The Notice of Exchanges and Subsidies Deadline was due- By October 1, 2013, virtually all US employers (regardless of size or whether the employer offers a health plan) are required to distribute a Notice of Exchanges and Subsidies to each employee (regardless of part-time, temporary, full-time or health plan enrollment status).
Additionally, beginning on October 1, 2013, this notice must be provided to each new employee within 14 days of the employee’s start date. There are two model notices available, one for employers that offer a company-sponsored health plan to some or all employees, and one for organizations that do not offer an employer-sponsored health insurance plan.
The purpose of the Notice of Exchanges and Subsidies is to inform employees of the existence of Health Insurance Exchanges (also called Health Insurance Marketplaces) as well as potential federal subsidies available to them in 2014. Should an employee opt to shop in the Exchange, the employee may use this Notice provided by the employer to enter certain information on the application. The Exchanges are government-provided virtual marketplaces intended to offer individuals and small groups “one-stop shopping” to find and compare private health insurance options. Open enrollment for health insurance coverage through the Health Insurance Marketplaces begins October 1, 2013 and coverage is available beginning on January 1, 2014. On September 11, 2013, the DOL announced that there is no specific fine or penalty for failing to provide the notice by October 1, 2013. However, the DOL or plan participants may bring a civil action against an employer for failure to comply with this notice requirement.
Affordable Care Act Out-of-Pocket Maximum Delay for Some Health Plans – A previously little-noticed decision made by the government earlier this year to grant a one-year grace period to certain health plans with regard to the Affordable Care Act’s (ACA) out-of-pocket maximum provision has been getting a lot of press lately. What does it mean for you? The ACA’s out-of-pocket maximum provision goes into effect starting in plan year 2014 and generally limits the allowed out-of-pocket maximum to $6,350 for an individual and $12,700 for a family. The grace period that the government has announced applies only to health plans that use more than one entity to provide benefits and where each policy carries its own out-of-pocket maximum. The most common example is when there is a separate medical plan and prescription plan. In these instances, the major medical plan will be subject to the out-of-pocket maximum limit and the other benefit plan (such as the prescription care plan) will be subject to its own out-of-pocket maximum of $6,350 for individuals and $12,700 for families. Essentially, for these specific cases and for one year only (until plan year 2015), the government is allowing double out-of-pocket maximums. The reason for this delay in fully implementing the out-of-pocket maximum is that these different health benefit providers have not yet been able to coordinate how to establish separate plans with one out-of-pocket maximum. As with many aspects of the Affordable Care Act, there likely will be more changes, so make sure to frequently check in with your benefits provider or your HR Professional to ensure your organization’s practices are current and compliant with the new regulations.
October was Opening Day for the Health Insurance Exchanges!
We have been hearing about them for over three years now, but today is opening day for the Health Insurance Exchanges. Each state now has an operational Health Insurance Exchange, which includes an individual Health Insurance “Marketplace”, and a Small Business Health Options Program or “SHOP” Exchange. So what does this mean for you as a business owner? Well, there are several ways in which Exchanges may affect you and your employees.
Individual Health Plans – Most Americans are eligible to shop in the Health Insurance Marketplaces for individual health insurance plans. Open enrollment begins today and runs through March 31, 2014. So your employees may elect to log in and see the rates for plans from multiple carriers in your area for an effective date as early as January 1, 2014. Should an employee elect to enroll in an individual plan through the Marketplace, the employee will forfeit the employer health insurance contribution that you currently offer to your workforce. Individual coverage purchased through the Marketplace will not be deducted from an employee’s paycheck; rather, the individual will be responsible for remitting payment for the coverage. It is important to note that employer mandate penalties do not apply in 2014. Therefore, if one of your employees elects to shop in the Marketplace and receives a premium subsidy, it will in no way trigger a “play or pay” penalty for your business in 2014. (The Employer Mandate provisions of Health Care Reform have been delayed until 2015.)
Small Group Health Plans – Small employers (generally those with less than 50 full time equivalent employees) may elect to shop in the Exchanges or “SHOPS” for group coverage. Small employers can enroll beginning October 1, 2013 for coverage starting as soon as January 1, 2014. Small businesses can also enroll and begin coverage any time after January 1, 2014. As a small business owner, you may continue to use your existing licensed health insurance agent or broker when shopping in the Exchange to assist you in comparing and contrasting the price, coverage, quality and features of the available plans. The price you pay will be the same with or without the help of an agent or broker. There are a few important things to consider when making your decision as to whether to utilize the SHOP Exchange in your state:
- If you plan to use SHOP, you must offer coverage to all of your full-time employees–generally those working an average of 30 or more hours per week.
- In many states, at least 70% of your full-time employees must enroll in your SHOP plan.
- If you currently enjoy the small business health insurance tax credit, it is very important to note that beginning in 2014 the tax credit is available only for plans purchased through a SHOP.
- Once you have selected a plan through a SHOP, in most states your employees will have only that one plan as an option for the benefit year. Most state SHOP exchanges do not provide for multiple plan options for a single employer.
- You may be curious as to what types of health insurance plans are offered through the Exchange. All health insurance plans available for purchase through the Exchanges are offered through private health insurance carriers. There is not a government or “public” option available. Initially, you will generally see four levels of plans offered through the Exchanges:
- Bronze – Enrollee pays 40% of health care costs
- Silver – Enrollee pays 30% of health care costs
- Gold – Enrollee pays 20% of health care costs
- Platinum – Enrollee pays 10% of health care costs
The difference among these coverage tiers rests with their “actuarial” value – in other words, how much a plan will cover before the patient must chip in for co-insurance, deductibles and co-payments. So a platinum plan will have a higher premium, but will yield less out-of-pocket costs than a bronze plan.
