Tag Archives: Small Group

What do the DOL’s new AHP rules actually mean?

July 25, 2018

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President Trump signed an Executive Order on October 12, 2017 directing the U.S. Department of Labor to consider ways to make it easier to form an Association Health Plan by expanding existing membership rules. After issuing proposed regulations in early 2018 and considering public comments, the DOL issued a set of final regulations intended to make it easier to form AHPs on June 18, 2018.

The final regulations do not replace the existing AHP rules. Instead, they create a three-tier AHP system referred to in this article as the:

Narrow Standard AHP: These AHPs are available under the existing rules, but they can be difficult to form.

Relaxed Standard AHP: These AHPs are created by the new regulations. They are easier to form than a Narrow Standard AHP and can allow self-employed individuals to participate, but they do not allow as much flexibility in terms of plan design and underwriting (discussed in the chart below under “Plan Design and Underwriting”).

Non-Conforming AHPs: These are AHPs that do not meet either the Narrow or Relaxed Standards. We’ll touch on these briefly at the end of this article.

What are the Pros and Cons for Narrow and Relaxed Standard AHPs?

Pros:

  • The combined membership of the member employers may enable the AHP to self-insure
  • Qualify as single employer group health plans for ERISA and other purposes, enabling many fully-insured AHPs to qualify as a large group insured plan based upon the number of covered lives· Self-insured and large group insured AHPs are able to avoid certain requirements applicable to small group and individual plans under federal and state law, including:
  • The requirement to offer all essential health benefits (EHB) mandated by a state’s EHB package (the AHP will still have establish a reasonable definition for EHBs such as selecting a benchmark plan); and
  • Community rating requirements. This may enable AHPs to offer less expensive coverage alternatives to member employers as well as greater flexibility when setting premiums (but see “Plan Design and Underwriting” in the chart below)
  • Greater buying power than individual member employers may have on their own
  • The AHP’s risk pool may be more favorable for smaller employers than the community rating in their applicable small group market(s)

Cons:

  • Not appropriate for many potential member employers and should be carefully evaluated on a case-by-case basis
  • Do not avoid state regulation, even if self-insured
  • Require a strong ongoing commitment to participate from member employers as turnover can cause AHPs to quickly fail
  • Insurance carriers may be reluctant to insure AHPs that do not meet certain criteria established by the carrier (e.g. The insurance carrier may require a closer relationship between the member employers than the AHP rules require)

AHP odds and ends

AHPs are generally subject to the reporting and disclosure requirements applicable to the underlying benefits, which may include providing summary plan descriptions, summaries of benefits and coverage, and Form 5500 filings. The DOL is still working out how certain other requirements may apply to AHPs. For example, the DOL indicated that existing HIPAA wellness rules apply to AHPs and the Mental Health Parity and Addiction Equity Act will apply if the member employers of the association have at least 50 employees in the aggregate, but the DOL is still considering how COBRA may apply and intends to issue additional guidance addressing this.

Many AHPs will not qualify as Narrow Standard or Relaxed Standard AHPs, typically because the association fails to meet the formation requirements described above. These Non-Conforming AHPs can still provide the advantages of greater purchasing power and the ability to separately experience-rate member employers like Narrow Standard AHPs, but Non-Conforming AHPs do not qualify for single employer plan treatment and are instead viewed as a separate plan maintained by each member employer. As a result, many member employers will still be subject to the small group and individual plan requirements that Narrow Standard and Relaxed Standard AHPs can avoid.

Effective dates

There are three phase-in effective dates under the final regulations:

  • Sept. 1, 2018: New or existing associations may establish a fully-insured Relaxed Standard AHP
  • Jan. 1, 2019: AHPs in existence on or before June 18, 2018 may establish a self-insured Relaxed Standard AHP.
  • April 1, 2019: All other new or existing associations may establish a self-insured Relaxed Standard AHP.

There are no effective dates specific to Narrow Standard or Non-Conforming AHPs as these existed before the final regulations and are not directly affected by them.

 

Christopher Beinecke

Christopher Beinecke is the Employee Health & Benefits National Compliance Leader for Marsh & McLennan Agency
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The DOL’s new Association Health Plan Rules and What They Actually Mean

June 29, 2018

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The President signed an Executive Order on October 12, 2017, directing the U.S. Department of Labor (DOL) to consider ways to make it easier to form an Association Health Plan (AHP) by expanding existing membership rules.  After issuing proposed regulations in early 2018 and considering public comments, the DOL issued a set of final regulations intended to make it easier to form AHPs on June 18, 2018.

