employers will be expected to remit the full amount owed by the due date.

CMS FF-SHOP FAQs

Fourth Circuit Rejects Constitutional Challenge to PPACA’s Employer Mandate

On July 11, 2013, the U.S. Court of Appeals for the Fourth Circuit, in Liberty Univ. v. Lew, 2013 WL 3470532 (4th Cir. 2013), held that PPACA’s employer mandate was constitutional. In doing so, the Fourth Circuit affirmed a previous trial court holding, concluding that the employer mandate is a valid exercise of Congress’s powers to regulate interstate commerce and to tax. In reaching their decision, the Fourth Circuit also concluded that the U.S. Anti-Injunction Act (AIA)—which generally states that taxes may only be disputed after they are assessed or collected—did not preclude a review of the case, and that the challengers to the mandate did indeed have standing to challenge.

Although the Fourth Circuit’s decision deals a loss to those challenging the constitutionality of the employer mandate, the case may eventually find itself before the U.S. Supreme Court, should the case be appealed. In addition, the Fourth Circuit’s conclusions on the AIA and on standing may open the door for separate cases challenging another PPACA provision. As background, in at least two other cases, plaintiffs have brought claims alleging that PPACA forbids the federal government to issue premium tax credits in the states that have refused to establish a health insurance exchange. The plaintiffs claim that should the federal government—which is charged with stepping in and establishing such an exchange for those states—choose to issue premium tax credits in those exchanges, it would be a direct violation of PPACA. If that portion of PPACA is held unconstitutional, it would be difficult for the federal government to implement the employer mandate, since employer mandate penalties are triggered by the issuance of a premium tax credit. The government has asked the courts to dismiss those cases on the grounds of the AIA and lack of standing. Relying on the Fourth Circuit’s opinion in Liberty, those courts would likely have to deny the government’s request, thus paving the way for those challenges to proceed.

We will continue to monitor developments related to the Fourth Circuit Liberty case, as well as any related developments with respect to other challenges to PPACA.

Liberty Univ. v. Lew


July 16, 2013

IRS Formally Delays Employer Mandate

On July 9, 2013, the IRS issued Notice 2013-45, which provides a one-year delay for employers subject to PPACA’s employer mandate and information reporting requirements, initially scheduled to be implemented in 2014. Notice 2013-45 formalizes a July 2, 2013, U.S. Treasury Department blog post announcing the delay.

The guidance includes the following important points: 

  • Employers will not be liable for employer mandate penalties until 2015.
  • Employers and insurers are not required to file informational reporting for 2014. The guidance encourages employers and insurers to voluntarily comply with informational reporting requirements in 2014, with reporting becoming mandatory for 2015. Proposed rules on informational reporting are not yet available, but are expected late summer 2013.
  • The notice confirms that employees will be able to receive premium tax credits through an exchange if they are otherwise eligible; the delay does not affect an individual’s ability to qualify for such a credit.
  • The guidance clarifies that if an individual has a valid offer of affordable and minimum value employer-sponsored coverage, they will not qualify for exchange-based individual subsidies to begin on Jan. 1, 2014. Therefore, education of employees remains critical concerning the status of their existing employer-based coverage and whether or not it meets the definition of minimum value and/or minimum essential coverage. 

Importantly, the notice does not specifically address transition relief that had already been allowed for 2014, including relief for employers that contribute to multiemployer plans, those not yet offering dependent coverage and those with non-calendar-year plans. The notice did not clarify whether transition relief will be extended into 2015. Since the notice indicates that the employer mandate will be “fully effective” on Jan. 1, 2015, it appears that previous transition relief appears no longer applies. As such, all employers should anticipate that the employer mandate penalties will apply on Jan. 1, 2015, regardless of plan year.

In addition, the notice made no reference to the measurement period safe harbor guidance for variable hour and seasonal employees. Thus, it appears that this guidance remains in place, although it is clear that any penalties for such employees who qualify for premium assistance (due to not being offered affordable, minimum value coverage) will be delayed until Jan. 1, 2015.

Finally, it is important to note that the notice does not affect other PPACA provisions (or their effective dates), including the exchange notice, Form W-2 reporting, the summary of benefits and coverage (SBC) requirement, insurance market reforms for small groups, PPACA’s fees and taxes, the individual mandate and the establishment of the exchanges.

NFP encourages our clients to meet with their advisors regarding these changes and continue with good-faith compliance efforts regarding the employer shared responsibility requirements and reporting provisions during the coming year. This extra compliance time can be used to make sound business decisions regarding the requirements without the risk of significant financial penalties in the first year of changed operations.

NFP Benefits Compliance will be following these issues closely, and will continue to provide updates as necessary.

IRS Notice 2013-45

CMS Issues Guidance on Exchange Verification Process

On July 15, 2013, CMS published a final rule in the Federal Register that, among other things, outlines the exchange verification process. As background, the exchanges, authorized under PPACA, are required to begin enrolling individuals on Oct. 1, 2013, for coverage beginning Jan. 1, 2014. Part of the exchange functions include awarding advance premium tax credits and cost-sharing subsidies to those individuals who qualify based on income and whether they have access to employer-sponsored coverage. The rule clarified that the federally facilitated exchanges may perform random sampling when an individual’s income is significantly lower than in previous tax filings. The state-based exchanges have the option of adopting the same process or accepting a self-certification.

The rule also impacted the verification of eligibility for an employer-sponsored plan until 2015 for the 16 state-based exchanges (plus Washington, D.C.), citing “legislative and operational barriers.” In other words, the state-based exchanges may accept an individual’s self-certification and will not be required to verify with an employer whether an individual is eligible for an employer-sponsored plan (and whether that plan is affordable to the individual), although the state may do so. HHS will not perform employer verifications on behalf of the states in 2014. This guidance, however, does not relieve employers of the requirement to respond to an inquiry verifying coverage by an exchange in 2014, in the event a particular state or federally facilitated exchange is functional at that time.

The final rule also addressed other aspects of PPACA implementation, including new Medicaid eligibility provisions, finalized changes related to electronic Medicaid and Children’s Health Insurance Program (CHIP) eligibility notices and delegation of appeals, revised CHIP rules on substantiation of coverage to improve coordination of CHIP with other coverage, and amended requirements for certain benchmark plans to ensure they include essential health benefits and meet other minimum standards.

CMS Final Rule


July 2, 2013

Departments Issue Final Regulations Related to Contraceptive Coverage and Religious Organizations

On June 28, 2013, HHS, IRS and EBSA issued final rules related to contraceptive coverage and religious organizations. As background, PPACA required non-grandfathered group health plans to provide coverage for women’s preventive services effective for plan years beginning on or after Aug. 1, 2012. The coverage must be provided with no cost to the participant. One of the categories of services that must be provided is contraceptive services.

Under the previously issued proposed regulations, non-grandfathered group health plans sponsored by religious employers were exempt from providing coverage for contraceptive services for plan years beginning on or after Aug. 1, 2012. The new regulations extend that exemption for plan years starting on or after Aug. 1, 2013. For this purpose, a religious employer is defined as a nonprofit entity referred to in Section 6033(a)(3)(A)(i) and (ii) of the IRC. This generally includes churches, conventions or associations of churches and other houses of worship.

The earlier proposed regulations also provided a safe harbor for non-grandfathered group health plans sponsored by other religiously affiliated nonprofit entities, such as hospitals and educational institutions. Such plans were given a one-year delay under the requirement to provide coverage for contraceptive coverage if the nonprofit employer sponsoring the plan met certain requirements. Those requirements were that the organization holds itself as a religious organization, it has not offered coverage for contraceptive coverage since February 2013 on account of religious objections and it maintains on file a self-certification in accordance with the regulations. The final regulations extend the safe harbor for plan years starting on or after Aug. 1, 2013 through Dec. 31, 2013.

Effective for plan years starting on or after Jan. 1, 2014, the final regulations provide an accommodation for group health plans sponsored by the religiously affiliated nonprofit entities defined above. Such nonprofit entities are not required to arrange or pay for contractive services coverage on account of religious objections. However, women enrolled under the plan will still be eligible for contraceptive coverage at no cost. The insurer or third party administrator (TPA) will provide the coverage to the insureds with no cost to the nonprofit entity.

 A nonprofit entity wanting to take advantage of this accommodation should complete a self-certification and provide it to the plan’s insurer or TPA. The new certification applies to plan years beginning on or after Jan. 1, 2014, and must be completed prior to the first day of the applicable plan year. The DOL has provided a model notice for this purpose. The insurer or TPA will then notify the participants of the plan’s certification and the availability of coverage through the insurer or TPA.

Final Regulations
Safe Harbor Extension for Plan Years beginning before Jan. 1, 2014.
Model Certification Form, for Plan Years beginning on or after Jan. 1, 2014.
CMS Fact Sheet
HHS Press Release

Final HHS Rule Regarding Exchange Functions Released: Discusses Exemptions from the Individual Mandate Penalty

On June 26, 2013, HHS released a final rule on Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions. This rule finalizes a proposed rule published Jan. 30, 2013 (and discussed in the Feb. 12, 2013, edition of Compliance Corner). The analogous IRS proposed rule was released at the same time (also discussed in the same Compliance Corner article). While there is not a final IRS rule, on June 26, 2013, the IRS published Notices 2013-41 and 2013-42, which address issues raised by this HHS final rule. As a reminder, the Secretary of HHS has joint responsibility of these matters with the Secretary of Treasury. Also released by HHS was a fact sheet explaining the new rule, and guidance addressing criteria for determining whether a hardship exists. The final rule outlines when an individual is exempt from PPACA’s individual mandate and includes several provisions regarding minimum essential coverage.

PPACA recognizes nine exemptions from the individual mandate. Eligibility for the hardship exemption and the religious conscience exemption will be determined exclusively by the exchange. Applicants who file for any of the following four exemptions-- lack of affordable coverage, income below the tax filing limit, unlawful presence in the United States or short term (three months) gaps in coverage-- will claim such exemption at the time of filing for taxes (if at all). For the remaining three categories of individuals eligible for exemptions--members of health care sharing ministries, members of Indian tribes, or persons who are incarcerated-- an exemption can be obtained through the exchange or, alternatively, at the time they file their taxes. An applicant can apply for multiple exemptions simultaneously.

The end of the final rule addresses minimum essential coverage, which is the type of coverage an individual must have to avoid the individual mandate penalty. The proposed rule recognized self-insured student health plans as minimum essential coverage.  However, after substantial feedback that some student health plans may offer inadequate coverage, the final rule only recognizes self-insured student health plans as minimum essential coverage through Dec. 31, 2014.  State high-risk pools will similarly only be recognized as minimum essential coverage through Dec. 31, 2014. Foreign health coverage, multi-share plans and AmeriCorps coverage will not generally be recognized as minimum essential coverage. However, coverage that does not otherwise qualify as minimum essential coverage can qualify if it meets specific criteria set out in the rule.  These criteria include “substantially” complying with the insurance reform requirements of PPACA that pertains to non-grandfathered, individual coverage (although the rule does not specify which insurance reform requirements are included).

