Under the Affordable Care Act, beginning January 1, 2013, annual contributions made to a health flexible spending account (FSA) will be limited to $2,500 (this amount will be adjusted for inflation in subsequent years). Plan sponsors should begin working with their third-party administrators to update cafeteria plan documents and summary plan descriptions (SPDs) to reflect this limit, and should begin preparing to communicate the changes to their employees.
Although regulations have yet to be issued on this provision, there are some things that are important to note: the $2,500 limit only applies to salary reduction contributions (and not employer contributions) and the requirement does not apply to
dependent care FSA (which have a statutory cap of $5,000 in a calendar year) or health reimbursement arrangements (HRAs).
Most calendar year plans will change their health FSA effective January 1, 2013, however, for non-calendar year health FSA,it may be a little more complex. The $2,500limit is tracked on a calendar year basis, so non-calendar year plans will need to
ensure their employees’ health FSA contributions will not exceed $2,500 for the 2013 calendar year. It may be a good idea for plan sponsors of non-calendar year plans to consider adjusting the health FSA contribution limit to reflect a $2,500 limit
beginning in 2012.
As information develops, we will continue to keep you updated.
Information provided by Emerson, Reid and Co.
Tuesday, January 31, 2012
Tuesday, January 24, 2012
First Quarter Updates
I hope you find our first quarter blog that summarizes updates in the insurance industry useful. I remain committed to keeping you up to date with the newest developments in health insurance reform and policy changes of individual carriers. I will also continue to bring information to you throughout the year about issues relating to life, health (including Medicare Supplement plans), disability and long term care insurance.
Each year the government announces adjustments for inflation, tax brackets, exemptions, thresholds and other items. This e-mail will highlight the 2012 allowances as it relates to health insurance and long term care insurance. Some provisions, already in effect, are reviewed for informational purposes. In addition, policy changes for Empire will also be described.
Information in this blog is sorted as follows:
1. Refunds due to New York Medical Loss Ratio Rules
2. 2012 Contribution Limits for Health Savings Accounts (HSAs)
3. Other changes for HSAs
4. 2012 Medicare D Prescription Plan Information (with an explanation of the donut hole)
5. 2012 Long-Term Care Premium Deductibility Limits for 2012
6. Updates under the Affordable Care Act
7. Empire Blue Cross Blue Shield Policy Change
I welcome any feedback and am available to answer any of your questions or concerns.
Robert S. Israel, CLU
Long Island Planning Group, Ltd.
Risrael@optonline.net
1. Refunds due to New York Medical Loss Ratio Rules
Under New York State law, insurers are required to spend 82 cents of every dollar collected in premiums on providing medical care. If the amount spent on care, known as a "medical loss ratio" or "MLR," is less than the 82 percent requirement, insurers are required to refund the difference to policyholders. On a Federal level, the Department of Health and Human Services issued rules that it will require 80% (small groups) and 85% (large groups) of premium dollars to be spent on clinical care.
The New York State Department of Insurance website disclosed that Insurers required to make refunds include Aetna, Empire, GHI, Health Net of NY, HIP Health Plan of Greater NY, MVP Health Plan and Oxford Health Insurance. Group health insurance policyholders have already begun to receive these refunds. Note that these refunds are due as a result of the New York Insurance Laws and are not part of the MLR rebate required under federal health care reform. (http://www.governor.ny.gov/press/110911health)
2. 2012 Contribution Limits for Health Savings Accounts (HSAs)
The IRS has issued the 2012 contribution limits for Health Savings Accounts: $3,100 for single plans and $6,250 for family plans. The 2011 limits were $3,050 for single plans and $6,150 for family plans. For participants ages 55 and up, catch up provisions are $1,000, allowing a $4,100 contribution. Employer and/or the employee pretax contributions can be made to these accounts. Withdrawals of funds for qualified medical expenses, including Long Term Care Insurance premiums, are tax free. Workers 65 and older can use the HSA accounts but cannot make contributions to the HSA account. Unlike other plans such as Section 125 Cafeteria plans and Flexible Spending Accounts (FSAs), unused money in HSA accounts can be carried over into future years. Note that a "high deductible" health plan is required to qualify to make an HSA contribution.