The final regulations do not replace the existing AHP rules and instead create a three-tier AHP system referred to in this article as the:

  1. Narrow Standard AHP – These AHPs are available under the existing rules, but they can be difficult to form.
  2. Relaxed Standard AHP – These AHPs are created by the new regulations.  They are easier to form than a Narrow Standard AHP and can allow self-employed individuals to participate, but they do not allow as much flexibility in terms of plan design and underwriting (discussed in the chart below under “Plan Design and Underwriting”).
  3. Non-Conforming AHPs – These are AHPs that do not meet either the Narrow or Relaxed Standards.  We’ll touch on these briefly at the end of this article.

Some Pros/Cons for Narrow and Relaxed Standard AHPs

Pros:

  • The combined membership of the member employers may enable the AHP to self-insure (but see “MEWA Status and State Regulation” in the chart below)
  • Qualify as single employer group health plans for ERISA and other purposes, enabling many fully-insured AHPs to qualify as a large group insured plan based upon the number of covered lives
  • Self-insured and large group insured AHPs are able to avoid certain requirements applicable to small group and individual plans under federal and state law, including:
    • The requirement to offer all essential health benefits (EHB) mandated by a state’s EHB package (the AHP will still have to establish a reasonable definition for EHBs such as selecting a benchmark plan); and
    • Community rating requirements

This may enable AHPs to offer less expensive coverage alternatives to member employers as well as greater flexibility when setting premiums (but see “Plan Design and Underwriting” in the chart below)

  • Greater buying power than individual member employers may have on their own
  • The AHP’s risk pool may be more favorable for smaller employers than the community rating in their applicable small group market(s)

Cons:

  • Not appropriate for many potential member employers and should be carefully evaluated on a case-by-case basis
  • Do not avoid state regulation, even if self-insured (see “MEWA Status and State Regulation” in the chart below)
  • Require a strong ongoing commitment to participate from member employers as turnover can cause AHPs to quickly fail
  • Insurance carriers may be reluctant to insure AHPs that do not meet certain criteria established by the carrier (e.g. The insurance carrier may require a closer relationship between the member employers than the AHP rules require)

Comparing and Contrasting the Narrow and Relaxed Standard AHPs

The Relaxed Standard AHP information is based on the final regulations.  There is no set of regulations for the Narrow Standard AHP, and the information below is an attempt to summarize decades of DOL advisory opinions and court decisions.

 Narrow Standard AHP Relaxed Standard AHP
Formation  Member employers must:

  1. be within same industry, trade, line of business or profession;
    AND
  2. be located within same geographic location
Member employers must:

  1. be within same industry, trade, line of business or profession (without regard to geographic location);
    OR
  2. have their principal places of business located within the same state or metropolitan area (even if the metropolitan area crosses state lines)
Association Purpose Association must already exist for a business purpose other than solely to provide the AHP to member employers

  • The business purpose does not have to be a for-profit activity
  • Valid business purposes other than providing benefits include marketing/sales support, member education, the development and sharing of business strategies, and lobbying efforts
Association does not have to exist prior to offering the AHP to member employers

Association’s primary purpose can be to offer the AHP to member employers, but the AHP must also have at least one other substantial business purpose

  • The business purpose does not have to be a for-profit activity
  • Valid business purposes other than providing benefits include marketing/sales support, member education, the development and sharing of business strategies, and lobbying efforts
Governance A formal governance structure with a governing body and bylaws must exist enabling the member employers to exercise control

  • Ability to elect or remove directors/officers/trustees who have authority over the AHP; or
  • Member employers must be able to directly vote on actions to form, amend, or terminate the AHP
Participant Eligibility
  • Employees and former employees* of current member employers and their eligible dependents defined under the AHP

*Former employees eligible if they gained eligibility while an employee of the member employer.  This effectively limits participation to COBRA participants and individuals who qualify for retiree coverage under the AHP (if offered)

A sole proprietor or other self-employed individual (e.g. An independent contractor) is not an eligible employee and cannot participate as a member employer if operating a business with no common law employees

  • Employees and former employees* of current member employers
  • Beneficiaries of employees and former employees* defined under the AHP (e.g. Spouses, dependent children, and other tax dependents, if eligible)

*Former employees eligible if they gained eligibility while an employee of the member employer.  This effectively limits participation to COBRA participants and individuals who qualify for retiree coverage under the AHP (if offered)

A sole proprietor or other self-employed individual (e.g. An independent contractor) operating a business with no common law employees can qualify as a member employer and participate in an AHP as an eligible employee by meeting the “Working Owner” test:

  1. Works at least 20 hours/week or 80 hours/month for business
    OR
  2. Has earned income from the business at least equal to the cost of AHP coverage
Plan Design and Underwriting There are limits to an AHP’s ability to vary participant eligibility, covered benefits, and premiums based on health factors, but an AHP may develop and charge different premiums to different member employer groups based on each member employer’s actual health claims experience (i.e. The AHP can separately experience-rate member employers)