Final Rule
Fact Sheet
Guidance of Hardship Exemption Criteria and Special Enrollment Periods.

Eligibility for Minimum Essential Coverage for Purposes of the Premium Tax Credit

On June 26, 2013, the IRS issued Notice 2013-41, which provides guidance on when certain individuals are eligible for minimum essential coverage under certain government-sponsored health programs (i.e., Medicaid, Medicare, CHIP or TRICARE) or through self-funded student health plans and state high risk pools for purposes of the premium tax credit. The notice specifically addresses disenrollment from CHIP or Medicaid for nonpayment of premiums, CHIP waiting period, eligibility based on agency determination and eligibility based on enrollment to indicate circumstances when individuals may or may not be eligible for subsidized exchange coverage during these periods.

The notice reiterates guidance issued by HHS on the same day (see previous article above), providing for a one-year transitional relief period in 2014 whereupon self-funded student health plans and state high risk pools will be considered minimum essential coverage. These plans will not be permanently designated as minimum essential coverage and starting with plan years beginning on or after Jan. 1, 2015, they will have to apply to HHS to be so recognized.

Although the specifics of the individual shared responsibility penalty are not of direct significance to employers, familiarity with these provisions will help employers appreciate the indirect impact on employees of their failure to offer an affordable employer-sponsored plan. There is still more detail to come as the IRS finalizes its regulations on the individual mandate penalty.

IRS Notice 2013-41

IRS Provides Transitional Relief Regarding Individual Mandate Penalty

On June 26, 2013, the IRS released IRS Notice 2013-42, which provides transitional relief for certain individuals under the individual mandate penalty. Specifically, the transitional relief applies to uncovered individuals who are eligible to enroll in a non-calendar year plan that begins in 2013 and ends in 2014. The individual, and eligible family members, would not be liable for a penalty under the individual mandate for any month before the plan year begins in 2014. For example, if an individual is eligible for an employer-sponsored plan, with a plan year that runs June 2013 through May 2014, the individual and eligible family members would not be subject to a penalty under the individual mandate for January 2014 through May 2014.

IRS Notice 2013-42

DOL Releases Spanish Version of the Exchange Notice

The DOL has released a Spanish version of the model Exchange Notice. As a reminder, employers, who are subject to the FLSA, must distribute the notice to existing employees by Oct. 1, 2013, and to subsequent new employees within 14 days of the hire date. The notice informs employees of the availability of the health insurance exchange and their possible eligibility for a premium tax credit. The new version will be helpful for employees whose primary language is Spanish. The NFP HR and Compliance Solutions website has been updated to reflect these additions.

Model Exchange Notice (Spanish) for Employers Who Offer A Health Plan
Model Exchange Notice (Spanish) for Employers Who Do Not Offer A Health Plan
NFP HR and Compliance Solutions, Model Notices

Tenth Circuit Ruling Results in Temporary Order Barring Enforcement of Contraceptive Mandate

On June 28, 2013, two Oklahoma corporations run by religious families were granted a temporary restraining order by the District Court for the Western District of Oklahoma, temporarily barring the government from enforcing the mandate to provide birth control at zero cost-sharing as required for non-grandfathered plans under PPACA (known as the “contraceptive mandate”). The temporary order was a result of a ruling by the U.S. Court of Appeals for the Tenth Circuit the day before, on June 27, 2013, in which the Circuit Court issued six separate opinions after hearing the case of Hobby Lobby Stores, Inc. v. Sebelius, 12-6294, 2013 WL 3216103 (10th Cir. June 27, 2013). The Circuit Court ruled that some for-profit corporations can be considered “persons” that can have their own religious beliefs and exercise them. The decision is significant because this was the first ruling by a federal appeals court on the contraceptive mandate, and is one of the few being filed by a for-profit corporation. Nearly 60 other lawsuits are pending nationwide challenging the mandate, but most are being filed by non-profit colleges, schools and other institutions.

The Tenth Circuit Court split five to three with respect to the treatment of for-profit corporations as religious persons. The decision found that corporations, if they are owned by religiously devout individuals who control the company’s affairs, are protected by the federal Religious Freedom Restoration Act. The Circuit Court returned the case to a federal district judge in Oklahoma, to weigh whether to bar the government from enforcing the mandate against the two Christian-oriented corporations. The district judge issued a temporary restraining order, barring the government from enforcing the mandate – and collecting federal fines of approximately $1.3 million per day ($475 million per year), until a hearing can be held, set for July 19, 2013, on whether to impose a more lasting order.

Importantly, this case does not relieve nongrandfathered plans of the obligation to comply with the contraceptive mandate as required under PPACA.  Employers considering noncompliance with this mandate must consult legal counsel.

Hobby Lobby Stores, Inc. v. Sebelius
Temporary Restraining Order


June 18, 2013

Additional Guidance Regarding the PCOR Fee

PPACA provides for a new fee that will help fund clinical effectiveness research conducted by the nonprofit Patient-centered Outcomes Research (PCOR) Institute. The carrier is responsible for reporting and paying the PCOR fee for a fully insured plan. The employer plan sponsor is responsible for a self-insured plan including an HRA. For plan years ending between Oct. 1, 2012 and Dec. 31, 2012, the fee is due by July 31, 2013. This is done by filing IRS Form 720, which has now been revised to reflect the fee. Please note that while Form 720 is entitled the Quarterly Federal Excise Tax Return, the PCOR fee is only due annually.

On May 31, 2013, Associate Chief Counsel Andrew Keyso issued guidance related to the PCOR fee in an IRS Memorandum (AM2013-002). The memo states that the PCOR fee will be considered an ordinary and necessary business expense paid or incurred in carrying on a trade or business and, therefore, will be deductible under Section 162 of the Internal Revenue Code. IRS Memorandums, such as this one, do not bind the agency, but do provide helpful insight for plan sponsors of self-insured plans into how the IRS will apply Section 162 to the PCOR fee. The NFP HR and Compliance Solutions website has been updated to reflect this recent guidance.

AM2013-002
Form 720
Form 720 Instructions
NFP HR and Compliance Solutions, Health Care Reform Fees

HHS Releases Final SHOP Regulations

On June 4, 2013, HHS issued final regulations on the Small Business Health Options Program (SHOP) rules. The final rule amends existing regulations regarding triggering events and special enrollment periods for qualified employees and their dependents and implements a transitional policy regarding employees’ choice of qualified health plans (QHPs) in the SHOP. Beginning in 2014, individuals and small businesses will be able to purchase private health insurance through an exchange. PPACA contemplates that each exchange will have a SHOP that assists qualified employers in providing health insurance options for their employees. PPACA requires at a minimum that the SHOP must allow employers the option of offering employees one or more QHPs at the level of coverage chosen by the employer. This is called the “employee-choice model” because it gives employees a choice among all QHPs at the metal level chosen by the employer.

The final rule establishes a one-year transitional policy that delays implementation of the employee-choice model for plan years beginning on or after Jan. 1, 2014 and before Jan. 1, 2015. Under the transitional policy, a SHOP is not required, but may permit, qualified employers to offer their employees a choice of QHPs at a single coverage level. Federally-facilitated SHOPs will not exercise this option, but instead allow employers to choose a single QHP from the choices available in the SHOP. The transitional policy is intended to provide additional time to prepare for an employee-choice model and to increase the stability of the small group market during 2014.

Because of the delayed implementation of the employee-choice model, the final rule also delays implementation of the premium aggregation function for the SHOP. Premium aggregation was designed to assist employers whose employees were enrolled in multiple QHPs. Because this function will not be necessary in 2014, the premium aggregation function is now optional for plan years beginning before Jan. 1, 2015.

Finally, PPACA established a special enrollment period for exchanges. Under PPACA’s Exchange Establishment Rule, a qualified individual generally has 60 days from the date of the triggering event to select a QHP. This differs from the length of special enrollment periods in group markets provided by HIPAA, which lasts 30 days. Recognizing the lack of rationale to support providing a longer special enrollment period in a SHOP than is provided in the outside group market, the final rule establishes a SHOP special enrollment period of 30 days for most applicable triggering events. For the triggering event of loss of Medicaid/CHIP eligibility or becoming eligible for premium assistance under Medicaid/CHIP, however, the final rule maintains a 60-day special enrollment period, which is consistent with HIPAA’s Special Enrollment Right provisions in the group market.

Regulations
Draft Employer Application for SHOP (for those not applying online)
Draft Employee Application for SHOP (for those not applying online)


June 4, 2013

Final Wellness Program Regulations Issued

On May 29, 2013, the IRS, DOL and HHS (the Departments) issued final regulations related to incentives for nondiscriminatory wellness programs in group health plans. The regulations largely finalize the proposed regulations that were issued on Nov. 20, 2012 (see the Dec. 4, 2012, issue of Compliance Corner). The regulations continue to recognize two types of wellness programs in connection with a group health plan: participatory and health-contingent wellness programs. Health-contingent wellness programs must meet five statutory requirements under HIPAA (maximum reward, promotion of health, availability of reasonable alternative standard, annual opportunity to qualify for reward and plan materials). Under the finalized rules, with respect to the first HIPAA requirement, a program may provide a reward of up to 30 percent of the total cost of coverage (up to 50 percent if the program is designed to reduce tobacco usage).

There is one important addition in the new regulations. The Departments divide the health-contingent wellness programs into two categories: activity-only and outcome-based programs. Activity-only programs require an individual to perform or complete an activity, such as walking, diet or exercise, in order to obtain a reward. A reasonable alternative standard must be provided to individuals who are unable to complete the activity because of a medical condition or if a health provider states that it is medically inadvisable for the employee to do so.

Outcome-based programs require an individual to attain or maintain a specific health outcome, such as not smoking or attaining certain results on a biometric screening. For outcome-based programs, a reasonable alternative standard must be provided to all individuals who do not meet the initial outcome. This means that if a program requires employees to be nonsmokers to receive a higher employer contribution toward health plan premiums, a reasonable alternative standard must be provided to any employee who smokes, regardless of whether they provide a medical certification. The regulations state that this new requirement is to ensure that the program is reasonably designed to improve health and is not a subterfuge for underwriting or reducing benefits based on health status.

A health-contingent program (both active-only and outcome-based) must provide written materials describing the availability of a reasonable alternative standard. Revised sample language to satisfy this requirement is provided in the regulations.

The Departments anticipate issuing future subregulatory guidance to provide additional clarity and potentially proposing modifications to the final regulations as necessary, including the permissibility of rescinding coverage in connection with an employee’s certification regarding tobacco usage.

The regulations apply to fully insured, self-insured, grandfathered and non-grandfathered plans for plan years beginning on or after Jan. 1, 2014.

Regulations

CMS Provides Technical Assistance Portal Containing FAQs, Webinar Opportunities and Important 2014 Plan Design Clarifications

On May 28, 2013, CMS provided new FAQs within the REGTAP Library, an online portal designed to provide technical assistance and training related to the health insurance marketplace (also called the “exchanges”), premium stabilization programs, and guidance and operations that address the following areas: federally facilitated exchange enrollment, qualified health plan certification, eligibility, Small Business Health Options Program (SHOP), advanced premium tax credits, cost-sharing reductions and information on risk adjustment, reinsurance and risk corridors.