3. Other changes for HSAs
For 2012, HSA plans must have a "high deductible" health plan with an annual deductible of at least $1,200 for single plans and $2,400 for family coverage; these are the same as the 2011 amounts. Annual out-of-pocket expenses (besides premiums) cannot exceed $6,050 for single coverage and $12,100 for family coverage; the 2011 amounts were $5,950 for single coverage and $11,900 for family coverage.
4. 2012 Medicare D Prescription Plan Information
Medicare D prescription plans provide prescription coverage for Medicare enrollees. A deductible of $310 in 2011 rising to $320 in 2012 is usually followed by co-insurance (75%) or co-pays. Once a subscriber reaches the coverage limit $2,930 in 2012 (up from $2,840) the plan enters a coverage gap or donut hole. Coverage resumes with 95% of formulary drugs covered after a $4,700 maximum cost. Plans may be more generous than this, but must be equal to or better to be considered "creditable."
As required in the Medicare Prescription Drug, Improvement and Modernization Act of 2003, beginning in 2007 the Part B premium that a beneficiary pays each month is based on his or her modified adjusted gross income.
For Beneficiaries who file an individual tax return with income of $85,000 or less and for Beneficiaries who file a Joint tax return with income of $170,000 or less, the 2012 Part B Monthly Premium will be $99.90.
For Beneficiaries who file an individual tax return with income of $85,001 - $107,000 and for Beneficiaries who file a Joint tax return with income of $170,001 - $214,000, the 2012 Part B Monthly Premium will be $139.90.
For Beneficiaries who file an individual tax return with income of $107,001 - $160,000 and for Beneficiaries who file a Joint tax return with income of $214,001 - $320,000, the 2012 Part B Monthly Premium will be $199.80.
For Beneficiaries who file an individual tax return with income of $160,001 - $214,000 and for Beneficiaries who file a Joint tax return with income of $320,001 - $428,000, the 2012 Part B Monthly Premium will be $259.70.
For Beneficiaries who file an individual tax return with income above $214,000 and for Beneficiaries who file a Joint tax return with income above $428,000, the 2012 Part B Monthly Premium will be $319.70.
Note that Medicare D prescription cards may carry a higher charge for high income beneficiaries as well.
(https://questions.medicare.gov/app/answers/detail/a_id/2310/~/2012-part-b-premium-amounts-for-persons-with-higher-income-levels)
5. 2012 Long-Term Care Premium Deductibility Limits for 2012
The IRS is increasing the Long-Term Care Premium Deductibility Limits for 2012. Premiums for "qualified" long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 7.5 percent of the insured's adjusted gross income. Business owners, self-employed, S Corp. owners as well as LLC and LLP members can take deductions for allowable premiums. The 2012 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term 'medical care' are based on attained age of the insured before the close of the taxable year. Any premium amounts for the year above these limits are not considered to be a medical expense. C Corps, paying long-term care insurance premiums, can take the deduction for the entire premium. They are not limited by the chart below. Since long-term care insurance is not an ERISA Benefit, discrimination rules do not apply.
2012 Deductible Limits Based on Age
40 or less: $350
More than 40 but not more than 50: $660
More than 50 but not more than 60: $1,310
More than 60 but not more than 70: $3,500
More than 70: $4,370
Please note that New York State offers a 20% tax credit for LTCI premiums. The per-diem limitation under 7702B(d)(4) is $310. This applies to policies that offer indemnity rather than reimbursement benefits.
(http://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php)
6. Updates under the Affordable Care Act
The Affordable Care Act originally required employers to report the cost of coverage under an employer-sponsored group health plan. Notice 2010-69, issued last Fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. This reporting is for informational purposes. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.