Additional state law requirements may apply

 An AHP’s ability to vary premiums is limited to bona fide employment-based classifications that are not specifically related to health factors, including:

  1. Full-time vs. part-time;
  2. Different occupations (e.g. Corporate vs. retail, etc.);
  3. Date of hire;
  4. Geographic location (including urban vs. rural);
  5. Union vs. non-union;
  6. Length of service; and
  7. Current vs. former employees

An AHP may not develop and charge different premiums to different member employer groups based on each member employer’s actual health claims experience (i.e. Experience-rating)

Example:  An AHP could charge higher premiums to member employers primarily located in cities than to member employers primarily located in rural areas so long as the member employers’ actual claims experience is not taken into account.  

Additional state law requirements may apply

MEWA Status and State Regulation  AHPs are considered multiple employer welfare arrangements (MEWAs) for ERISA purposes meaning ERISA pre-emption of state insurance laws does not apply

This can make it very difficult to offer an AHP across state lines:

  • Both self-insured and fully-insured AHPs will generally be subject to state insurance laws where the AHP coverage is issued
  • Self-insured MEWAs may be subject to additional state regulation similar to the regulation of insurance carriers within the respective State(s); these requirements will largely be dealt with by the insurance carrier for fully-insured AHPs
  • Most AHPs will also be subject to the federal Form M-1 filing requirement with the DOL

Note:  The DOL indicated it may seek to limit state authority to regulate self-insured AHPs in the future if it appears that states are over-reaching and interfering with the formation of self-insured AHPs.

Odds and Ends

AHPs are generally subject to the reporting and disclosure requirements applicable to the underlying benefits, which may include providing summary plan descriptions, summaries of benefits and coverage, and Form 5500 filings.  The DOL is still working out how certain other requirements may apply to AHPs.  For example, the DOL indicated that existing HIPAA wellness rules apply to AHPs and the Mental Health Parity and Addiction Equity Act will apply if the member employers of the association have at least 50 employees in the aggregate, but the DOL is still considering how COBRA may apply and intends to issue additional guidance addressing this.

Non-Conforming AHPs

Many AHPs will not qualify as Narrow Standard or Relaxed Standard AHPs, typically because the association fails to meet the formation requirements described above.  These Non-Conforming AHPs can still provide the advantages of greater purchasing power and the ability to separately experience-rate member employers like Narrow Standard AHPs, but Non-Conforming AHPs do not qualify for single employer plan treatment and are instead viewed as a separate plan maintained by each member employer.  As a result, many member employers will still be subject to the small group and individual plan requirements that Narrow Standard and Relaxed Standard AHPs can avoid.

Effective Dates

There are three phase-in effective dates under the final regulations:

  1. September 1, 2018 – New or existing associations may establish a fully-insured Relaxed Standard AHP.
  2. January 1, 2019 – AHPs in existence on or before June 18, 2018 may establish a self-insured Relaxed Standard AHP.
  3. April 1, 2019 – All other new or existing associations may establish a self-insured Relaxed Standard AHP.

There are no effective dates specific to Narrow Standard or Non-Conforming AHPs as these existed before the final regulations and are not directly affected by them.

The information contained herein is for general informational purposes only and does not constitute legal or tax advice regarding any specific situation. Any statements made are based solely on our experience as consultants. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein.  The information provided in this alert is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency is not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions. © 2018 Marsh & McLennan Agency LLC. All Rights Reserved.

About the Author. This alert was prepared by Chris Beinecke, J.D., LL.M.. the Employee Health & Group Benefits National Compliance Leader for Marsh & McLennan Agency LLC

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ACA’s Deductible Cap Repealed

April 18, 2014

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On April 1st the President signed into law the “Protecting Access to Medicare Act of 2014” otherwise known as the “Doc Fix.” The bill prevents a double-digit cut in Medicare reimbursements to doctors from taking effect this year. Additionally the bill included a significant modification to the Affordable Care Act eliminating a mandated deductible limit that was to be imposed on the small employer market.

Prior to the “Doc Fix” legislation the Affordable Care Act established limits on the deductible amounts of non-grandfathered health plans in the small group market for 2014 of $2,000 (single) or $4,000 (Family) annually. The elimination of the limits means that all plan deductibles will only be subjected to the mandated out-of-pocket maximum limitations for all subscriber cost-sharing regardless of group size.

The “Doc Fix” legislation went into effect April 1st, 2014.

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SHOP Exchange Delayed

December 2, 2013

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On November 27th the administration announced the delay of online enrollment for small businesses looking to purchase coverage through the federal SHOP exchange.