In addition to the FAQs posted and archived on the site, the website provides webinar opportunities, such as a recent webinar held on May 31, 2013, open to interested parties to hear and learn about the consumer and small business processes for applying, comparing plans and enrolling in coverage for the health insurance marketplace.

While not developed directly to assist employers (but rather insurance carriers and actuaries), the website contains many interesting FAQs that employers, both large and small, fully insured or self-insured, may find helpful in designing their plans for 2014 compliance. The most recent FAQs discuss the recently released IRS limits that affect the new maximum out-of-pocket limits that apply to all group health plans. The guidance also clarifies that self-insured group health plans may use the Form 5500 counting method for paying the reinsurance fee, even if the plan year is not the same as the calendar year.

To be apprised of future opportunities and view past FAQs, registration is required.

Register for REGTAP
May 28, 2013, FAQ


May 21, 2013

DOL Releases Model Notice and Guidance on PPACA’s Exchange Notice Requirement

On May 8, 2013, the DOL issued Technical Release No. 2013-02, which includes temporary guidance and a model notice relating to the notice to employees of coverage option (known as the “Exchange Notice”) requirement under PPACA. As background, PPACA requires employers subject to the FLSA to provide each employee with a written notice that describes information about the state health insurance exchanges (also referred to as “marketplaces”), including the availability of premium tax credits and the implications relating to purchasing coverage through the exchanges. Originally, PPACA required employers to distribute the notice by March 1, 2013; but earlier this year the DOL delayed that effective date. Technical Release No. 2013-02 makes clear that employers must distribute the exchange notice to all current employees by Oct. 1, 2013. In addition, after Oct.1, 2013, employers must provide the exchange notice to new hires within 14 days of the employee’s start date.

Importantly, the notice must be distributed regardless of whether the employee is full-time or part-time and regardless of whether the employee is actually eligible for coverage. For this purpose, Technical Release No. 2013-02 provides two model notices to assist employers in providing the required information: Notice for Employers Without Health Plans and Notice for Employers With Health Plans. The former includes (among other things) a brief description of the exchanges, the circumstances under which a premium tax credit may be available, and a link to a website for further information and an exchange enrollment application. The latter includes all of that information, as well as specific information relating to the employer’s health plan (e.g., whether the plan meets the minimum value standard, whether the coverage is affordable, etc.).

Now that the model notices are available and the effective date is known, employers should begin preparations for drafting and distributing the notices. Employers should review the model notices and determine what plan-specific language, if any, it should include in the notices.

Technical Release No. 2013-02
Model Notice for Employers Without Health Plans
Model Notice for Employers With Health Plans


May 7, 2013

DOL Releases Model Notice and Guidance on PPACA’s Exchange Notice Requirement

On May 8, 2013, the DOL issued Technical Release No. 2013-02, which includes temporary guidance and a model notice relating to the notice to employees of coverage option (known as the “Exchange Notice”) requirement under PPACA. As background, PPACA requires employers subject to the FLSA to provide each employee with a written notice that describes information about the state health insurance exchanges (also referred to as “marketplaces”), including the availability of premium tax credits and the implications relating to purchasing coverage through the exchanges. Originally, PPACA required employers to distribute the notice by March 1, 2013; but earlier this year the DOL delayed that effective date. Technical Release No. 2013-02 makes clear that employers must distribute the exchange notice to all current employees by Oct. 1, 2013. In addition, after Oct.1, 2013, employers must provide the exchange notice to new hires within 14 days of the employee’s start date.

Importantly, the notice must be distributed regardless of whether the employee is full-time or part-time and regardless of whether the employee is actually eligible for coverage. For this purpose, Technical Release No. 2013-02 provides two model notices to assist employers in providing the required information: Notice for Employers Without Health Plans and Notice for Employers With Health Plans. The former includes (among other things) a brief description of the exchanges, the circumstances under which a premium tax credit may be available, and a link to a website for further information and an exchange enrollment application. The latter includes all of that information, as well as specific information relating to the employer’s health plan (e.g., whether the plan meets the minimum value standard, whether the coverage is affordable, etc.).

Now that the model notices are available and the effective date is known, employers should begin preparations for drafting and distributing the notices. Employers should review the model notices and determine what plan-specific language, if any, it should include in the notices.

Technical Release No. 2013-02
Model Notice for Employers Without Health Plans
Model Notice for Employers With Health Plans

CMS Publishes Notice on Early Retiree Reinsurance Program

On April 19, 2013, the Federal Register outlined procedures for terminating several processes under the Early Retiree Reinsurance Program (ERRP) in preparation for the Jan. 1, 2014, sunset date. In connection with the Federal Register, CMS issued a press release outlining the last date plan sponsors may update information (Dec. 31, 2013), the deadline for submitting ERRP reimbursement requests (July 31, 2013), the deadline for submitting corrections (July 31, 2013) and the last date to submit an ERRP reopening request (Dec. 31, 2013).

Importantly, plan sponsors must continue to maintain and furnish to HHS certain records when a request is made.

Federal Register
Announcement

Updated SBC Guidance and FAQs Released

On April 24, 2013, the DOL issued a set of FAQs, together with a new template, for the summary of benefits and coverage (SBC) that applies to group health plans and individual health insurance issuers. The new rules and form modify existing guidance and will apply for coverage offered in 2014.

The SBC provides information to plan participants about plan design using a required format. The new template includes two new entries that address whether the plan provides minimum essential coverage (MEC) and meets the minimum value (MV) standard. The updated SBC template is necessary because the template provided last year did not include information regarding whether the benefit option being described provides MEC or meets the MV requirements. These terms are relevant for the purpose of determining whether, and to what extent, an employer shared responsibility penalty might apply (and whether an individual may qualify for a premium tax credit through the state health insurance exchanges). The remainder of the SBC template and uniform glossary remain unchanged.

The FAQ explains that if it would be administratively burdensome for a plan to use the new sample, the prior sample SBC can be used and no enforcement action will be taken, provided that a cover letter or other notice is provided to participants with the SBC indicating whether or not the plan provides MEC or meets the MV requirements. Sample language is provided for this purpose.

FAQs About the Affordable Care Act Implementation Part XIV
SBC Template
SBC Template (in Word format)
Sample Completed SBC

Agencies Issue New PPACA FAQs on Expiration of Annual Limit Waivers and Clinical Trial Coverage

On April 29, 2013, the DOL, HHS and the U.S. Department of the Treasury jointly issued FAQs about the Affordable Care Act Implementation Part XV. The new FAQs relate to the expiration of annual limit waivers, clinical trial coverage and provider nondiscrimination rules.

On the expiration of the annual limit waivers, as background, under a special program established in 2010, HHS granted waivers from PPACA’s annual limit restrictions to certain employer group health plans, including HRAs, for plan or policy years ending before Jan. 1, 2014. The FAQs state that changing the plan year does not change the waiver’s expiration date. As an example, the FAQs state that if a waiver approval letter states that a waiver is granted for an April 1, 2013, plan or policy year, the waiver will expire on March 31, 2014, regardless of whether the plan or issuer later amends its plan or policy year.

On clinical trial coverage, as background, beginning in 2014, a plan or insurer may not deny a qualified individual’s participation in an approved clinical trial with respect to the treatment of cancer or another life-threatening disease or condition, may not deny (or limit or otherwise impose conditions on) the coverage of routine patient costs for items and services provided in connection with the trial, and may not discriminate against the individual based on participation in the trial. The FAQs indicate that the agencies will not be issuing additional regulations on the clinical trial coverage prior to its effective date. Until further guidance is issued, plans and insurers must use a good faith, reasonable interpretation of the law.

Finally, on provider nondiscrimination rules, as background, for plan or policy years beginning in 2014, group plans and insurers may not discriminate (with respect to plan participation or coverage) against any health care provider acting within the scope of that provider’s license or certification under applicable state law. According to the FAQs, HHS does not intend to issue additional guidance before the provision’s effective date, and until further guidance is issued, plans and insurers are expected to follow a good faith, reasonable interpretation of the law. Importantly, though, the FAQ clarifies that the provision does not require plans or insurers to accept all types of providers into a network, and it does not apply to provider reimbursement rates.

FAQs About the Affordable Care Act Implementation Part XV

Final Application for Public “Marketplace” Shortened to Three Pages

On April 30, 2013, HHS Secretary Kathleen Sebelius posted a blog to the healthcare.gov website announcing that the application for the public marketplace (also known as the exchange) has been finalized. The application was simplified to three double-sided pages from the initial proposed 21-page draft. A longer application must be completed in order for an individual to determine if they may qualify for tax credits or subsidies to help pay premiums for health care purchased on the exchange beginning in 2014.

HealthCare.gov Blog Post
Individual Application
Family Application
Individual Without Financial Assistance Application

CMS Issues Guidance Related to PPACA’s Health Insurance Market Reforms

CMS recently issued “Questions and Answers Related to the Health Insurance Market Reforms,” including geographic rating areas, association coverage and premium adjustment when coverage becomes secondary to Medicare.

With respect to geographic areas, the answers indicate that CMS intends to propose a rule that the geographic rating factor and premiums will be based on the employer’s primary business location. This would apply to small group health plans sold inside and outside the state health insurance exchanges. In addition, the FAQs indicate that an employer generally may have only one exchange account per state, although that limitation would not apply to multi-state employers (they will be able to establish either one exchange account for all employees or multiple exchange accounts).

On association coverage, one question asks whether states can define coverage sold to individuals and small groups through an association as large group health coverage and therefore avoid subjecting the coverage to the single risk pool and the other requirements of the individual and small group market. The answer is “no.” Specifically, any state law that defines coverage sold to individuals and small groups through an association as large group coverage would be pre-empted by federal law (which states that such coverage is individual or small group coverage).

The questions and answers clarify that coverage that is offered to associations but is not related to employment is considered individual, not group, coverage. However, if the coverage is offered in connection with an association group health plan, then it is considered group health coverage. To the extent an association has any covered members that are small employers, the insurance issuer is subject to the requirements that apply to small group coverage with respect to any small employer in the association.

Questions and Answers Related to the Health Insurance Market Reforms

IRS Issues Proposed Regulations on Minimum Value and Premium Tax Credit Eligibility

Minimum Value

On May 3, 2013, the IRS issued proposed regulations related to minimum value (MV) and eligibility for a premium tax credit. According to the regulations, an individual is not eligible for a premium tax credit if he or she is eligible for employer-sponsored coverage that is both affordable and provides MV. An employer is not liable for a penalty under the employer mandate if it offers affordable, MV coverage to full-time employees. “MV” means that the plan’s share of the total allowed costs of benefits provided under the plan is at least 60 percent.

The preamble to the regulations provide for three safe harbor designs. If the plan covers all of the benefits included in the MV calculator and complies with one of the following designs, it would meet the MV standard. Comments are requested on the following plan designs as well as other common designs.

