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Does Your EAP or Wellness Program Need a Summary of Benefits and Coverage?

Even though health reform’s legal status is up in the air, plan sponsors are still taking cautious steps forward to make sure they are ready if it survives the Supreme Court challenge. One of those steps, which is coming soon, is the Summary of Benefits and Coverage requirement, which has to be initially provided for the first open enrollment period beginning on or after September 23, 2012.

Many plan sponsors mistakenly assume that their employee assistance programs (EAPs) or wellness programs are not subject to these requirements. However, as we discussed in our post on W-2 reporting of health coverage, EAPs that provide counseling (even for only a few sessions) and wellness programs that provide medical care are technically group health plans under ERISA. Among other implications, this means they are subject to SBC requirements.

That said, plan sponsors do have some structuring alternatives that may help ease compliance with this requirement and avoid the need for a separate SBC. For example, if a plan sponsor documents the EAP or wellness program as part of its group health plan, a separate SBC for the EAP or wellness program may not be required. However, the plan sponsor may need to tweak the SBC disclosures to take into account these additional benefits. The EAP or wellness provider may not be equipped to help complete the SBC, and any insurer or TPA (for a self-funded plan) may not be aware that EAP or wellness services are being

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 3

As we have posted about previously, the IRS has requested comments on the determination of “minimum value” (discussed here) and reporting on “minimum essential coverage” (discussed here).  In this, our final post of the series, we summarize the IRS’s request for comments regarding reporting by employers subject to “play or pay” penalties in Notice 2012-33.

Beginning in 2014, employers who could be subject to PPACA’s “pay or play” penalties must file returns with the IRS that include the following information:

  • Name and EIN;
  • The date the return is filed;
  • A certification of whether the applicable large employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan;
  • If so, a certification of:
    • The duration of any waiting period;
    • The months during the calendar year when coverage under the plan was available;
    • The monthly premium for the lowest cost option in each enrollment category under the plan; and
    • The employer’s share of the total allowed costs of benefits provided under the plan.
  • The number of full-time employees for each month of the calendar year;
  • For each full-time employee, the name, address, and taxpayer identification number (TIN) of the employee and the months (if any) during which the full-time employee (or any dependents) were covered under the eligible employer-sponsored plan; and
  • Such other information as may be required by the Secretary of the Treasury.

Companion returns with the above information (except

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 2

In addition to requesting comments on the determination of “minimum value” (discussed in our prior post here), the IRS is also asking for comments regarding the information reporting requirements regarding “minimum essential coverage” under PPACA and for reporting by employers subject to “play or pay” penalties.

Minimum Essential Coverage Reporting. Under PPACA, every health insurance issuer, self-funded plan sponsor, governmental agency administering governmental health insurance programs, and any other entity that provides minimum essential coverage is required to file annual returns reporting who is covered under its plan or policy. For insured plans, the IRS intends to require the insurer to report.

The reporting must include, name, address, taxpayer ID number (usually a social security number) of each covered person, dates of coverage during the calendar year, and any other information Treasury may require. Additional reporting is required for policies offered through an exchange.

An employer must also separately report its own name, address, and EIN, the portion of the premium that it pays, and any other information Treasury may require.

Reporting is made to the IRS with a copy provided to each individual. It will be effective for coverage on or after January 1, 2014.

Why do we have to report this? Employers will want to report this information to avoid being hit with “play or pay” (or “shared responsibility”) penalties.  Employees eligible for minimum essential coverage are not eligible for the tax credit to help them defray the cost of health insurance from the exchange. If

Recent CCIIO and IRS Medical Loss Ratio Guidance

Recent CCIIO and IRS Medical Loss Ratio Guidance

May 7, 2012

Authored by: benefitsbclp

Both the Center for Consumer Insurance Information and Oversight (CCIIO – a division of the Centers for Medicare and Medicaid Services) and the IRS have recently issued guidance related to the Medical Loss Ratio requirement under the Patient Protection and Affordable Care Act (“PPACA” or “health reform”). As you may know, the MLR requirements generally mandate that insurers spend a certain percentage of premiums (85% for “large group” plans, 80% for “small group” and individual plans) on (1) claims and (2) healthcare quality improvement activities. If they do not, they must provide rebates to enrollees. Insurers are also required to report on MLR compliance to CCIIO. Employers must properly allocate such rebates between the employer and employees, and satisfy applicable reporting and withholding obligations.