An HHS notice indicates that, eligible, employers wanting to buy marketplace plans will now need to go through an agent, broker or insurance company to buy coverage this year. Officials indicate that the plan is to still allow small businesses to buy coverage without having to deal with the problem plagued HealthCare.gov website.

The delay of the SHOP (Small Business Health Option Program) comes as little surprise as it has been fraught with issues and delays completely independent of the problems associated with the HealthCare.gov website. This new delay impacts only employer in those states in which a federally run SHOP exchange exists.

Qualified small groups have until December 23rd to purchase coverage that takes effect January 1.

FAQ’s on new Federally facilitated SHOP enrollment

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Small Employers and the SHOP Marketplace

October 14, 2013

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Information contributed by Paul Dominick, a 3L at SLU Law and a compliance intern at J.W. Terrill where he provides legal research on health care reform issues.

SHOP, Small Business Health Option Program, is a new program with a goal to simplify the process for small businesses looking to buying affordable health insurance. The enrollment period will start October 1st of this year for coverage that will begin January 1st, 2014. Some of the benefits include a possible tax break of up to 50% of the premium costs, easy online comparisons of different plans, and the ability to control the coverage offered and the amount paid towards employee premiums. An employer wishing to provide insurance through the SHOP marketplace will need to qualify as a small employer.

Does my business qualify as a small employer?
For now, i.e. 2014, a small employer that qualifies for the SHOP marketplace is one with 50 or fewer employees; this will expand to 100 or fewer employees beginning in 2016. Also, a business that qualifies as a small employer but later grows to the point of having over 50 full-time employees will still be considered a small employer, so long as the employer has continuously made enrollment in qualified health plans available to its employees through an exchange since exceeding the 50 employee limit. So the question becomes ‘How do I determine how many employees I have under the Affordable Care Act definition?’

The number of employees is determined by adding the number of full-time and full-time equivalent employees together however; there is some vital information that is necessary to explain the process. The IRS issued a guidance article which included guidelines for a measurement period, administration period and stability period. The measurement period will be the time frame which the employees’ information will be pulled to determine if he is or is not a full-time employee. The administration period will be the time frame in which the business can collect all the employees’ information, determine if they are or are not full-time employees, and notify the employees of their option to enroll in the insurance. Finally, the stability period will be the period of time in which the employer will be required to offer insurance to those employees that were considered full-time during the measurement period.

Full-Time Employees
Since the employee count includes both full-time and full-time equivalent employees lets begin with how to determine full-time employees. Full-time employee means an employee who worked an average of at least 30 hours per week in any given month. If in any month the average hours worked per day is six hours or more, then the employee should be counted as a full-time employee for that month. This method is applicable for all employees that were continuously employed through the measurement period mentioned above. It is important to note that the hours that should be used to calculate if an employee meets the definition of a full-time employee should include not only the hours worked but any hours for which the employee was paid such as vacation or leave.

Example 1: Employer A does a measurement period of 6 months and finds that all 12 of the employees had at least one month where the averaged 30 or more hours per week. Employer A would then have 12 employees that meet the full-time employee definition.

Full-Time Equivalent Employees
In addition to the number of full-time employees for any month otherwise determined, an employer shall include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120. An employer must add up all of the hours of any employees that did not meet the 30 hour per week average during a given month and divide that number by 120. After dividing the aggregate hours by 120, the employer will have the number of full-time equivalent employees. The number of full-time equivalent employees should then be added to the number of full-time employees which will the n give the employer its employee count. This employee count is the number that will be used to determine if an employer is considered a small employer, 50 or fewer employees and eligible for SHOP, or a large employer, more than 50 employees and not eligible for SHOP.

Example 2: Employer A from example 1 has an additional 12 employees that did not have a month in which the averaged at least 30 hours per week. These 12 employees only averaged 20 hours per week which equal 1,040 for the year. So the 12 employees worked a total of 12,480 hours for the year between them all. 12,480 divided by 2080 yields the number of full-time equivalent employees, 6. So Employer A would have a total of 18 employees thus qualify as a small employer.

Small Employer Tax Credit Eligibility

Determining the Number of Full-Time Employees and Average Wages for the Tax Credit
The number of full-time employees is determined by dividing the total number of hours for which the employer pays wages during the year, excluding hours worked by an employee in excess of 2080, by 2080. There are three ways to calculate hours of service for which the employer pays wages. The first is to determine actual hours of service from recorded or hours worked and hours for which payment is made or due, including hours for paid leave. A second option is to use days-worked equivalency whereby the employee is credited with 8 hours of service for each day for which payment is made or due including weeks of paid leave. Finally an employer may use week-worked equivalency whereby the employee is credited with 40 hours of service for each week for which payment is made or due including weeks of paid leave.