Beginning in 2010, group health plans must provide coverage for preventative care without any cost-sharing requirements. Preventative care services include yearly preventative medicine visits and standard immunizations recommended by the American Committee on Immunization Practices. Members at an appropriate age or risk status are entitled to screening for colorectal cancer, sexually transmitted diseases and HIV, counseling in a primary care setting for alcohol or substance abuse, tobacco use, obesity, diet and nutrition as well as for high blood pressure, diabetes and depression.
(http://www.irs.gov/newsroom/article/0,,id=237894,00.html)
7. Empire Blue Cross Blue Shield Policy Change
Empire intends to phase out many of its small group products on groups' renewal dates starting with groups renewing on April 1, 2012. Groups renewing during the first quarter will have the ability to renew their plans with prescription changes and rate increases. Empire's previously stated policy was to "simplify" its available plans for all groups on April 1, 2012 regardless of groups' renewal dates. Note that a group that fails to recredential or prove eligibility can be terminated with 30 days notice.
Each year the government announces adjustments for inflation, tax brackets, exemptions, thresholds and other items. This e-mail will highlight the 2012 allowances as it relates to health insurance and long term care insurance. Some provisions, already in effect, are reviewed for informational purposes. In addition, policy changes for Empire will also be described.
Information in this blog is sorted as follows:
1. Refunds due to New York Medical Loss Ratio Rules
2. 2012 Contribution Limits for Health Savings Accounts (HSAs)
3. Other changes for HSAs
4. 2012 Medicare D Prescription Plan Information (with an explanation of the donut hole)
5. 2012 Long-Term Care Premium Deductibility Limits for 2012
6. Updates under the Affordable Care Act
7. Empire Blue Cross Blue Shield Policy Change
I welcome any feedback and am available to answer any of your questions or concerns.
Robert S. Israel, CLU
Long Island Planning Group, Ltd.
Risrael@optonline.net
1. Refunds due to New York Medical Loss Ratio Rules
Under New York State law, insurers are required to spend 82 cents of every dollar collected in premiums on providing medical care. If the amount spent on care, known as a "medical loss ratio" or "MLR," is less than the 82 percent requirement, insurers are required to refund the difference to policyholders. On a Federal level, the Department of Health and Human Services issued rules that it will require 80% (small groups) and 85% (large groups) of premium dollars to be spent on clinical care.
The New York State Department of Insurance website disclosed that Insurers required to make refunds include Aetna, Empire, GHI, Health Net of NY, HIP Health Plan of Greater NY, MVP Health Plan and Oxford Health Insurance. Group health insurance policyholders have already begun to receive these refunds. Note that these refunds are due as a result of the New York Insurance Laws and are not part of the MLR rebate required under federal health care reform. (http://www.governor.ny.gov/press/110911health)
2. 2012 Contribution Limits for Health Savings Accounts (HSAs)
The IRS has issued the 2012 contribution limits for Health Savings Accounts: $3,100 for single plans and $6,250 for family plans. The 2011 limits were $3,050 for single plans and $6,150 for family plans. For participants ages 55 and up, catch up provisions are $1,000, allowing a $4,100 contribution. Employer and/or the employee pretax contributions can be made to these accounts. Withdrawals of funds for qualified medical expenses, including Long Term Care Insurance premiums, are tax free. Workers 65 and older can use the HSA accounts but cannot make contributions to the HSA account. Unlike other plans such as Section 125 Cafeteria plans and Flexible Spending Accounts (FSAs), unused money in HSA accounts can be carried over into future years. Note that a "high deductible" health plan is required to qualify to make an HSA contribution.
3. Other changes for HSAs
For 2012, HSA plans must have a "high deductible" health plan with an annual deductible of at least $1,200 for single plans and $2,400 for family coverage; these are the same as the 2011 amounts. Annual out-of-pocket expenses (besides premiums) cannot exceed $6,050 for single coverage and $12,100 for family coverage; the 2011 amounts were $5,950 for single coverage and $11,900 for family coverage.
4. 2012 Medicare D Prescription Plan Information
Medicare D prescription plans provide prescription coverage for Medicare enrollees. A deductible of $310 in 2011 rising to $320 in 2012 is usually followed by co-insurance (75%) or co-pays. Once a subscriber reaches the coverage limit $2,930 in 2012 (up from $2,840) the plan enters a coverage gap or donut hole. Coverage resumes with 95% of formulary drugs covered after a $4,700 maximum cost. Plans may be more generous than this, but must be equal to or better to be considered "creditable."