CCIIO FAQs

The FAQs released on April 20, provide very few surprises, but provide some helpful answers. They confirm that self-funded plans, Medicaid MCOs, and Medicare Advantage and Part D plans are not subject to the MLR requirements. The FAQs also state that insurance coverage labeled as “blanket” coverage may be subject to the requirements if it qualifies as coverage in the group market or individual market under the Public Health Service Act. Additionally, the FAQs state that coverage issued to a sole proprietor covering the proprietor and his/her spouse is considered individual market coverage.

Under health reform guidance, whether a policy is considered to be part of the “small group” or “large group” market turns on the number of employees of the employer

IRS Updates COBRA Audit Guidelines

The IRS recently updated its audit guidelines for field agents conducting reviews of employers COBRA programs.

In these updated guidelines, the IRS has advised agents that any COBRA audit should consist of a review of the following minimum level of documentation: (i) the employers procedure manual; (ii) form letters; (iii) internal audit procedures; (iv) the underlying group health plan documents; and (v) details of any past or pending COBRA-related litigation. If any of the foregoing materials appear deficient or problematic, agents are advised to make follow-up inquiries relating to the number of qualifying events, the method of notifying qualified beneficiaries, the method of notifying the plan administrator in connection with qualifying events, qualified beneficiary elections and the amount of premiums paid by COBRA beneficiaries. In performing more comprehensive reviews, the IRS advises agents to request an employer’s federal and state employment tax returns; lists of individuals affected by qualifying events; and lists of individuals covered by each group health plan and to compare those lists against the employer’s personnel records.

In outlining these materials, the IRS appears to have the expectation that agents will be seeking to confirm that an employer is offering COBRA coverage under all of the group health plans that are legally required to offer COBRA coverage, that all participants terminating employment are being offered COBRA coverage; that those being offered COBRA coverage are being provided the opportunity to elect any and all appropriate coverages and that the cost of those coverages are in conformance

IRS Fires Shot Across the Bow on Health Reform Minimum Value and Reporting Guidance – Part 1

On April 26, the IRS released three “requests for comment” on various provisions under the Patient Protection and Affordable Care Act (“PPACA” or “health reform”). While the IRS is soliciting comment, it also gave some indication of how it was leaning on each of the issues it addressed. This first post (of three) discusses the comments on the determination of “minimum value.”

Under PPACA, if an employer plan does not provide “minimum value,” then an employee may be eligible for a premium tax credit through the state-based insurance exchanges, if he or she meets the other applicable requirements. If an employee takes advantage of that tax credit, the employer will be subject to “pay or play” penalties under health reform. Therefore, “minimum value” matters. (It is worth noting that HHS previously found that about 98% of individuals covered by employer-sponsored plans were enrolled in plans providing minimum value as described in the IRS guidance.)

In Notice 2012-31, the IRS basically outlined three approaches it may use to determine minimum value:

  • The use of an actuarial value or minimum value calculator that will be provided by HHS and the IRS. Using either calculator, employers would enter certain plan information into the calculator (such as benefits, cost-sharing, etc.) and the calculator would determine if the plan provides minimum value.
  • Self-funded plans and insured large group plans would be allowed to use the minimum value calculator, which is expected to use claims data reflecting typical self-insured employer plans.

IRS Releases Proposed Rules on New Comparative Effectiveness Fee for Health Plans

On April 12, the IRS released proposed regulations regarding the collection of the fee for the Patient-Centered Outcomes Research Trust Fund (the “Fund”) under the Patient Protection and Affordable Care Act (“PPACA”). The Fund will be used to pay for the Patient-Centered Outcomes Research Institute which has the goal of helping health care providers and consumers make informed health decision by synthesizing research comparing the outcome effectiveness of various treatments.