If the number of full-time employees is determined to be less than 25 the next step is to determine the average wage. Determining the average wage is done by dividing the yearly payroll by the number of full-time employees. If the average wage is less than $50,000 then the employer qualifies for the tax credit. However, the tax credit will “phase out” as the number of employees approaches 25 and the average wage approaches $50,000; the two tables below give a good idea as to what rates can be expected.

Small Business Tax Credit for For-Profit Employer

SHOP_1b

Small Business Tax Credit for Non-Profit Employer

SHOP_2

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PPACA’s Impact on Affordability

April 23, 2013

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A March 2013 report by the Independent Society of Actuaries (SOA) forecasts that the individual market could experience as much as a 32% cost of care increase on average due to changes enacted by the Patient Protection and Affordable Care Act (PPACA). The resulting premiums would be dramatically increased as those costs would be passed on to those who purchase health insurance. According to the report,

  1. After three years of exchanges and insurer restrictions, the percentage of uninsured nationally will decrease from 16.6% to between 6.8% and 6.6%
  2. Under the ACA, the individual non-group market will grow 115%, from 11.9 million to 25.6 million.
  3. The non-group cost per member per month will increase 32 percent under the ACA.

According to the SOA report some states could experience dramatic rate changes. The study illustrates rate changes by 2017 on a pmpm (per member per month) basis. Some of the most extreme are as follows:

  • 80% increase in Ohio & Wisconsin
  • 68% increase in Indiana
  • 67% increase in Maryland
  • 62% increase in California
  • 60% increase in Alabama
  • 1.4% decrease in New Jersey
  • 6.6% decrease in Rhode Island
  • 12.8% decrease in Massachusetts
  • 13.9% decrease in New York

In Missouri the forecast indicates a 55-58% increase contingent on the expansion of Medicaid. In Illinois the anticipated market impact is approximately a 50.8% average increase.

Many supporters of the health care law are now lashing out citing close ties between the SOA actuaries and the insurance industry. The administration claims the analysis fails to consider cost relief strategies in the law such as premium tax credits and the risk adjustment pools that would help subsidize health insurance carriers that attract higher shares poor risk.

However, insurance experts have countered that neither measure actually cuts the cost of the claims pmpm. These measures in the law merely transfer funds from the federal budget to individuals or shift funds generated through tax revenues to insurance companies. Meaning there is no true cost cutting only cost shifting with the aggregate costs actually being greater.

The study did not directly address PPACA’s impact on “large employer” groups (defined as >100) and focused on the individual and small group market.

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Small-Business Health Care Program Delayed

April 16, 2013

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The Patient Protection and Affordable Care Act creates as part of the Small Business Health Options Program (SHOP) exchanges. Through these exchanges small businesses up to 100 employees are supposed to be able to purchase qualified coverage from a government run purchasing exchange.

However, the federal government announced the SHOP program will be delayed until 2015. Small-business employees will still be able to get insurance, but the states have the option to limit that to one choice, rather than a variety of plans.

Federal officials indicated that the delay is due to the inability of insurance carriers to implement in a timely fashion. Prior comments going back over the last two years suggest that the insurance carriers have in fact been awaiting guidance from regulators and had proactively informed regulators of potential implementation delays if guidance was not forthcoming. Regardless of why offerings under the SHOP program will be limited at best.

The Chamber of Commerce issued a statement indicating that as a result of the delay, small-business insurance through the health exchange “will be of little or no value to employers, or by extension, their employees.”

There are numerous technical issues that will need to be resolved prior to a legitimate SHOP offering in the marketplace. First and foremost regulators must address key issue related to the insurance market. This in turn will be followed by insurers creating plans and infrastructure to support the government program. Assuming these issues are addressed in a timely fashion the much ballyhooed SHOP program should be available for small businesses for the 2015 calendar year.

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The Patient Protection and Affordable Care Act & Small Businesses

April 2, 2013

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On Tuesday, March 23, 2010 President Obama signed into law The Patient Protection and Affordable Care Act (PPACA). This 900 page historical piece of legislation is anticipated to require in excess of 100,000 pages of regulations, many of which directly impact employer/employee  coverages, benefits and costs. The law will be phased into effect through 2018; however, the majority of the PPACA’s immediate impacts occur between 2013-2014. Where in great part the PPACA makes little distinction between large and small group impacts, there are those areas where it treats groups differently by size however.

To this extent we are providing a summary of impacts to small employers in three classifications that coincide with classifications provided by the U.S. Small Business Administration; self-employed, groups under 25 employees, groups under 50 employees and groups with 50-99  employees. Where the rules being listed here predominantly focus on the “small group” market, which is now defined by the PPACA as groups with less than 100 employees, many of these rules apply to all market segments.