  1. A plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost-sharing and a $6,000 maximum out-of-pocket limit for employee cost-sharing
  2. A plan with a $4,500 integrated medical and drug deductible, 70 percent plan cost-sharing, a $6,400 maximum out-of-pocket limit and a $500 employer contribution to an HSA
  3. A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan medical expense cost-sharing, 75 percent plan drug cost-sharing, a $6,400 maximum out-of-pocket limit and drug copays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75 percent coinsurance for specialty drugs

The proposed regulations provide that employer contributions to an HSA are included in the calculation of a plan’s MV. Amounts newly made available in an HRA may be included in the calculation of the plan’s MV, if the HRA is integrated with the plan, and if the contributions may be used only for cost-sharing expenses.

Some wellness plans provide for reduced cost sharing, such as a reduced deductible, for participating in a wellness program. The plans’ MV must be calculated without regard to the reduced cost-sharing provision available under the wellness program. However, there is an exception. If the wellness program is designed to reduce or prevent tobacco use, then the reduced cost-sharing amount would be used in the MV calculation as if all individuals participated in the program.

Premium Tax Credit Eligibility

In determining whether an individual’s employer-sponsored coverage is affordable, the proposed regulations provide that new employer contribution amounts to an HRA are included in the calculation. However, the HRA must be integrated with the plan, and the contributions must be available for employees to use to pay premiums. Please note that if the employee premium contributions for the medical plan are taken on a pretax basis, then HRA funds cannot be used to pay premiums, and this provision would not apply to such a plan.

Many wellness programs provide a premium contribution discount to those who participate in the program. The proposed regulations provide that affordability must be determined without regard to the reduced contribution amount available under the wellness program. However, if the wellness program is designed to reduce or prevent tobacco use, then the reduced contribution amount is used in the affordability calculation as if all individuals participated in the program and were eligible for the reduced contribution amount.

In regard to the employer mandate penalty, for plan years beginning before Jan. 1, 2015, an employer will not be assessed a penalty if the offer of coverage to the employee would have been affordable or would have satisfied MV if the employee satisfied the requirements of any wellness program. This rule only applies if the terms and rewards of the employer’s wellness program were in effect as of May 3, 2013.

Regulations


April 23, 2013

HHS Issues Proposed Regulations Relating to Standards for Exchange Navigators

On April 5, 2013, HHS issued proposed regulations that would create standards for navigators and non-navigator assistance personnel for federal exchanges and for federally funded non-navigator assistance personnel in state-based exchanges. As background, state health insurance exchanges must have a navigator program that will train navigators to facilitate enrollment and provide impartial information to consumers about health insurance, the exchange and insurance affordability programs. State-based exchanges may also establish non-navigator consumer assistance programs to help provide outreach, education and assistance to consumers.

These proposed regulations focus on the impartial nature of exchange navigators as providers of information to consumers and to small employers eligible to purchase coverage through an exchange. To this end, the proposed regulations prohibit insurers from acting as navigators and from compensating navigators.

While the proposed regulations provide that states and exchanges cannot prescribe licensing or certification standards for navigators that would conflict with PPACA, the regulations clarify that navigators must have expertise in eligibility and enrollment rules and procedures. Detailed conflict of interest standards applicable to navigator and non-navigator personnel are proposed. They would require, among other things, a written plan to remain free from conflicts and an attestation that the navigator does not have a prohibited relationship with an insurer or the insurance industry. There are also standards for training, certification and recertification, including specifics about the required content for up to 30 hours of training and certification examination requirements after training is completed. State-based exchanges are not required to adopt these standards for their navigators or for non-navigator assistance personnel that are not federally funded, but they may take them into account when establishing their own standards.

Federal Register

Congressional Research Service Issues Report Clarifying Proposed Employer Mandate Guidance

On April 3, 2013, a report written by the Congressional Research Service summarizing the proposed employer mandate penalties was made available to members of Congress. The report summarizes in plain English many of the intricacies that were included within the employer mandate proposed regulations previously issued by the IRS, such as:

  • How the penalty amount can vary for employers
  • The definitions of “affordable” and “adequate” for purposes of health insurance coverage offered by employers
  • Which dependents must be offered coverage
  • The safe harbors available for affordability
  • What “adequate coverage” and “actuarial value” actually mean
  • Which employees are full-time and whether they are counted toward determining if an employer is subject to the mandate
  • A discussion of measurement, stability and administrative periods
  • The likelihood of employers paying a penalty on seasonal employees
  • When employers will need to begin measuring full-time status for ongoing employees

Importantly, and of interest for employers, the report describes the proposed IRS regulations in greater detail and provides examples of potential dates when employers will need to begin measuring full-time status for their ongoing employees.

Report


April 9, 2013

Sequester Reduces Small Business Health Care Tax Credit for Tax-exempt Employers

In 2010, PPACA implemented a health care tax credit for small employers. Generally, employers are eligible for the credit if they have 25 or fewer full-time equivalent employees and have average annual wages of $50,000 or less. For eligible tax-exempt employers, the credit is a refundable tax credit limited to the amount of the employer's payroll taxes during the calendar year in which the tax year begins. Under the sequester requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic cuts took place as of March 1, 2013. One of those cuts is an 8.7 percent reduction in the refundable portion of the credit for tax-exempt employers. The sequestration reduction rate is in effect until Sept. 30, 2013, unless Congress takes intervening action.

IRS Announcement

HHS Issues New Regulations and Guidance Related to Medicaid

Effective in 2014, PPACA authorizes states to expand Medicaid eligibility and coverage to adults under the age of 65 who have income up to 133 percent of the federal poverty level. Currently, Medicaid is generally only available to children, pregnant women, those age 65 or older, or individuals with disabilities. On April 2, 2013, HHS published final regulations regarding the funding for those states that choose to expand Medicaid. From 2014 through 2016, the federal government will pay 100 percent of the cost of certain newly eligible adult Medicaid beneficiaries. The federal funding will gradually decrease to 90 percent by 2020, which is where the funding rate will remain.

On Mar. 29, 2013, HHS also released FAQs related to Medicaid Premium Assistance. Some states had indicated an interest in using Medicaid funds to purchase private health insurance through the exchange for the Medicaid expansion population. The FAQs explain that HHS may consider this type of program if it meets certain criteria, including that recipients have a choice of at least two private plans and coverage provides all required Medicaid benefits. The department considers this to be a premium assistance program and not a partial expansion of Medicaid. Some states already have a premium assistance program in which Medicaid or Children’s Health Insurance Program funds are used to pay for an eligible individual’s premium under a group health plan if it is cost-effective to do so.

Regulations
HHS Press Release
Premium Assistance FAQ

CMS Issues FAQs Addressing Dental, Vision and Other Ancillary Products on Exchanges

On March 29, 2013, CMS issued a bulletin with three FAQs pertaining to dental, vision and other ancillary products and whether they may be provided on health insurance exchanges.

The three FAQs clarify that an exchange may offer qualified health plans (QHPs), which do include stand-alone dental plans. However, stand-alone vision plans and other ancillary insurance products will not be offered on the exchange, although if a state program shares resources and infrastructure with a state-based exchange, they may choose to offer such products. Additionally, an exchange may explain these products and provide basic information, as long as the information provided clarifies that advanced payment of premium tax credits and cost-sharing reductions are not available for vision or other ancillary insurance products.

Bulletin


March 26, 2013

Agencies Propose Regulations on 90-day Waiting Period Limit and Elimination of HIPAA Certificates

On March 21, 2013, the DOL, HHS and IRS published in the Federal Register a joint set of proposed regulations implementing the PPACA requirement that group health plans and health insurance issuers offering group health insurance cannot apply a waiting period that exceeds 90 days. The proposed regulations make the rules regarding 90-day waiting periods consistent with previously issued regulations implementing the employer mandate (also known as the “pay or play penalty”).

The proposed regulations define a waiting period as the period that must pass before coverage can become effective for an employee or dependent who’s otherwise eligible under the terms of the group health plan. Plan sponsors are allowed to impose substantive eligibility requirements (i.e., full-time employment) for coverage without restriction. However, waiting periods based solely on the passage of time cannot exceed 90 days. This means coverage for otherwise eligible employees and dependents must become effective on the 91st day.

Note that no extension is permitted in the event that the commencement of coverage is tied to the first day of the month. Thus, in that case, the waiting period cannot be extended to the first day of the month following the completion of a 90-day wait. Plans may still require the completion of a specified number of hours to become eligible for health coverage. The proposed regulations indicate that the specified number of hours cannot exceed 1,200 and can only be imposed on a one-time (as opposed to an annual) basis.

In addition, the proposed regulations provide some flexibility regarding variable-hour provisions for new employees. In these circumstances, the plan sponsor may apply a measurement period of up to 12 months to determine whether the new variable-hour employee satisfies the eligibility conditions. The proposed regulations explain that the plan will not violate the 90-day waiting period requirement for this limited subset of employees if coverage is effective no later than 13 months from the employee's start date, plus the time remaining until the first day of the following month if the employee started midmonth.

The proposed regulations also include several changes to conform existing regulations to other PPACA provisions. First, the proposed regulations make changes to the pre-existing condition (PEC) limitations and other portability provisions of HIPAA. The regulations would amend HIPAA to remove provisions superseded by PPACA’s prohibition on PECs. This includes eliminating the need to provide HIPAA certificates of creditable coverage. The proposed amendment to eliminate the requirement to issue a certificate of creditable coverage is proposed to apply Dec. 31, 2014 (as opposed to Jan. 1, 2014, when the prohibition on PECs takes effect). This delayed effective date is so that individuals needing to offset a PEC exclusion under a plan that operates with a plan year beginning later than Jan. 1 would still have access to the certificate for proof of coverage. Second, the regulations propose updating certain examples in other regulatory provisions — for example, to reflect the prohibition on annual and lifetime dollar limits and the provision of coverage to dependent children until age 26. Lastly, the regulations propose clarifying that a multistate plan must comply with PPACA’s federal external review process.

Federal Register

Federal Health Exchange Application Available

On Jan. 25, 2013, CMS released the application that will be used by individuals to apply for health insurance coverage through federally facilitated exchanges in 2014. These applications, which will be used beginning with the initial open enrollment on Oct. 1, 2013, will collect financial and demographic information. This information will be used to determine whether an individual is eligible to purchase health care coverage through the exchange, and whether the person further qualifies for a premium tax credit. Individuals will be able to submit applications online, through the mail, over the phone or in person.

In addition to paper applications, many individuals applying for affordability programs and for insurance through the exchange will apply online. CMS also released a draft list of all possible questions that could be asked in an online application. There is also information about two video demonstrations of the online application.

Please note that the paper application for health insurance (and cost assistance) contains a draft template of an employer coverage form to assist individuals with gathering the requested information on employer-sponsored coverage from their employers.