As required in the Medicare Prescription Drug, Improvement and Modernization Act of 2003, beginning in 2007 the Part B premium that a beneficiary pays each month is based on his or her modified adjusted gross income.
For Beneficiaries who file an individual tax return with income of $85,000 or less and for Beneficiaries who file a Joint tax return with income of $170,000 or less, the 2012 Part B Monthly Premium will be $99.90.
For Beneficiaries who file an individual tax return with income of $85,001 - $107,000 and for Beneficiaries who file a Joint tax return with income of $170,001 - $214,000, the 2012 Part B Monthly Premium will be $139.90.
For Beneficiaries who file an individual tax return with income of $107,001 - $160,000 and for Beneficiaries who file a Joint tax return with income of $214,001 - $320,000, the 2012 Part B Monthly Premium will be $199.80.
For Beneficiaries who file an individual tax return with income of $160,001 - $214,000 and for Beneficiaries who file a Joint tax return with income of $320,001 - $428,000, the 2012 Part B Monthly Premium will be $259.70.
For Beneficiaries who file an individual tax return with income above $214,000 and for Beneficiaries who file a Joint tax return with income above $428,000, the 2012 Part B Monthly Premium will be $319.70.
Note that Medicare D prescription cards may carry a higher charge for high income beneficiaries as well.
(https://questions.medicare.gov/app/answers/detail/a_id/2310/~/2012-part-b-premium-amounts-for-persons-with-higher-income-levels)
5. 2012 Long-Term Care Premium Deductibility Limits for 2012
The IRS is increasing the Long-Term Care Premium Deductibility Limits for 2012. Premiums for "qualified" long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 7.5 percent of the insured's adjusted gross income. Business owners, self-employed, S Corp. owners as well as LLC and LLP members can take deductions for allowable premiums. The 2012 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term 'medical care' are based on attained age of the insured before the close of the taxable year. Any premium amounts for the year above these limits are not considered to be a medical expense. C Corps, paying long-term care insurance premiums, can take the deduction for the entire premium. They are not limited by the chart below. Since long-term care insurance is not an ERISA Benefit, discrimination rules do not apply.
2012 Deductible Limits Based on Age
40 or less: $350
More than 40 but not more than 50: $660
More than 50 but not more than 60: $1,310
More than 60 but not more than 70: $3,500
More than 70: $4,370
Please note that New York State offers a 20% tax credit for LTCI premiums. The per-diem limitation under 7702B(d)(4) is $310. This applies to policies that offer indemnity rather than reimbursement benefits.
(http://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php)
6. Updates under the Affordable Care Act
The Affordable Care Act originally required employers to report the cost of coverage under an employer-sponsored group health plan. Notice 2010-69, issued last Fall, made this requirement optional for all employers in 2011. IRS Notice 2011-28 provided further relief for smaller employers filing fewer than 250 W-2 forms by making the reporting requirement optional for them at least for 2012 and continuing this optional treatment for smaller employers until further guidance is issued. This reporting is for informational purposes. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludible from an employee's income, and it is not taxable.
Beginning in 2010, group health plans must provide coverage for preventative care without any cost-sharing requirements. Preventative care services include yearly preventative medicine visits and standard immunizations recommended by the American Committee on Immunization Practices. Members at an appropriate age or risk status are entitled to screening for colorectal cancer, sexually transmitted diseases and HIV, counseling in a primary care setting for alcohol or substance abuse, tobacco use, obesity, diet and nutrition as well as for high blood pressure, diabetes and depression.
(http://www.irs.gov/newsroom/article/0,,id=237894,00.html)
7. Empire Blue Cross Blue Shield Policy Change
Empire intends to phase out many of its small group products on groups' renewal dates starting with groups renewing on April 1, 2012. Groups renewing during the first quarter will have the ability to renew their plans with prescription changes and rate increases. Empire's previously stated policy was to "simplify" its available plans for all groups on April 1, 2012 regardless of groups' renewal dates. Note that a group that fails to recredential or prove eligibility can be terminated with 30 days notice.