Self-Employed Individuals

Individual Shared Responsibility Provisions (i.e. Individual Mandate)
Requirement for all U.S. citizens and legal residents to have qualifying coverage. Those without coverage will have to pay a per year penalty up to a maximum of three times (3x) the amount for family. Penalties will be phased in as follows:

  • 2014 – Greater of $95 or 1.0% of taxable income
  • 2015 – Greater of $325 or 2.0% of taxable income
  • 2016 – Greater of $695 or 2.5% of taxable income

After 2016 penalties will be increased annually by the cost-of-living adjustment.

Exemptions will be granted for a issues ranging from financial hardships to religious objections.

Itemized Deduction Threshold Increase from 7.5% to 10%
Reduction in the medical expense amounts available to individuals to claim tax deduction on.

Exchange Availability
New government run marketplaces will be available for individuals and small groups beginning January 1, 2014. The individual market will offer a choice of four levels of coverage. Individuals may qualify for subsidies on income/needs  based scales. Current
proposed hard copy applications are 21-pages and online enrollment utilities forecasted to take 40-50 minutes to complete.

Medical Loss Ratio Requirements
The Patient Protection and Affordable Care Act (PPACA) requires insurers to spend certain percentages of premiums for medical services and the improvement of health care quality. If insurance companies aggregate spending does not reach the required levels they are required to provide the excess back to policyholders in the form of a rebate. The required levels are:

  • 80% in the individual market;

During the prior plan year the actual average rebate nationally came in less than $40 per employee, with many providers not paying any rebates as they came in over the required ratios.

$2,500 Flexible Spending Account Cap
Beginning this past January 1, 2013 the Patient Protection and Affordable Care Act (PPACA) limits tax advantaged salary reduction contributions under a health care flexible spending account (FSA) during the taxable year to a maximum of $2,500.

Additional Medicare Withholdings on Wages
Effective 12/31/2012 the Patient Protection and Affordable Care Act (PPACA) mandates an increase in the Medicare Part A tax rate wages by 0.9% on those earning over $200,000 for individuals taxpayers and $250,000 for married couples filing jointly.

3.8% Tax on Net Investment Income
The Patient Protection and Affordable Care Act (PPACA) implements a new 3.8% tax on unearned income effective January 1, 2013 on net investment incomes such as capital gains, dividends, rent, royalties, etc.

Health Insurance Premium Tax
Beginning on February 2013 renewals, participants of fully-insured medical plans will begin seeing higher premiums a general industry tax of approximately 2.54% goes into effect.

Community Rating Guidelines
Effective January 1, 2014 premiums for individual and small group plans will not be based on health status. Instead they will be based on family tier, age, geography and tobacco use. These plans must also use “3 to1” age bands. This means that current age bands that range from 8 to 1 or even 20 to 1 will have to be reduced creating a market compression and redistributing risk within these markets.

Deductible Maximums & OOP Maximums
Effective January 1, 2014 all new plans and renewals, in the individual and small group fully-insured markets, will be required to have deductible maximums of $2,000 single / $4,000 family with in-network out-of-pocket maximums being indexed to QHDHP limitations. Some flexibility may be allowed to carriers in plan development to meet certain actuarial requirements.

Groups Under 25 Employees

Small Business Health Care Tax Credits
The Patient Protection and Affordable Care Act (PPACA) provides a tax credit for small employers to assist with the cost of providing health insurance to their employees. The tax credit is in effect from 2010 through 2013.

Small Business Health Options Program (SHOP)
The Patient Protection and Affordable Care Act (PPACA) requires states to create Small Business Health Options Programs (SHOP) designed to help small employers access affordable insurance for their employees.

Summary of Benefits and Coverage (SBCs ) Disclosure Rules
Under the Patient Protection and Affordable Care Act health insurers and group health plans are required to provide information about health plan benefits to participants in a unified method and manner by providing qualified Summary of Benefits and Coverage (SBCs) to participants.

Medical Loss Ratio Requirements
The Patient Protection and Affordable Care Act (PPACA) requires insurers to spend certain percentages of premiums for medical services and the improvement of health care quality. If insurance companies aggregate spending does not reach the required levels they are required to provide the excess back to policyholders in the form of a rebate. The required levels are:

  • 80% in the small group market;

During the prior plan year the actual average rebate nationally came in less than $40 per employee, with many providers not paying any rebates as they came in over the required ratios.

$2,500 Flexible Spending Account Cap
Beginning this past January 1, 2013 the Patient Protection and Affordable Care Act (PPACA) limits tax advantaged salary reduction contributions under a health care flexible spending account (FSA) during the taxable year to a maximum of $2,500.