Application Materials

Agencies Extend Transition Period for State External Review Process

On March 15, 2013, the DOL, HHS and IRS jointly released Technical Release 2013-01. The guidance provides relief to health insurers offering non-grandfathered fully insured plans and non-grandfathered self-insured non-ERISA plans in states working to bring their external review processes into compliance with National Association of Insurance Commissioners (NAIC) standards.

Previous guidance provided a grace period until Jan. 1, 2014, for these non-grandfathered plans to provide an external review process using either the state’s process or the federal process. Typically, self-insured ERISA plans would use the federal process. Self-insured non-ERISA plans (e.g., plans sponsored by municipalities, county governments, public school systems), as well as fully insured plans, would typically use the state’s process. However, because some states either did not have external review processes in place or did not use an external review process that provided the level of protections required in the NAIC Uniform Health Carrier External Review Model Act (known as the “NAIC-parallel process”), there was concern as to whether such plans would be in compliance by Jan. 1, 2014. In June 2011, the agencies provided for a transition period where a state could use a process that meets temporary standards, (known as the “NAIC-similar process”), if the states did not have an NAIC-parallel process in place.

The additional transition relief now provides that insurers and self-insured non-ERISA plans will be treated as complying with the external review requirements if they follow a state process that meets the temporary NAIC-similar process standards, a less burdensome process than the NAIC-parallel process. Such plans may utilize the transition relief until Jan. 1, 2016, but if a state still does not adopt the NAIC-parallel process standards by that date, the plans will be required to use the federally administered external review process.

The guidance ends with clarification that the agencies intend to issue additional guidance on state external review standards, incorporating comments received. The transition relief in Technical Release 2013-01 should be relied upon for guidance until this additional guidance is released.

Technical Release 2013-01

Corrections to the Employer Mandate Guidance

On March 15, 2013, the IRS printed in the Federal Register four corrections to the original employer mandate guidance, which was issued on Dec. 28, 2012 (and published in the Federal Register on Jan. 2, 2013). The corrections make several minor changes to the employer mandate guidance (also known as the “pay or play penalty” or “shared responsibility requirement”).

While the corrections seem minor, they provide much-needed clarification where, in two cases, an incorrect cross-referencing citation was provided. Another correction replaces language applicable to the transition relief for fiscal plan years (non-calendar-year plans) so that the word “member” is deleted. The deletion of the word “member” is vital because there was concern that the transition relief only applied to members of a controlled group, instead of all applicable large employers subject to the employer mandate guidance.

The final correction was lengthier, and applies to applicable large employer members who are required to make contributions to a multiemployer plan under a collective bargaining agreement, with respect to some or all of its employees. The IRS provided replacement text that is more easily understood and also corrects one citation (the definition of “affordable”). The correction adds a new sentence, which clarifies that such plans may also utilize the transition relief with respect to offers of coverage to dependents.

Federal Register


March 12, 2013

PPACA, HIPAA Self-compliance Checklist Published by DOL

The DOL recently released two self-compliance tools designed to assist group health plans, plan sponsors, plan administrators and health insurance issuers in determining whether the group health plan is in compliance with Part 7 of ERISA’s PPACA and HIPAA provisions. While the self-compliance tools do not necessarily cover all the specifics of these laws, they are intended to assist those involved in the operation of a group health plan in understanding the laws and related responsibilities. To this end, the tools include an informal explanation of relevant statutes and interpretations of recent regulations. The publication of the self-compliance checklist is part of the DOL’s ongoing effort to assist (rather than impose penalties on) plans, issuers and others who are working diligently and in good faith to understand and come into compliance with the new law.

Checklist

DOL Releases Affordable Care Act Implementation FAQs Part XIII

On March 8, 2013, in what has become an almost weekly occurrence, the DOL released sub-regulatory guidance in the format of a frequently asked question. The single question addresses to what extent expatriate group health insurance coverage is subject to the provisions of PPACA.

PPACA Implementation FAQs Part XIII

Rules About PPACA’s Whistleblower Protections Released

On Feb. 27, 2013, the DOL’s Occupational Safety and Health Administration (OSHA) issued interim final regulations implementing health care reform whistleblower protection provisions. The regulations establish procedures and time frames for the filing and handling of retaliation complaints.

An employer may not retaliate against an employee for receiving subsidized coverage under a qualified health plan through an exchange. Furthermore, retaliation is prohibited for reporting a violation under Title I of PPACA, refusing to participate in an activity the employee reasonably believes to be a violation of Title I or participating in a whistleblower proceeding.

An employee who believes he or she has been the victim of retaliation in violation of PPACA may file a complaint within 180 days of the claimed retaliation. OSHA will review the employee’s evidence and conduct an investigation at its discretion. Under these interim final regulations, OSHA has the power to negotiate settlements or enter an order awarding damages and other remedies.

Regulations

HHS Finalizes Health Insurance Market Reforms

On Feb. 27, 2013, HHS issued final regulations in the Federal Register on health care reform’s market rules, covering premium rate setting and review, risk pooling, guaranteed availability and renewability, and catastrophic plan standards. Initially proposed in November 2012, the final regulations generally apply to insurers offering individual and non-grandfathered small group market health insurance (both inside and outside the exchanges) beginning in 2014. For the most part, the final regulations adopt the provisions of the proposed regulations. While the details are primarily of interest to insurers, the rules will have significant direct and indirect impacts on how much plans made available both inside and outside of the exchanges will cost. HHS indicated it will release future guidance on counting employees for determining market size of a group health plan.

Rating Factors
Importantly, HHS rejected requests to allow flexibility to health care reform’s restricted list of health insurance rating factors. As a result, rating factors may only take into account family size, geography, age and tobacco use. While these factors will only apply in the individual and small group market in 2014, these rating factors will extend to all coverage offered in the large group market beginning in 2017, in states that open exchanges to large employers.

Some of the significant results under the rating factors discussion included the fact that HHS will permit states to decide what family members may be included on family policies. For example, whether opposite- and same-sex domestic partners, as well as stepchildren and foster children, are included in the family policy will be up to the state. For geographic rating areas, states will have the discretion to establish rating areas, if they are based on certain geographic divisions such as counties or ZIP codes. There will be three permissible age bands (children under 21 years old, adults 21 to 63 years old and adults age 64 and older). Finally, for tobacco, the final regulations state that insurers in the small group market may impose a tobacco rating factor only if a tobacco user can avoid paying the full amount of that factor by participating in a wellness program.

Guaranteed Availability and Renewability
There are some changes in these rules that will be of particular interest to employers in the small group market. The most significant change is with respect to minimum participation and minimum coverage requirements, as the final regulations provide that insurers cannot deny coverage to small employers for failure to satisfy minimum participation or contribution requirements. But the final regulations continue to allow an insurer to refuse to renew a group policy in the small group market if the employer fails to satisfy an employer contribution or group participation rule under applicable state law. This rule is significant for employers in the small group market that are large enough to be subject to the employer shared responsibility (“play or pay”) penalty taxes. It means they will at least be able to offer minimum value, affordable coverage to avoid penalties, but unfortunately, may be forced to switch insurers every year.

The final regulations do not allow insurers to limit coverage sold through bona fide associations only to associations, although there is a statutory exception that allows insurers to refuse to renew coverage sold through bona fide associations to a nonmember.

Finally, the final regulations clarified that the small group market generally will have continuous open enrollment. But to address adverse selection concerns, enrollment for small employers that fail to meet minimum participation or minimum coverage requirements may be limited to a restricted open enrollment period (Nov. 15 through Dec. 15). In addition, to minimize adverse selection and align open enrollment periods in the individual and small group markets, the regulations provide a one-time open enrollment period for individuals with a non-calendar-year plan to transition to a calendar-year plan on their renewal date in 2014. The final regulations also adopt additional triggers for “limited” open enrollment periods in the individual market that are equivalent to the exchange special enrollment periods (e.g., an individual and any dependent losing minimum essential coverage other than because of a failure to pay premiums timely). The final regulations establish 60-day special enrollment periods in the individual market but 30-day special enrollment periods in the small group market.

Final Regulations

Fact Sheet

HHS Finalizes Premium Stabilization Programs, Including Reinsurance Contribution Rates and SHOP Rules

On March 11, 2013, HHS published final regulations in the Federal Register providing details and payment parameters for three programs designed to stabilize premiums (risk adjustment, reinsurance and risk corridors) that will begin in 2014. Initially proposed in December 2012, these final regulations also establish standards for advance payments of premium tax credits, cost-sharing reductions, the MLR program and the Small Business Health Options Program (SHOP). HHS simultaneously issued interim final regulations providing a transitional, simplified method for insurers to use in calculating cost-sharing reductions to be reconciled against advanced payments received from HHS. Both the final and interim final regulations are full of technical detail of interest primarily to insurers. But the final regulations address some issues that are worth highlighting for employers, particularly employers who sponsor self-insured plans subject to reinsurance contribution requirements.

Reinsurance Contributions Required From Insurers and Self-Insured Plans
Insurers and self-insured plans will be required to contribute to a reinsurance program for three years (2014–2016).

Contributing Entities
A modified definition clarifies that a self-insured health plan is the contributing entity responsible for reinsurance contributions, although it may choose to use a third-party administrator (TPA) to transmit the contribution. It is now clear that the self-insured health plan is ultimately responsible to HHS, although plans may choose to contract with a TPA to calculate and transmit the payments.

Coverage Excluded from Contributions
Under the final regulations, a self-insured health plan must make reinsurance contributions for major medical coverage, with certain exceptions. For this purpose, HSAs, health FSAs, expatriate health plans and prescription drug plans are expressly excluded. HRAs are excluded only if they are integrated with other health coverage. Wellness, disease-management and employee assistance programs are excluded if they do not provide major medical coverage. COBRA coverage and retiree medical coverage are subject to reinsurance contributions, unless one of the general exceptions applies. The regulations also clarify the treatment of coverage that is coordinated with Medicare under the Medicare secondary payer rules.

Counting Covered Lives
A variety of methods are provided to count covered lives for calculating reinsurance contributions. The final regulations modify the rules for employers with multiple plans, giving plan sponsors flexibility, under certain conditions, to count coverage options within a single group health plan separately and not to aggregate separate group health plans.

Contribution Rate
HHS will establish a national reinsurance contribution rate each year. The annual per capita (i.e., per covered life) contribution rate for 2014 announced by HHS is $63 ($5.25 per month). HHS will collect all contributions and allocate reinsurance payments on a national basis. The same contribution rate applies to self-insured group health plans, although those plans are excluded from receiving reinsurance payments under the program. States may elect to operate their own reinsurance programs, and can require supplemental contributions and administrative cost payments.

Plan Expenses
HHS notes that the DOL has confirmed that reinsurance contributions are permissible plan expenses under ERISA, and the IRS has confirmed that self-insured plan sponsors may treat them as deductible ordinary and necessary business expenses.

Annual Payments
Contributing entities are to make reinsurance contributions annually. Enrollment data must be provided to HHS by Nov. 15 (generally calculated based on January through September data, even for non-calendar-year plans). HHS will notify the contributing entity, by the later of Dec. 15 or 30 days after receiving the data, of the amount of the contribution for the year, and payment is due 30 days after notification.