Thursday, January 12, 2012
Empire Changes Date for Dropping Small Business Plans
Empire Blue Cross Blue Shield announced changes to its company's policy that will affect small businesses that offer Empire's health insurance plans. Empire plans to issue a formal announcement in January regarding its decision, but I wanted to inform you immediately of the policy changes.
Empire intends to phase out approximately seven small group products on groups’ renewal dates starting with groups renewing on April 1, 2012. Groups renewing during the first quarter will have the ability to renew their plans with prescription changes and a rate increase. Empire's previously stated policy was to "simplify" its available plans for all groups by a hard date of April 1, 2012, regardless of groups' renewal dates.
Employer groups renewing April 1and thereafter with Empire HSA, EPO, Prism, or Point of Service plans among others will be terminated on their renewal dates. Empire has added two plans to the short list of those that it is keeping. It had said it was continuing PPO1 and 2, HMO/DHMO Option 12 and Healthy New York (with limited availability for new groups). Now it has added Blue Essential Option 10 and Total Blue Option 3 to the list. When this change becomes effective, members will not be automatically switched to another plan. The Group Administrator will be required to select another Empire product or change to another carrier. Pre-existing conditions will not apply to HIPAA compliant groups with a minimum of 12 months of continuous coverage.
For Empire groups with an upcoming renewal of January, February, or March, their plans will not be eliminated until the following renewal. Empire will alter the way its members pay prescriptions. Non-formulary drugs, and in some cases, brand named drugs will be reimbursed at a percentage. I expect an increase in rates despite the decrease in benefits. Participation and eligibility requirements will immediately apply.
Please call me with any questions or concerns at 516-682-8400. I remain committed to keeping you up to date with news from the health insurance industry. I am also available to discuss life, disability, and long term care insurance.
Empire intends to phase out approximately seven small group products on groups’ renewal dates starting with groups renewing on April 1, 2012. Groups renewing during the first quarter will have the ability to renew their plans with prescription changes and a rate increase. Empire's previously stated policy was to "simplify" its available plans for all groups by a hard date of April 1, 2012, regardless of groups' renewal dates.
Employer groups renewing April 1and thereafter with Empire HSA, EPO, Prism, or Point of Service plans among others will be terminated on their renewal dates. Empire has added two plans to the short list of those that it is keeping. It had said it was continuing PPO1 and 2, HMO/DHMO Option 12 and Healthy New York (with limited availability for new groups). Now it has added Blue Essential Option 10 and Total Blue Option 3 to the list. When this change becomes effective, members will not be automatically switched to another plan. The Group Administrator will be required to select another Empire product or change to another carrier. Pre-existing conditions will not apply to HIPAA compliant groups with a minimum of 12 months of continuous coverage.
For Empire groups with an upcoming renewal of January, February, or March, their plans will not be eliminated until the following renewal. Empire will alter the way its members pay prescriptions. Non-formulary drugs, and in some cases, brand named drugs will be reimbursed at a percentage. I expect an increase in rates despite the decrease in benefits. Participation and eligibility requirements will immediately apply.
Please call me with any questions or concerns at 516-682-8400. I remain committed to keeping you up to date with news from the health insurance industry. I am also available to discuss life, disability, and long term care insurance.
Monday, November 14, 2011
CLASS Act Scrapped - What this Means for You
On October 14, 2011, the Department of Health and Human Services announced that it would not implement the portion of the Health Care Reform Act that was intended to provide voluntary long term care benefits for working Americans. The program known as the Community Living Assistance Services and Supports Act (CLASS Act) was designed to create a voluntary government program under which employees would pay a monthly premium and would be eligible for modest benefits for their long term care needs after five years of paying premiums. The program was open to anyone who met certain work requirements - regardless of their health.