Who Pays for This

Here’s the kicker: insurers and self-insured health plans get to pay for this, along with multiemployer plans, state and local governmental plans, stand-alone VEBAs and other health plans. We focus primarily on private employer plans, but many of the rules apply similarly to other types of plans.

How Much

Initially, the fee is $1 per covered life. It will first apply for plan or policy years ending between October 1, 2012 and October 1, 2013, which means it is coming soon. After October 1, 2013, it increases to $2 per covered life until October 1, 2014. After that, it is indexed based on projected increases in per capita medical expenditures. It is set to expire on October 1, 2019. The tax return to pay the fee is generally due by the end of July following the end of the applicable plan or policy year.

Overview and “Gotchas”

Generally, the proposed regulations provide that the fees apply to policies or plans that provide medical coverage. Insurers pay the fee on behalf of insured plans, although

How do you think the Supreme Court will rule in the health reform case?

Now that oral arguments  have concluded in U.S. Department of Health and Human Services, et al. v State of Florida, et al., we want your opinion!  How do you think the Supreme Court will rule on the issues below.  For more information on each of these, please see our prior posts from Monday (Anti-Injunction Act), Tuesday (Individual Mandate), and Wednesday (Severability/Medicaid).  Feel free to leave a comment explaining how you voted!

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Thank you!

What the Supreme Court is Hearing Today: Wednesday – Severability and Medicaid

Update (12:45 PM ET): Audio and transcript from this morning’s arguments is available here.

Update (3:12 PM ET): Audio from the afternoon arguments is available here.

Over the last few days we have posted brief descriptions of the arguments the Supreme Court will hear in U.S. Department of Health and Human Services, et al. v State of Florida, et al., the case challenging the landmark health reform law, the Patient Protection and Affordable Care Act (“PPACA”). As the audio of the oral arguments is released, we will post links to the audio here. Go to our prior posts for some background and a discussion of Monday’s and Tuesday’s arguments. As with Tuesday’s arguments, the individuals challenging the law are joined by the National Federation of Independent Businesses (“NFIB”). Additionally, similar to the arguments over the AIA described in Monday’s post, the Court appointed a special counsel to argue in favor of complete severability of the Individual Mandate.

Today, they will hear a total of two and a half hours of argument: 90 minutes on the issue of Severability, a break for lunch, and then 1 hour on PPACA’s expansion of Medicaid. We will take each argument separately.

Severability

What are they arguing about? If the Court determines that the Individual Mandate is unconstitutional (as discussed in yesterday’s post), then can the Mandate be removed from the law by itself with the rest of the

What the Supreme Court is Hearing Today: Tuesday – The Minimum Coverage Provision (a.k.a. the Individual Mandate)

Update: The audio and transcript of  today’s oral arguments is now available here.

Yesterday, today, and tomorrow we are posting brief descriptions of the arguments the Supreme Court will hear in U.S. Department of Health and Human Services, et al. v State of Florida, et al., the case challenging the landmark health reform law, the Patient Protection and Affordable Care Act (“PPACA”). As the audio of the oral arguments is released, we will post links to the audio here. Go to our first post for some background and a discussion of Monday’s arguments. Note that, in arguing over the constitutionality of the Individual Mandate, the individual respondents are joined by the National Federation of Independent Businesses (“NFIB”).

Today, the Court will hear two hours of argument on the Minimum Coverage Provision (a.k.a. the Individual Mandate).

What are they arguing about? Does Congress have the power to force you to buy health insurance or pay a penalty? The issue is fundamentally about Congress’s authority to regulate interstate commerce under the Commerce Clause of the Constitution (for an additional discussion of this point, see our October post on this issue). The Court will consider whether the Individual Mandate falls within Congress’ ability to regulate commerce among the states or to tax and spend for the general welfare.

What does the U.S. Government say? Of course Congress can do this, says the U.S. Government. The health care market accounts for 17.6%

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