MLR Adjustment
The final regulations also adjust the MLR calculation to include premium stabilization amounts, a change HHS indicates will improve accuracy. The proposed delays in MLR reporting deadlines (from June 1 to July 1) and rebate disbursement (from Aug. 1 to Sept. 30) are retained, beginning with the 2014 MLR reporting year. According to the preamble, this change allows the deadlines to occur after all the premium stabilization payment and receipt amounts are determined.

More Standards for SHOPs
The final regulations also clarify and expand on a number of standards for SHOPs that were established in earlier final exchange establishment regulations:

Determining Employer Size for SHOP Participation
For purposes of counting employees to determine whether an employer is a small employer (and thus SHOP-eligible), the final regulations adopt the Code Section 4980H(c)(2) counting method, which applies for employer shared responsibility (play or pay) purposes and which, in simplified terms, counts not only full-time employees (those averaging 30 hours of service per week) but also part-time employees (as full-time equivalents). The preamble notes that employers should be able to use the same method to determine SHOP eligibility that they will use to determine whether they are subject to employer shared responsibility.

Minimum Participation Rates
Under the earlier final exchange establishment regulations, a state-operated SHOP may have minimum participation requirements as long as they are based on the rate of employee participation in the SHOP, not on the rate of employee participation in any qualified health plan (QHP) of a particular issuer.

Employee-Choice Model Delayed
Under the original SHOP rules, both state-operated and federally facilitated SHOPs were required to allow employees to have a choice among all QHPs at the metal level chosen by the employer (bronze, silver, gold or platinum). The final regulations contain a statement of this rule for both types of SHOPs. Separate SHOP regulations proposed on the same day, however, delay the effective date for this “employee-choice” model so that, for plan years beginning before Jan.1, 2015, state-operated SHOPs could choose (but would not be required) to offer an employee-choice option, and federally facilitated SHOPs would offer no employee-choice option. This will allow employers who prefer to offer employees a single QHP to participate in a federally facilitated SHOP and retain potential eligibility for the small business tax credit, which, beginning in 2014, is only available through a SHOP exchange. More information on these separate SHOP proposed regulations can be found below.

Final Regulations

Interim Final Regulations

Fact Sheet

HHS Amends Existing SHOP Rules

On March 11, 2013, HHS published proposed regulations in the Federal Register that would amend existing Small Business Health Options Program (SHOP) rules for special enrollment periods and also implement a transitional policy for an “employee-choice” model in both state-operated and federally facilitated SHOPs.

As background, health care reform requires each state that chooses to operate an exchange to also establish a SHOP that assists eligible small businesses in providing health insurance options for their employees. Federally facilitated SHOPs will operate in states that do not establish an exchange. These proposed regulations would amend some of the standards that were established for SHOPs by final exchange regulations in March 2012 and by another set of final regulations issued simultaneously with the proposed regulations. Here are highlights of the proposed regulations:

  • SHOP Special Enrollment Periods Aligned with HIPAA. For most applicable triggering events (losing coverage, gaining a dependent due to marriage, birth or adoption), the proposed regulations would amend the SHOP special enrollment period from 60 days, as previously established in the final exchange regulations, to 30 days. For the triggering event of loss of Medicaid or CHIP eligibility, the proposed regulations would specify a 60-day special enrollment period. Under another clarifying amendment, dependents would only be eligible for a special enrollment period if the employer offers coverage to dependents of qualified employees. These changes align the SHOP special enrollment periods with the special enrollment periods for the group market under the HIPAA portability rules.
  • Employee Choice and Premium Aggregation Delayed. Under the SHOP rules as they developed, both state-operated SHOPs and federally facilitated SHOPs were to allow employees to have a choice among all qualified health plans (QHPs) at the metal level chosen by the employer (bronze, silver, gold or platinum). Final regulations, issued on the same day as these proposed regulations, contain a statement of this rule for both types of SHOPs. The proposed regulations, however, would delay the effective date for this “employee-choice” model so that, for plan years beginning before Jan. 1, 2015, state-operated SHOPs could choose (but would not be required) to offer an employee-choice option, and federally facilitated SHOPs would offer no employee-choice option. The proposed regulations would also delay the implementation of the SHOP premium aggregation function designed to assist employers with employees enrolled in multiple QHPs.

Federal Register

OPM Issues Final Regulation Establishing Multistate Plan Program

On March 11, 2013, the Office of Personnel Management (OPM) published final regulations in the Federal Register establishing the multi-state plan program (MSPP) under health care reform. A multi-state plan (MSP) is a new type of private health insurance that will be administered by OPM and offered across state lines through the exchanges beginning in 2014. Following the issuance of proposed regulations in December 2012 (discussed in the Dec. 18, 2012, edition of Compliance Corner), OPM received numerous comments from interested parties but adopted the proposed rules largely unchanged.

OPM will contract with insurers to provide multi-state coverage through the exchanges in all 50 states and the District of Columbia. The MSPP will offer individuals and small businesses a choice of plans providing a uniform benefits package that includes essential health benefits (EHB). The regulations contain details on the requirements for an MSP’s selection of an EHB package. MSPs must comply with the otherwise applicable cost-sharing limits (unless state law imposes stricter requirements), and MSPP insurers must ensure that eligible individuals receive advance payment of premium tax credits and cost-sharing reductions. Insurers must offer in each state at least one plan at each of the gold and silver metal levels; bronze or platinum levels of coverage may also be offered.

Insurers may phase in MSPP coverage over four years but must provide coverage in all states by 2017. MSPs must provide SHOP coverage only if required to do so by the rules for the federally facilitated SHOP program or by state law in states with state-based exchanges. OPM has the discretion to allow phased-in SHOP coverage if such coverage is required.

Enrollment for individuals and small employers is expected to begin on Oct. 1, 2013, for coverage beginning Jan. 1, 2014. Large employers will be eligible to participate beginning in 2017.

Federal Register

Proposed Regulations on Annual Fee for Health Insurance Released

On March 4, 2013, the IRS released proposed regulations regarding the annual fee for health insurers (also sometimes referred to as the “health insurance tax,” or “HIT”). This fee applies to any “covered entity” engaged in the business of providing health insurance with respect to U.S. citizens, residents and certain other persons present in the U.S. Put simply, this fee only applies to insurers, and the regulations specifically exclude self-insured plans. It is based on an annual target amount called the “applicable amount.” For 2014, this amount is $8 billion; $11.3 billion in 2015 for 2016; and $13.9 billion for 2017. The fee will be apportioned among insurers to reflect market share based on net premiums for health insurance written during the preceding calendar year. The proposed regulations offer guidance regarding who must pay the tax, how each covered entity’s tax obligation will be determined and when it will be due.

The guidance helps define a “covered entity” for these purposes, specifically including health insurance issuers, HMOs, insurance companies, insurers providing Medicare Advantage, Medicare Part D or Medicaid Coverage, and certain MEWAs that are not fully insured. It also established that a more-than-50 percent ownership standard applies when determining when entities will be considered one covered entity.

The proposed regulations define “health insurance” and advise on what amounts are excluded when determining net premiums to be reported. “Health insurance” is defined as benefits consisting of medical care provided under a certificate, policy or contract with a health insurance insurer. Generally excluded from this definition are HIPAA-excepted benefits. However, limited-scope dental and vision benefits are not excluded, nor are retiree-only plans. Regarding the calculation of a covered entity’s net premiums that need to be reported, the first $25 million of net premiums for a year, and 50 percent of the next $25 million in net premiums for the same year, will not be included in the amount.

Finally, the proposed regulations outline how and when a covered entity will have to report net premiums. Based on that information, the IRS will calculate the fee for each covered entity. Then those entities will have an opportunity to make corrections before ultimately remitting the owed fee.

Federal Register

February 26, 2013

HHS Issues Final Regulations on EHB and Actuarial Value; Minimum Value Calculator Released

On Feb. 20, 2013, HHS issued final regulations on essential health benefits (EHB) and actuarial value. On EHB, effective for plan years starting on or after Jan. 1, 2014, non-grandfathered individual and small group insurance policies will be required to provide coverage for the 10 categories of EHB. (Large group policies and self-insured plans are not required to provide coverage for EHB.) One of the 10 categories is pediatric services, including oral and vision care. For this purpose, pediatric is defined as 19 years of age and younger. Another category is mental health and substance abuse. The final regulations clarify that in order to satisfy the requirement to provide EHB, a small group health plan must comply with the existing mental health and substance use disorder parity requirements.

In 2014, a small group health plan must offer benefits substantially equal to those offered by the state’s benchmark plan. Multistate plans must meet benchmark standards set by the U.S. Office of Personnel Management, which have not yet been released.

For plan years beginning on or after Jan. 1, 2014, non-grandfathered small group health plans will be prohibited from having a deductible greater than $2,000 for single coverage and $4,000 for family. This provision does not apply to large group plans or self-funded plans. Employer contributions to a health FSA will not be included in the deductible calculation.

Non-grandfathered small group, large group, and self-funded plans will be prohibited from having an out-of-pocket maximum greater than the maximum applied for qualified high-deductible health plans. The maximum does not apply to out-of-network services.

An employer’s contributions to an HSA or integrated HRA will be included in the plan’s actuarial value. An employer must inform the carrier of such contributions at the time of purchase of the small group policy.

Finally, the minimum value calculator has been made available for large group plans, which must have a minimum value of 60 percent to avoid the employer mandate penalty. Employer contributions to an HSA or integrated HRA will be included in the plan’s minimum value.

Final Regulations

Minimum Value Calculator

DOL Releases Affordable Care Act Implementation FAQs Part XII

On Feb. 20, 2013, the DOL released Affordable Care Act Implementation FAQs Part XII. The majority of these FAQs relate to women’s preventative services, but they also address cost-sharing limits, as well as coverage of preventative services.

Regarding preventive services, the FAQs explain that if a plan does not offer any in-network providers for a particular preventive service, then the plan cannot impose cost-sharing when an individual goes out-of-network for that service. Another FAQ instructs that plans only need to provide over-the-counter medications (e.g., aspirin) without cost-sharing if they are prescribed by a health care provider.

One FAQ also addresses what aspects are included in a “well-woman” visit. The FAQ states that the guidelines recommend at least one annual well-woman preventive care visit for adult women to obtain the recommended preventive services that are age-appropriate and developmentally appropriate, including preconception and prenatal care. The FAQ also clarifies that if a clinician determines that a patient requires additional well-woman visits in consideration of her health status, health needs or other risk factors, the additional visits must also be provided without cost-sharing (and subject to reasonable medical management).

PPACA Implementation FAQs Part XII


February 12, 2013

Agencies Issue Multiple Rules Relating to Minimum Essential Coverage, Premium Tax Credit Eligibility

On Feb. 1, 2013, HHS and the Treasury published three rules under the PPACA health care reform law in the Federal Register. Two of the rules were proposed. The first proposed rule addresses exchange functions, eligibility for exemptions and other miscellaneous minimum essential coverage provisions and the second proposed rule addresses the shared responsibility payment for not maintaining minimal essential coverage. The last rule was issued in final format, and covers the health insurance premium tax credit. Simultaneously with the issuance of these rules, the IRS issued a set of frequently asked questions on the individual shared responsibility requirement.