Under the terms of the CLASS Act, the program would go into effect only if it were economically viable. Secretary of Health and Human Services Kathleen Sebelius stated that she “did not see a viable path forward for CLASS implementation at this time." The report cited actuarial and solvency impediments as the reason why they had not found a way to make the program work. Premiums were projected to be too high and few healthy people were projected to enroll.
The problem that the CLASS Act was intended to address – aging population and paying for the high cost of long term care assistance - remains a pressing issue. The current cost for a nursing home in New York is $140,000 a year. The cost for home health care is $250 per day for 24/7 care and the cost of assisted living is $3,000-$6,000 per month. These costs are expected to continue to rise.
Enrollment in private long term care insurance, subject to underwriting, can secure a policy for an individual that will provide the benefits needed for the future - be it staying at home with an aid or moving to a nursing home or an assisted living residence. As one grows older, the cost of long term care insurance rises substantially and it may simply be unavailable should one become ill. As a New York resident, one may be eligible for a program called the New York State Partnership for Long Term Care Insurance (NYSPLTC). This allows residents to protect their assets while applying for Medicaid Extended Coverage if their long term care needs exceed the period covered by their qualified NYSPLTC insurance policy.
Long term care insurance is a benefit offered by employers to their employees and/or key people. Employers, self-employed, LLC members, Sub C owners and partners in a partnership are eligible to receive income tax advantages as it relates to long term care insurance premiums. In addition, New York State offers a 20% tax credit. Because long term care insurance is not considered an ERISA benefit, employers can offer it to employees on a select basis. Insurers often offer simplified underwriting and/or discounts to a block of people from a company or an association buying long term care insurance.
Attached is a link to an article from The New York Times that details the ending of the CLASS program: http://www.nytimes.com/2011/10/15/health/policy/15health.html.
If you have any questions regarding CLASS or your long term care needs, please do not hesitate to contact me at 516-682-8400 or Risrael@optonline.net. Additionally, I am available to answer any of your questions regarding health insurance, annuities, life and disability insurance. I look forward to speaking with you soon.
Thursday, May 26, 2011
HSA: IRS Releases New Limits
The 2012 limits for HSAs have been released by the IRS in Revenue Procedure 2011-32.
MINIMUM ANNUAL DEDUCTIBLES
There is no change in the minimum annual deductibles required for a plan to be considered a "high deductible health plan", or "HDHP". They remain at $1,200 for single coverage and $2,400 for family coverage.
OUT OF POCKET MAXIMUMS
The maximum out of pocket maximums for HDHPs for 2012 will increase to $6,050 for single coverage and $12,100 for family coverage (2011 levels are $5,950 single/$11,900 family).
ANNUAL INDIVIDUAL CONTRIBUTION LIMIT
The maximum permitted contribution to the HSA on behalf of an individual increases to $3,100 for an individual with single coverage and $6,250 for an individual with family coverage (2011 levers are $3,050 single/$6,150 family).
If you have any questions about how this impacts your health insurance or would like help planning for 2012, please call me at 516-682-8400.
Bob
MINIMUM ANNUAL DEDUCTIBLES
There is no change in the minimum annual deductibles required for a plan to be considered a "high deductible health plan", or "HDHP". They remain at $1,200 for single coverage and $2,400 for family coverage.
OUT OF POCKET MAXIMUMS
The maximum out of pocket maximums for HDHPs for 2012 will increase to $6,050 for single coverage and $12,100 for family coverage (2011 levels are $5,950 single/$11,900 family).
ANNUAL INDIVIDUAL CONTRIBUTION LIMIT
The maximum permitted contribution to the HSA on behalf of an individual increases to $3,100 for an individual with single coverage and $6,250 for an individual with family coverage (2011 levers are $3,050 single/$6,150 family).
If you have any questions about how this impacts your health insurance or would like help planning for 2012, please call me at 516-682-8400.