It is certainly a rapidly changing time in the health insurance world. Remember, the Exchanges are a new concept for everyone, so be sure to lean on your health insurance broker, accounting professional and Human Resources professional for compliance and strategic expertise in this evolving area.
Question & Answer
Q: Our organization is looking to change from providing Vacation and Sick Leave to Paid Time Off (PTO). What steps do we need to take in order to implement this change?
A: First, you will want to ensure that your new program will be fair and equitable to your employees and that the policy is updated and distributed to your employees at least thirty days prior to enacting it. It is also recommended that employees sign off acknowledging the updated policy. Additionally, you will want to review how PTO will be calculated: will it be provided as a lump sum or will it accrue over the course of a year? Is the year calculated by a calendar year or is it based on each employee’s anniversary? Will PTO carry over from one year to the next? Are employees offered an option to be paid out for unused PTO at the end of a year? In addition to these items, it is imperative that you adhere to state laws as they apply to compensation for unused, accrued PTO as well as payment in lieu of using PTO.
DOMA: How will the Supreme Court Decision Impact Employers?
In June 2013, the U.S. Supreme Court held a portion of the federal Defense of Marriage Act (DOMA) to be unconstitutional. Under DOMA, social security survivors’ benefits, immigration sponsorship rights, the ability to file joint federal tax returns and the protection of federal officers’ family members among other rights were not extended to same-sex spouses. The decision striking down part of DOMA came in the case of United States v. Windsor which arose when Edith Windsor was assessed estate taxes on her deceased same sex spouse’s estate. Windsor filed a lawsuit against the federal government claiming that the denial of the federal surviving spouse estate tax exemption under DOMA was unconstitutional. The Supreme Court agreed and found that Section 3 of DOMA infringed upon the 5th Amendment right to Due Process.
Thirteen states and the District of Columbia currently or will soon recognize same-sex marriages. For employers with operations in these jurisdictions, the Court’s decision means benefits plans must treat all lawfully married employees who also live in a state that recognizes same sex marriage equally, including how they handle eligibility, taxation and the continuation of benefits under COBRA. Lawfully married same-sex partners are also covered by the Family Medical Leave Act. Immigration status will additionally be affected by this ruling.
While the result of this case for those living in states that recognize same sex marriage is fairly straightforward, the situation is much murkier for couples living in states that do not recognize same sex marriage. This is because even if a couple who lives in a state that does not recognize same sex marriage goes to another state to get married, certain federal benefits seemed to be tied to the state of domicile (i.e. where the couple lives) and not the state of celebration (i.e. where the ceremony took place). Since the decision, we have been waiting on communication from the federal government to help clarify the situation.
Now we have guidance from two agencies on issues that directly affect employers. First we heard from the Department of Labor that for purposes of the Family Medical Leave Act (FMLA) it will be using the state of domicile to determine whether a same sex spouse should be included in the definition of “spouse.” What this means for employers is if an employer (no matter where the employer is located) has an employee who has a same sex spouse and lives in a state that recognizes same sex marriage, that spouse should be treated as a family member for FMLA purposes. This rule can be very difficult to apply, so employers must be careful to get it correct. For example, same sex marriage is legal in Maryland and Washington D.C. and is not legal in Virginia. If a Washington D.C. employer has two employees, one who lives in Maryland with her same sex spouse and one who resides in Virginia with his same sex spouse, only the employee who lives in Maryland is eligible to have her spouse treated as a family member under FMLA. While it may be tempting for an employer to simply have a policy that grants leave to both couples identically under similar circumstances, for purposes of tracking FMLA leave time it is important to know which same sex spouses count as “spouses” under FMLA.
Additional changes noted by the Department of Labor will affect the Employee Retirement Income and Security Act (ERISA). As the IRS has determined, the definitions of “spouse” and “marriage” will also apply to ERISA, meaning that same-sex spouses will be eligible for the same benefits as opposite-sex spouses if the marriage is considered to be valid in the state in which it was held.
Federal law will also provide same-sex spouses the entitlement to equitable treatment under the Health Insurance Portability and Accountability Act (HIPAA) as well as continued benefits coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) as are opposite-sex spouses.
Much like the benefits provided under FMLA and ERISA, same-sex spouses who were married in any state that recognizes same-sex marriages, without regard to the state in which the employee resides will be entitled to coverage under COBRA and HIPAA.
Most recently, the Treasury Department issued guidance stating that for all federal tax purposes, it will use state of celebration to determine who is and is not a spouse. This is a much simpler rule to apply as the employer does not need to know who lives where and have different rules for different employees. Instead, the employer simply needs to determine whether its employees are married. In doing so, however, employers should be careful to not ask for more proof of marriage from same sex couples than it does from opposite sex couples, as that may be discriminatory.
While employers who operate in multiple states or who have large numbers of employees who reside in different states may be most affected by the Supreme Court decision overturning part of DOMA, all employers will potentially be affected and should be attentive to any additional guidance from the government.
Tool of the Month
Pro-actively preparing to effectively manage harassment claims can make the difference between prolonged litigation and a speedy resolution. In response to addressing a harassment complaint, the following steps will help ensure an effective and efficient resolution. To find the full document with additional details, login to the HR Support Center, click on Guides, and search for Harassment Investigation Guide.
- Determine the Urgency
- Plan the Investigation
- Interview the Accuser
- Interview the Accused
- Interview any Witnesses
- Research other Sources
- Review the Evidence
- Consider the Remedies
- Communicate the Results
- Follow Up on the Investigation