Proposed Rule #1- Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions

The first proposed rule issued by HHS outlines when an individual is exempt from the individual mandate provisions of PPACA, explains standards for designating certain health benefits coverage, other than those listed in the statute, as constituting minimal essential coverage; and establishes the procedures health plan sponsors should follow to have their plans identified as meeting the minimal essential coverage requirements not specifically listed in the statute or regulation.

As background, Section 5000A(f) of PPACA defines minimum essential coverage as one of the following: (1) coverage under a specified government sponsored program, (2) coverage under an eligible employer-sponsored plan, (3) coverage under a health plan offered in the individual market within a state, (4) coverage under a grandfathered health plan, and (5) other health benefits coverage that the Secretaries of HHS and the Treasury recognize for purposes of section 5000A(f). This proposed rule addresses option (5) by providing criteria and a process by which these other types of coverage may be designated as minimum essential coverage.

The proposal lists the following as types of coverage that would be designated as minimum essential coverage:

  1. Self-insured student health insurance plans;
  2. Foreign health coverage;
  3. Refugee medical assistance supported by the Administration for Children and Families;
  4. Medicare Advantage plans; and
  5. AmeriCorps coverage.

In addition, HHS proposes that state high risk pools initially be designated minimum essential coverage, but reserves the right to assess and reevaluate this decision. To this end, the agency is seeking comments on whether state high risk pools should automatically be designated as minimum essential coverage or whether they should be required to follow the process outlined in other sections of the proposed rule for being recognized as meeting the necessary requirements.

HHS states that in addition to the aforementioned plans, there could be other plans that provide health coverage comparable to the mandated minimal essential coverage. The proposal outlines a process for plan sponsors to have their plan’s coverage be recognized as meeting the minimum requirements. The proposal explains that this recognition “would apply only to the particular plan sponsored by the submitting organization seeking recognition.” Employment-based coverage, however, would not be recognized as minimal essential coverage through this process, as employment-based group coverage “is generally subject to the provisions of either ERISA, the Code and/or the PHS Act, and there is a separate statutory category of minimum essential coverage under the Department of Treasury’s authority that addresses eligible employer-sponsored plans.”

The agency seeks comments on what types of coverage would “substantially comply” with the coverage requirements set forth in Title I of PPACA relating to non-grandfathered, individual coverage, and the process for obtaining approval. The proposal lists the information a plan sponsor seeking to have the plan’s coverage recognized as minimal essential coverage would need to electronically submit to the HHS. The required information includes the essential health benefits covered by the plan, the cost-sharing requirements, and a certification that the plan substantially complies with the provisions of Title I of PPACA. If a plan is considered to meet the minimal essential coverage requirements, plan sponsors would be subject to annual information reporting requirements to the IRS.

Comments on this proposal must be received by May 2, 2013.

Proposed Rule #2- Shared Responsibility Payment for Not Maintaining Minimum Essential Coverage

A related proposed rule issued by the Treasury Department addresses the individual mandate in PPACA. Generally, PPACA requires nonexempt individuals to maintain minimal essential health coverage for themselves and nonexempt family members or pay a penalty on their income tax returns. The proposed rule discusses who is considered exempt from this requirement; explains how the shared responsibility payment will be computed; and outlines when an individual is deemed to have minimal essential coverage. This proposal is issued in conjunction with the aforementioned HHS rule. In addition, the proposal includes a notice of public hearing that will be held on May 29, 2013.

With respect to employer-sponsored coverage, the proposed rule confirms that a self-insured group health plan is an eligible employer-sponsored plan, not just insured group coverage. The proposed regulation also provides that an individual eligible to enroll in continuation coverage required under federal law, such as COBRA or a comparable state law, is deemed eligible to purchase minimum essential coverage under an eligible employer-sponsored plan only if the individual enrolls in the coverage.

The proposed rule states that health insurance coverage consisting of HIPAA excepted benefits does not constitute minimum essential coverage. Examples of this include stand-alone dental or vision plans, retiree-only plans, disability policies, workers’ compensation or coverage only for a specified disease or condition.

Comments on this proposal must be received by May 2, 2013.

Final Rule- Premium Tax Credit for Family Members

The IRS also issued a final rule providing guidance on when an employer-sponsored plan is considered “affordable” for an individual related to the employee for purposes of eligibility for a premium tax credit. Under PPACA, employees may be eligible for a premium tax credit to purchase health insurance through the future health insurance exchanges if, among other reasons, the employer plan is deemed unaffordable.

The final rule clarifies that for taxable years beginning before Jan. 1, 2015, “an eligible employer-sponsored plan is affordable for related individuals if the portion of the annual premium the employee must pay for self-only coverage (the required contribution percentage) does not exceed 9.5% of the taxpayer’s household income.” However, for purposes of applying the affordability exemption from the individual mandate in the case of related individuals, the required contribution is based on the premium the employee would pay for employer-sponsored family coverage. These final regulations are effective on Feb. 1, 2013 but apply to taxable years ending after Dec. 31, 2013.

Proposed Rule- Minimum Essential Coverage
Proposed Rule- Shared Responsibility Payment
Final Rule- Health Insurance Premium Tax Credit
IRS FAQs on Individual Shared Responsibility


Federal Agencies Issue Proposed Rule on Contraceptive Coverage

On Feb. 6, 2013, the IRS, DOL and HHS published proposed rules in the Federal Register outlining how the contraceptive coverage mandate applies to certain nonprofit religious employers. That mandate—which is part of health care reform’s preventive services rules—generally requires non-grandfathered, nonexcepted group health plans to cover contraception without cost-sharing for plan years beginning on or after Aug. 1, 2012 when those services are delivered by in-network providers. This mandate has been the subject of numerous court challenges by religious and secular employers who object to having to cover contraception for their workers. The proposed regulations are the next step in an effort to accommodate these religious objections.

In general, the proposed rule clarifies the definition of a “religious employer” that is exempt from the contraceptive coverage requirement. Under the proposed rule, any nonprofit entity referred to in specified Code provisions (e.g., churches, conventions or associations of churches, and exclusively religious activities of religious orders) would be considered a religious employer and would be exempt from the mandate. This is a change from previously announced criteria, under which the organization must have as its purpose the inculcation of religious values, and must primarily employ and serve persons who share its religious tenets. As discussed in the proposal, eliminating this three-part test “would avoid any inquiry into an employer’s purposes, as well as any inquiry into the religious beliefs of its employees and the religious beliefs of those it serves.”

The proposed rule also outlines how nonprofit religiously-affiliated organizations, such as certain hospitals and universities, which object to contraception on religious grounds, can seek an accommodation that absolves them from paying for contraceptive services while still ensuring that enrollees receive such coverage without providing a co-pay. An organization eligible for this accommodation is one that: (1) objects on religious grounds to providing coverage for some or all of any contraceptive services required by the health care law; (2) is organized and operates as a nonprofit entity; (3) holds itself out as a religious organization; and (4) self-certifies that it meets these criteria and specifies the contraceptive services for which it objects to providing coverage.

Self-insured religious entities would be able to notify a third-party administrator, “which in turn would automatically work with a health insurance issuer to provide separate, individual health insurance policies at no cost for participants. The costs of both the health insurance issuer and third party administrator would be offset by adjustments in federally-facilitated exchange user fees that insurers pay.” Notably, the proposal emphasizes that the accommodation would not be available to for-profit, secular employers.

Comments are due on April 8, 2013.

Feb. 6, 2013 Federal Register
More Information from CMS

HHS Now Referring to PPACA’s State Health Insurance Exchanges as “Marketplaces”

Although no formal announcement was made, HHS, on its web page HealthCare.gov, is now referring to PPACA’s state health insurance exchanges as “marketplaces.” The web page, used by HHS to educate the public on PPACA and its effects, previously used the term “exchanges,” which is the term used in PPACA and related regulations. “Marketplace” is commonly used to describe the exchanges, but now appears to be HHS’s preferred name for the exchanges. While the change in terms by HHS does not affect an employer’s obligations under PPACA, employers will want to be aware of HHS’s switch. Going forward, employers will likely hear both terms—exchange and marketplace—to describe the state health insurance exchanges that are meant to be operating by Jan. 1, 2014.

HealthCare.gov web site


January 29, 2013

March 1 Deadline for Employer-provided Exchange Notice Delayed; Other PPACA FAQs Provided

On Jan. 24, 2013, EBSA updated its website with Affordable Care Act Implementation FAQs Part XI. According to the new guidance, employers will not be required to comply with the new exchange notice requirements set forth in Section 18B of the FLSA until further regulations on the requirement are issued and become effective. As background, this provision requires employers to provide information about health care coverage options through the future health exchanges to new employees upon the date of hire and to existing employees by March 1, 2013. Specifically, these notices must explain:

  • The services the exchanges will provide
  • Whether the employee may be eligible to receive a premium tax credit to purchase insurance through the exchanges because the employer’s plan does not provide minimum value (i.e., the plan’s share of the total allowed costs of benefits provided under the plan must be at least 60 percent of those costs)
  • That in the event the employee opts to purchase insurance through an exchange, the employee could lose any employer contribution to any health benefits, and that all or a portion of this contribution may be excludable from income for tax purposes

The decision to delay the compliance date is based on the DOL’s position that the notice should align with IRS guidance on plan minimum value, and that the agency wishes to provide employers ample time to comply with the requirement and also to ensure employees receive the notice at the opportune time. As a result, EBSA anticipates that this notice distribution time will occur in “late summer or fall of 2013, which will coordinate with the open enrollment period for exchanges.”

The FAQs also provide guidance on an employer’s provision of HRAs in light of the prohibition on health plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits. The guidance explains that the interim final regulations implementing this section made a distinction between HRAs that are “integrated” with other coverage as part of a group health plan and those that are “stand-alone” HRAs. Generally, HRAs that are integrated with other coverage are not required to comply with the increased annual dollar limits, as the total package does so. The FAQs provide some explanation as to when an HRA can truly be considered “integrated” with other coverage.

In addition, the online guidance answers questions related to fixed indemnity insurance, Employer Group Waiver Plans used to supplement Medicare Part D coverage, and the permissibility of paying Patient-Centered Outcomes Research Institute (PCORI) fees from a multi-employer plan’s assets.

PPACA Implementation FAQs Part XI

HHS Issues Proposed Regulations on Processes for Exchanges to Verify Employer-sponsored Health Coverage

On Jan. 14, 2013, HHS issues proposed regulations and a fact sheet relating to processes for state exchanges to verify employer-sponsored health coverage. As background, individuals who are enrolled in or eligible for employer-sponsored coverage that meets affordability and minimum value standards are ineligible to receive advance payments of a premium tax credit or cost-sharing reductions through a state health insurance exchange. The proposed regulation includes detail on the procedures for the state exchange to verify access to employer-sponsored coverage. This is important for employers because a full-time employee receiving the tax credit through the exchange may trigger a penalty tax under the employer mandate (effective in 2014).