Bob
Thursday, January 6, 2011
Delay for Nondiscrimination Provisions Applicable to Insured Group Health Plans
On December 22, 2010, the IRS issued Notice 2011-1, which essentially delays compliance with the provisions of the Patient Protection and Affordable Care Act (PPACA) prohibiting fully insured group health plans from discriminating in favor of highly compensated individuals. The nondiscrimination provisions under the PPACA require non-grandfathered fully insured plans to comply with rules "similar" to the rules applicable to self-insured plans. The effective date of the nondiscrimination provisions was scheduled for your plan's anniversary beginning on or after September 23, 2010.
This provision has raised concerns about the ability of plan sponsors to comply with these provisions without regulatory guidance. In response to comments from the benefit community, the IRS, Treasury Department and Departments of Labor and Health and Human Services have determined that compliance with the nondiscrimination provision should not be required (and any sanctions for failure to comply do not apply) until after regulations or other administrative guidance has been issued. Such guidance will not apply until plan years beginning a specified period after issuance.
The Departments have requested further comments on a variety of issues by March 11, 2011; thus, we can not expect guidance in the near future. We will keep you apprised of any further developments, but for the time being, it appears that no changes will be required for the coming year.
As always, Long Island Planning Group, Ltd.'s goal is to keep you informed of the facts and the effects on you and your business.
*Information received from Emerson Reid
This provision has raised concerns about the ability of plan sponsors to comply with these provisions without regulatory guidance. In response to comments from the benefit community, the IRS, Treasury Department and Departments of Labor and Health and Human Services have determined that compliance with the nondiscrimination provision should not be required (and any sanctions for failure to comply do not apply) until after regulations or other administrative guidance has been issued. Such guidance will not apply until plan years beginning a specified period after issuance.
The Departments have requested further comments on a variety of issues by March 11, 2011; thus, we can not expect guidance in the near future. We will keep you apprised of any further developments, but for the time being, it appears that no changes will be required for the coming year.
As always, Long Island Planning Group, Ltd.'s goal is to keep you informed of the facts and the effects on you and your business.
*Information received from Emerson Reid
Monday, September 20, 2010
Immediate Implications of Health Care Reform
We at Long Island Planning Group, Ltd. are committed to keeping you informed about health care reform and the Patient Protection and Affordable Care Act (PPACA). The PPACA has a 10 year implementation period. Some PPACA reforms become effective as early as September 23, 2010. This blog is intended to provide a summary of some of the immediate implications of the reform act. Insurance companies have begun mailing notices to policyholders informing them of the companies' filings for proposed future rate adjustments.
Below is a list of benefit and eligibility enhancements that become effective on September 23. It is advised that these changes be communicated to employees. Note that "grandfathered plans" may not need to immediately comply with provisions affecting adult preventive care, discrimination, claims appeals and access to physicians. The September 23 changes are:
1. Annual and lifetime dollar limits on network coverage are eliminated: Group health plans may no longer set lifetime limits on "essential health benefits."
2. Pre-existing condition limitations are waived for enrollees under age 19.
3. Dependents may remain on their parents' health plan until age 26 (some New York plans extend to age 29). If you have children in their 20's, or your employees do, you may want to consider adding such dependents to your plan.
4. There is no in-network cost-sharing for preventive care services. Plans will provide first dollar coverage for in-network preventive care.
5. Emergency services must be covered without prior authorization and treated as in-network.
6. Plan members must be allowed to designate a child's pediatrician as the primary care provider. Plans may not require authorization or referrals for a participating OB-GYN.
The PPACA contains information defining discrimination in health plans. Under these new non-discrimination rules, group plans may not discriminate in favor of highly compensated employees (under IRC Section 105h). The term "highly compensated" is defined as one of the five highest paid officers, a shareholder owning 10% of the value of the stock, and/or an employee among the highest paid 25% of the employees. This may mean the end of certain plan designs where executives have a benefit separate from other employees (executive carve-out). Groups with low participation may also be affected.
The PPACA provides a tax credit for employer paid premiums for qualified firms. From 2010 to 2013, small businesses with 25 or fewer employees and an average wage of $50,000 or less are eligible for premium tax credits (for two years) of up to 35% of their contribution. To qualify, the business must contribute at least 50% of premium based on the rate of a single employee. Employers with 10 or fewer employees and average wages of $25,000 or less will be eligible for the 35% credit. In 2014, the credit will increase to 50% of eligible employer contributions. Groups with 11-25 employees with average earnings of $25,001 to $50,000 will be subject to a phase-out of the credit.