Additional Medicare Withholdings on Wages
Effective 12/31/2012 the Patient Protection and Affordable Care Act (PPACA) mandates an increase in the Medicare Part A tax rate wages by 0.9% on those earning over $200,000 for individuals taxpayers and $250,000 for married couples filing jointly.

3.8% Tax on Net Investment Income
The Patient Protection and Affordable Care Act (PPACA) implements a new 3.8% tax on unearned income effective January 1, 2013 on net investment incomes such as capital gains, dividends, rent, royalties, etc.

90-day Maximum Waiting Period
Healthcare reform mandates that a group health plan or health insurance issuer offering health insurance coverage shall not apply any waiting period that exceeds 90-days.

Transitional Reinsurance Program Fees
An established fee &/or tax that provides stabilization of premiums for coverage for the individual market during the first three years of Exchange operation (2014-2016). Program is funded by contributions from on a $5.25 per member per month basis or $63 per member per year during the first year. This funding is charged for anyone participating in any insured/self-insured market whether it is group or individual.

PCORI Fees
$2.00 per member per year fee to fund new research agency under authority of Health and Human Services (HHS).

Health Insurance Premium Tax
Beginning on February 2013 renewals, participants of fully-insured medical plans will begin seeing higher premiums a general industry tax of approximately 2.54% goes into effect.

Workplace Wellness Programs
Healthcare reform establishes incentives to promote employer wellness programs and encourage opportunities to support healthier workplaces. Effective January 1, 2014 the maximum reward under a health-contingent wellness program will increase from 20% to 30% of the cost of health coverage.

Community Rating Guidelines
Effective January 1, 2014 premiums for individual and small group plans will not be based on health status. Instead they will be based on family tier, age, geography and tobacco use. These plans must also use “3 to1” age bands. This means that current age bands that range from 8 to 1 or even 20 to 1 will have to be reduced creating a market compression and redistributing risk within these markets.

Deductible Maximums & OOP Maximums
Effective January 1, 2014 all new plans and renewals, in the individual and small group fully-insured markets, will be required to have deductible maximums of $2,000 single / $4,000 family with in-network out-of-pocket maximums being indexed to QHDHP limitations. Some flexibility may be allowed to carriers in plan development to meet certain actuarial requirements.

Groups Under 50 Employees

Small Business Health Options Program (SHOP)
The Patient Protection and Affordable Care Act (PPACA) requires states to create Small Business Health Options Programs (SHOP) designed to help small employers access affordable insurance for their employees.

Summary of Benefits and Coverage (SBCs ) Disclosure Rules
Under the Patient Protection and Affordable Care Act health insurers and group health plans are required to provide information about health plan benefits to participants in a unified method and manner by providing qualified Summary of Benefits and Coverage (SBCs) to participants.

Medical Loss Ratio Requirements
The Patient Protection and Affordable Care Act (PPACA) requires insurers to spend certain percentages of premiums for medical services and the improvement of health care quality. If insurance companies aggregate spending does not reach the required levels they are required to provide the excess back to policyholders in the form of a rebate. The required levels are:

  • 80% in the small group market

During the prior plan year the actual average rebate nationally came in less than $40 per employee, with many providers not paying any rebates as they came in over the required ratios.

$2,500 Flexible Spending Account Cap
Beginning this past January 1, 2013 the Patient Protection and Affordable Care Act (PPACA) limits tax advantaged salary reduction contributions under a health care flexible spending account (FSA) during the taxable year to a maximum of $2,500.

Additional Medicare Withholdings on Wages
Effective 12/31/2012 the Patient Protection and Affordable Care Act (PPACA) mandates an increase in the Medicare Part A tax rate wages by 0.9% on those earning over $200,000 for individuals taxpayers and $250,000 for married couples filing jointly.

3.8% Tax on Net Investment Income
The Patient Protection and Affordable Care Act (PPACA) implements a new 3.8% tax on unearned income effective January 1, 2013 on net investment incomes such as capital gains, dividends, rent, royalties, etc.

90-day Maximum Waiting Period
Healthcare reform mandates that a group health plan or health insurance issuer offering health insurance coverage shall not apply any waiting period that exceeds 90-days.

Transitional Reinsurance Program Fees
An established fee &/or tax that provides stabilization of premiums for coverage for the individual market during the first three years of Exchange operation (2014-2016). Program is funded by contributions from on a $5.25 per member per month basis or $63 per member per year during the first year. This funding is charged for anyone participating in any insured/self-insured market whether it is group or individual.

PCORI Fees
$2.00 per member per year fee to fund new research agency under authority of Health and Human Services (HHS).

Health Insurance Premium Tax
Beginning on February 2013 renewals, participants of fully-insured medical plans will begin seeing higher premiums a general industry tax of approximately 2.54% goes into effect.