Generally, an applicant must submit specific information to the exchange when applying to receive advance payment of the premium tax credit, and the exchange must somehow verify that information and determine whether the individual is eligible. According to the proposed regulations, exchanges will obtain verification data from publicly available sources and records of the Small Business Health Options Program (SHOP) operating in the same state as the exchange (which will presumably already have access to this information). While the exchanges will generally be allowed to rely on the individual’s attestations as to the truthfulness of the information, if verification from public sources or SHOP records is not possible (or if the verification conflicts with the individual’s attestations), the exchange must undertake a manual verification process for a random sample of applicants. This manual verification process requires the exchange to make efforts to contact the employer identified by the applicant to determine whether the applicant is enrolled in – or is eligible for affordable, minimum value coverage under – an employer-sponsored plan. Notably, an exchange can choose to have HHS conduct the verification process.

Existing regulations (issued in 2012) require the exchange to notify an employer if an employee is determined eligible for advance payment of the premium tax credit, with notice of the employer’s right to appeal the determination. The proposed regulations describe a detailed appeals process, as well as an appeals process for employers and employees who are denied eligibility to purchase coverage through a SHOP.

Finally, HHS has indicated that it is developing a one-page template that employers could obtain from the exchange website. The template could be used by the employer to provide information about its health coverage. Then, the employee could attach the completed template to the exchange applications, providing pre-enrollment verifications with respect to employer-sponsored coverage.

Proposed Regulations
Fact Sheet

CLASS Act Formally Repealed

The Community Living Assistance Services and Supports (CLASS) Act was created as part of PPACA, as enacted in March 2010. The purpose of the CLASS Act was to establish a national voluntary long-term care insurance program for purchasing community living assistance services. Employers were expected to help facilitate the program by allowing employees to contribute through wage deductions. In October 2011, HHS announced that it was halting implementation of the CLASS Act due to solvency and actuarial challenges. The CLASS Act was formally repealed as one of the provisions of the American Taxpayer Relief Act of 2012, which President Obama signed into law on Jan. 2, 2013.

American Taxpayer Relief Act of 2012, Pub. L. No. 112-240 (Jan. 2, 2013), Section 642 (Page 46)


January 15, 2013

HHS Conditionally Approves State Exchanges and Provides Additional Guidance on Partnership Exchanges

On Jan. 3, 2013, HHS announced that an additional seven states have been conditionally approved to operate a state-based exchange. This brings the total to 18 states, which are: California, Colorado, Connecticut, the District of Columbia, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont and Washington. Arkansas was conditionally approved to operate a partnership exchange, along with Delaware, which received prior approval.

HHS also issued guidance related to partnership exchanges in which the exchange duties are shared between the state and the federal government. States have until Feb. 25, 2013, to apply for a partnership exchange. The guidance includes a chart outlining the necessary responsibilities of an exchange, and identifies which duties will be performed by the state and which by HHS.

HHS clarified that even in those states that have defaulted to the federally facilitated exchange, the state is still responsible for performing insurance regulatory activities on all plans offered in the state. This includes reviewing the rates, benefits and networks of plans offered both in and out of the exchange.

Conditional Approvals
Guidance

IRS Releases 2012 Form 8941 and Instructions Related to PPACA’s Small Business Health Care Tax Credit

The IRS recently released the 2012 version of IRS Form 8941, Credit for Small Employer Health Insurance Premiums, and the related instructions. As background, eligible small employers that offer health insurance coverage to their employees are entitled to a tax credit of up to 35 percent of the non-elective contributions they make toward the premium cost. An eligible small employer is one that has no more than 25 full-time equivalent employees whose average annual wages do not exceed $50,000 (for 2010 through 2013). In addition, the employer generally must contribute a uniform percentage of at least 50 percent of the premium cost for employees.

Such small employers use Form 8941 to figure the credit. Once calculated, the tax credit is claimed as a general business credit on Form 3800 (or, by tax-exempt small employers, as a refundable credit on Form 990-T). The 2012 version of the form and its instructions are substantially similar to the 2011 version, but there are some additions. A new line 1b has been added to report the employer identification number of a third-party agent who has been appointed and approved, using Form 2678 to report employment taxes for the employer. In addition, the instructions contain new tips relating to partnerships and S corporations, as well as a reminder that seasonal workers include those employed exclusively during the summer and holiday season.

2012 IRS Form 8941
2012 IRS Form 8941 Instructions

HHS Updates Web Page on Timeline of Effective Dates of PPACA Provisions

HHS recently updated its Web page that outlines a timeline for effective dates relating to PPACA’s many provisions. The Web page, titled “What’s Changing and When,” contains an interactive timeline describing each provision of the law, including effective dates and links to more information. The Web page can be a helpful resource to both employers and employees as they learn more about how PPACA will affect their coverages and benefits.

HHS PPACA Timeline


January 3, 2013

IRS Releases Highly Anticipated Employer Shared Responsibility Guidance

On Dec. 28, 2012, the IRS closed out the year by issuing proposed guidance pertaining to the employer shared responsibility requirement to provide health benefits found in Code Section 4980H(a) that is scheduled to take effect on Jan. 1, 2014. The employer shared responsibility requirement (also known as the “pay or play” tax or “employer mandate”) assesses a penalty on “applicable large employers” with 50 or more full-time equivalent employees.

PPACA requires applicable large employers who wish to avoid paying a penalty on full-time employees to provide health coverage that is both affordable and meets minimum value (the plan's share of the total allowed cost of benefits must be at least 60 percent) for employees who work at least 30 hours per week.
                                                                        
Some of the highlights of the 144-page proposed rule include:

  • Clarifying that the term “substantially all” is defined as 95 percent. Thus, an employer will be treated as offering coverage if it offers coverage to all but 5 percent, or, if greater, five of its full-time employees.
  • Providing details on what constitutes a full- or part-time employee.
  • Outlining payments required for not providing affordable minimum coverage.
  • Calculating the size of employers that must comply with the provisions.
  • Advising that employers should not attempt to circumvent the new employer shared responsibility rules, as the agency included anti-abuse language designed to keep employers from using strategies such as employing a worker directly for 20 hours per week and employing the worker through a staffing agency for the rest of the week.
  • Providing specific guidance for certain types of workers, such as teachers, airline pilots and rehired workers.
  • Covering topics such as use of staffing agencies to avoid the PPACA benefits requirements.
  • Determining whether the benefits provided meet PPACA affordability standards. In addition to the existing safe harbor (Form W-2 method), the IRS outlined two additional types of safe harbors: the “Rate of Pay” safe harbor and the “Federal Poverty Line” safe harbor.
  • Addressing concerns by allowing for transition relief in several areas, including fiscal plan years beginning in 2013 and ending in 2014, creating a new Section 125 qualifying event, and allowing applicable large employers to choose any six consecutive months in 2013 to determine their large employer status.

The comment period ends on March 18, 2013, but employers may rely on these proposed regulations for guidance pending the issuance of final regulations or other applicable guidance.

The IRS also released a new frequently asked questions (FAQs) page dedicated to the shared responsibility for employers and the proposed guidance. There are 23 FAQs including topics such as basic information about the employer shared responsibility requirement, identifying employers subject to the payment, determining liability for the payment, calculating the payment, actually making a payment and transition relief.

Proposed Regulations
IRS FAQs

U.S. Supreme Court, Seventh Circuit and D.C. Circuit Court Act on Contraceptive Coverage Mandate Cases

The contraceptive coverage mandate in PPACA requires employers who provide health insurance to include free coverage for all forms of birth control approved by the federal government in addition to other forms of preventive care and pregnancy counseling. Under the interim rule, released in August 2012, there is an exception for religious employers, defined generally as churches or other institutions that employ and serve people of their own faith and are engaged only in religious activities. This exception does not apply to for-profit companies, and most educational institutions will have a difficult time meeting the definition of “religious employer” since they likely employ or serve people who are not of their faith. 

More than 40 lawsuits have been filed challenging the mandate. Three courts ruled on the issue, resulting in significant, but different, actions, as outlined below.

On Dec. 18, 2012, in Wheaton College v. Sebelius, No. 12-5273, 2012 WL 6652505 (D.C. Cir. Dec. 18, 2012), the U. S. Court of Appeals for the District of Columbia Circuit reinstated the cases of Wheaton College and Belmont Abbey College in regard to the mandate and declared that the cases will remain pending while the federal government works on a promised exception to the mandate for religious colleges. The order concluded with direction to the government to keep the court posted every 60 days as to the progress of the exception.

On Dec. 26, 2012, in Hobby Lobby Stores, Inc. v. Sebelius, No. 12A644, 2012 WL 6698888 (U.S. Dec. 26, 2012), the U.S. Supreme Court denied Hobby Lobby’s request for an emergency injunction blocking application of the contraceptive coverage mandate while the case proceeds through the legal system. As such, the store could be subject to fines for failing to offer the contraceptive coverage as part of its health coverage starting Jan. 1, 2013. Justice Sonia Sotomayor stated that Hobby Lobby did not meet the extremely high standard necessary for the Supreme Court to issue a preliminary injunction. Although denying Hobby Lobby’s request, Justice Sotomayor emphasized that she was not ruling on whether this challenge would succeed and that it would still proceed through the legal system. The case will now go back to the district court for a ruling on the merits.

On Dec. 28, 2012, in Korte v. Sebelius,  No. 12-3841 (7th Cir. Dec. 28, 2012), the United States Court of Appeals for the Seventh Circuit temporarily barred the federal government from enforcing the contraceptive coverage mandate against a construction company. The owners filed suit because they felt the mandate was a threat to their religious freedom. This ruling is significant because it is the first time a federal court at this level has found that a for-profit company owned and run by strongly religious people share their right to protection of their religious principles. The court remarked that the fact that the Kortes “operate their business in the corporate form is not dispositive of their claim... The Kortes would have to violate their religious beliefs to operate their company in compliance with [the mandate].” The court also distinguished this ruling from the Supreme Court’s ruling in the Hobby Lobby case by stating that the standard for obtaining an injunction from the Supreme Court is a more demanding one than to obtain one at a federal appeals court. The order will remain in effect while the challenge proceeds through the courts.

In addition to the above three cases, some other federal district courts have weighed in on the issue, including a number who have granted preliminary injunction in order to avoid claimed irreparable harm. The preliminary injunctions are granted to prevent enforcement of the law while the case is judged on its merits.  Others have denied injunction, finding that the standard of a preliminary injunction has not been met. For all of these cases, these results are just a temporary stopgap, and would apply only to the company or companies involved in the case.

Overall, this issue will still have to travel through the judicial system and up the different appeals circuits (and possibly the Supreme Court) to determine the actual application of this law.  In the meantime, unless another exception applies, employers should adhere to the contraceptive coverage mandate.

Wheaton College v. Sebelius
Hobby Lobby Stores, Inc. v. Kathleen Sebelius
Korte v. Sebelius