The PPACA will affect a business's reporting requirements. Companies will be required to report the cost of the employee sponsored health coverage to their employees on IRS Form W2.
On a state level, the New York State Legislature passed S58099 on June 7, 2010. This notice provides group policyholders information, or "Advance Notice," about the insurers' filing for changes in premium rates for 2011. These filings are subject to review and approval by the New York State Insurance Department. The actual size of the increase will be released in a renewal letter approximately 60 days before renewal date. The total estimated percent increase includes multiple components: a basic increase or trend increase, an additional increase resulting from the cost of benefit enhancements required by the new PPACA, and the elimination of the New York State subsidy for small group mental health benefits (Timothy's Law).
If you have any questions regarding the contents of this blog or your health, life, or long term care needs, please do not hesitate to call us at 516-682-8400. You can e-mail us at risrael@optonline.net or visit our website at www.liplanning.com.
Below is a list of benefit and eligibility enhancements that become effective on September 23. It is advised that these changes be communicated to employees. Note that "grandfathered plans" may not need to immediately comply with provisions affecting adult preventive care, discrimination, claims appeals and access to physicians. The September 23 changes are:
1. Annual and lifetime dollar limits on network coverage are eliminated: Group health plans may no longer set lifetime limits on "essential health benefits."
2. Pre-existing condition limitations are waived for enrollees under age 19.
3. Dependents may remain on their parents' health plan until age 26 (some New York plans extend to age 29). If you have children in their 20's, or your employees do, you may want to consider adding such dependents to your plan.
4. There is no in-network cost-sharing for preventive care services. Plans will provide first dollar coverage for in-network preventive care.
5. Emergency services must be covered without prior authorization and treated as in-network.
6. Plan members must be allowed to designate a child's pediatrician as the primary care provider. Plans may not require authorization or referrals for a participating OB-GYN.
The PPACA contains information defining discrimination in health plans. Under these new non-discrimination rules, group plans may not discriminate in favor of highly compensated employees (under IRC Section 105h). The term "highly compensated" is defined as one of the five highest paid officers, a shareholder owning 10% of the value of the stock, and/or an employee among the highest paid 25% of the employees. This may mean the end of certain plan designs where executives have a benefit separate from other employees (executive carve-out). Groups with low participation may also be affected.
The PPACA provides a tax credit for employer paid premiums for qualified firms. From 2010 to 2013, small businesses with 25 or fewer employees and an average wage of $50,000 or less are eligible for premium tax credits (for two years) of up to 35% of their contribution. To qualify, the business must contribute at least 50% of premium based on the rate of a single employee. Employers with 10 or fewer employees and average wages of $25,000 or less will be eligible for the 35% credit. In 2014, the credit will increase to 50% of eligible employer contributions. Groups with 11-25 employees with average earnings of $25,001 to $50,000 will be subject to a phase-out of the credit.
The PPACA will affect a business's reporting requirements. Companies will be required to report the cost of the employee sponsored health coverage to their employees on IRS Form W2.
On a state level, the New York State Legislature passed S58099 on June 7, 2010. This notice provides group policyholders information, or "Advance Notice," about the insurers' filing for changes in premium rates for 2011. These filings are subject to review and approval by the New York State Insurance Department. The actual size of the increase will be released in a renewal letter approximately 60 days before renewal date. The total estimated percent increase includes multiple components: a basic increase or trend increase, an additional increase resulting from the cost of benefit enhancements required by the new PPACA, and the elimination of the New York State subsidy for small group mental health benefits (Timothy's Law).
If you have any questions regarding the contents of this blog or your health, life, or long term care needs, please do not hesitate to call us at 516-682-8400. You can e-mail us at risrael@optonline.net or visit our website at www.liplanning.com.
Subscribe to:
Posts (Atom)