Workplace Wellness Programs
Healthcare reform establishes incentives to promote employer wellness programs and encourage opportunities to support healthier workplaces. Effective January 1, 2014 the maximum reward under a health-contingent wellness program will increase from 20% to 30% of the cost of health coverage.

Community Rating Guidelines
Effective January 1, 2014 premiums for individual and small group plans will not be based on health status. Instead they will be based on family tier, age, geography and tobacco use. These plans must also use “3 to1” age bands. This means that current age bands that range from 8 to 1 or even 20 to 1 will have to be reduced creating a market compression and redistributing risk within these markets.

Deductible Maximums & OOP Maximums
Effective January 1, 2014 all new plans and renewals, in the individual and small group fully-insured markets, will be required to have deductible maximums of $2,000 single / $4,000 family with in-network out-of-pocket maximums being indexed to QHDHP limitations. Some flexibility may be allowed to carriers in plan development to meet certain actuarial requirements.

Groups 50-100 Employees

Employer Shared Responsibility Requirements (Employer Mandate)
Beginning in 2014, employers with 50+ Full-time equivalents (FTE’s) are required to offer coverage to their employees or face penalties.  In addition to offering coverage employers are also encouraged to provide “affordable coverage” under Federal definitions or face penalties for employees who receive subsidies through exchanges.

Small Business Health Options Program (SHOP)
The Patient Protection and Affordable Care Act (PPACA) requires states to create Small Business Health Options Programs (SHOP) designed to help small employers access affordable insurance for their employees.

Summary of Benefits and Coverage (SBCs ) Disclosure Rules
Under the Patient Protection and Affordable Care Act health insurers and group health plans are required to provide information about health plan benefits to participants in a unified method and manner by providing qualified Summary of Benefits and Coverage (SBCs) to participants.

Medical Loss Ratio Requirements
The Patient Protection and Affordable Care Act (PPACA) requires insurers to spend certain percentages of premiums for medical services and the improvement of health care quality. If insurance companies aggregate spending does not reach the required levels they are required to provide the excess back to policyholders in the form of a rebate. The required levels are:

  • 80% in the small group market

During the prior plan year the actual average rebate nationally came in less than $40 per employee, with many providers not paying any rebates as they came in over the required ratios.

$2,500 Flexible Spending Account Cap
Beginning this past January 1, 2013 the Patient Protection and Affordable Care Act (PPACA) limits tax advantaged salary reduction contributions under a health care flexible spending account (FSA) during the taxable year to a maximum of $2,500.

Additional Medicare Withholdings on Wages
Effective 12/31/2012 the Patient Protection and Affordable Care Act (PPACA) mandates an increase in the Medicare Part A tax rate wages by 0.9% on those earning over $200,000 for individuals taxpayers and $250,000 for married couples filing jointly.

3.8% Tax on Net Investment Income
The Patient Protection and Affordable Care Act (PPACA) implements a new 3.8% tax on unearned income effective January 1, 2013 on net investment incomes such as capital gains, dividends, rent, royalties, etc.

90-day Maximum Waiting Period
Healthcare reform mandates that a group health plan or health insurance issuer offering health insurance coverage shall not apply any waiting period that exceeds 90-days.

Transitional Reinsurance Program Fees
An established fee &/or tax that provides stabilization of premiums for coverage for the individual market during the first three years of Exchange operation (2014-2016). Program is funded by contributions from on a $5.25 per member per month basis or $63 per member per year during the first year. This funding is charged for anyone participating in any insured/self-insured market whether it is group or individual.

PCORI Fees
$2.00 per member per year fee to fund new research agency under authority of Health and Human Services (HHS).

Health Insurance Premium Tax
Beginning on February 2013 renewals, participants of fully-insured medical plans will begin seeing higher premiums a general industry tax of approximately 2.54% goes into effect.

Workplace Wellness Programs
Healthcare reform establishes incentives to promote employer wellness programs and encourage opportunities to support healthier workplaces. Effective January 1, 2014 the maximum reward under a health-contingent wellness program will increase from 20% to 30% of the cost of health coverage.

Community Rating Guidelines
Effective January 1, 2014 premiums for individual and small group plans will not be based on health status. Instead they will be based on family tier, age, geography and tobacco use. These plans must also use “3 to1” age bands. This means that current age bands that range from 8 to 1 or even 20 to 1 will have to be reduced creating a market compression and redistributing risk within these markets.

Deductible Maximums & OOP Maximums
Effective January 1, 2014 all new plans and renewals, in the individual and small group fully-insured markets, will be required to have deductible maximums of $2,000 single / $4,000 family with in-network out-of-pocket maximums being indexed to QHDHP limitations. Some flexibility may be allowed to carriers in plan development to meet certain actuarial requirements.

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