Determining Minimum Value and Affordability

The IRS has released final regulations that address how wellness incentives or penalties, contributions to a health reimbursement arrangement, and employer contributions to a Section 125 plan are applied to determine affordability.

Proposed 2016 Benefit and Payment Parameters

Proposed 2016 Benefit and Payment ParametersThe Department of Health and Human Services (HHS) has issued its proposed Benefit and Payment Parameters for 2016. While these amounts and dates are not yet final, they may be of help for planning purposes. At this time, HHS expects:

  • Open enrollment for coverage through the Marketplace in 2016 will be from October 1 through December 15, 2015 (with coverage effective as of January 1, 2016).
  • The transitional reinsurance fee for 2016 is likely to be $27 per covered life. Filing for 2016 would be due November 15, 2016, with $21.60 per covered life due January 15, 2017, and $5.40 per covered life due November 15, 2017.
  • The out-of-pocket limits for health plans that are not high deductible plans related to HSAs would be $6,850 for single coverage and $13,700 for family coverage (with a maximum out-of-pocket for any family member of $6,850).
  • The federally facilitated exchange fee would remain at 3.5% of premium.
  • A special enrollment period would be available at renewal for individuals enrolled in non-calendar year plans.
  • Retirees and COBRA participants could be covered through a Small Business Health Options Program (SHOP) plan.
  • The current benchmark plans for essential health benefits would remain in effect for 2016, with new benchmark plans based on 2014 benefits and enrollment in effect for 2017.

A draft of an updated AV calculator and methodology for 2016 also are available. While this will help you stay forward-thinking, don’t forget about taking steps to ensure you are prepared to meet the Patient Protection and Affordable Care Act (PPACA) requirements that begin in 2015 and those which must be completed in 2014. For a complete checklist, download UBA’s PPACA Advisor, “Preparing for 2015 – Key PPACA Requirements”.

Determining Minimum Value and Affordability – Conshohocken Employee Benefits

Determining Minimum Value and AffordabilityThe IRS has released final regulations that address how wellness incentives or penalties, contributions to a health reimbursement arrangement, and employer contributions to a Section 125 plan are applied to determine affordability. While these regulations were issued in connection with the individual shared responsibility requirement (also called the individual mandate), the agencies said that they expect to use the same approach when determining affordability for purposes of eligibility for the premium tax credit and the employer-shared responsibility/play or pay requirements.

The regulations provide that when deciding if the employee’s share of the premium is affordable:

  • Wellness incentives or surcharges, except for a non-smoking incentive, may not be considered. In other words, the premium for non-smokers will be used to determine affordability (even for smokers). Any other type of wellness incentive must be disregarded, even if the employee has earned one.
  • If an employer makes contributions to a health reimbursement arrangement (HRA) that the employee may use to pay premiums, the employee’s cost of coverage may be reduced by the employer’s current year contribution to the HRA, provided that the planned employer contribution is publicized before the enrollment deadline.
  • If an employer makes flex contributions through a Section 125 cafeteria plan, the employee’s required contribution may be reduced by flex contributions that (1) may not be taken as a taxable benefit, (2) may be used to pay for minimum essential coverage, and (3) may only be used to pay for medical care.

Because an employer’s contribution to a health savings account (HSA) generally may not be used to pay premiums, employer contributions to an HSA may not be used when determining affordability. For a complete checklist, download UBA’s PPACA Advisor, “Preparing for 2015 – Key PPACA Requirements”.

Wellness Programs Feeling the Heat as the EEOC Increases Its Efforts – Part 1

Wellness Programs Feeling the Heat as the EEOC Increases Its Efforts - Part 1While wellness programs have increased in popularity, according to the 2014 UBA Health Plan Survey, actual wellness program adoption has been in a holding pattern. As one might expect, the highest percentage (58.8%) of plans offering wellness benefits came from employers with 1,000 or more employees and the lowest percentage (8%) of plans offering wellness benefits came from employers with fewer than 25 employees. On average, wellness programs are down slightly by 1.3%. It’s no wonder given all the pending litigation and regulation surrounding these programs, including the fact that the health of an employee population is no longer a rating factor for smaller employers.

On the other hand, corporate wellness programs do have many positives. From a global perspective, wellness programs combat the rising costs of health care. Employers also benefit from wellness programs by creating healthier workforces. Healthier employees are more productive and have less absenteeism. Moreover, employees who participate in wellness programs enjoy the extrinsic reward provided by their employer (or the spouse’s employer), and they also realize the intrinsic value of changing their lives through healthier living. Regardless of the motive and intent of employers who establish corporate wellness programs, they just may find themselves in hot water – I mean, court – with the EEOC or on the other side of the aisle from a grieved employee.

What makes wellness programs particularly complicated is the numerous rules and regulations, many of which are discordant with other regulatory provisions. Employers should take due diligence to ensure that they are not sponsoring a wellness program that is ripe for litigation. The programs should be analyzed under the Americans with Disabilities Act (ADA)/Americans With Disabilities Act Amendments Act (ADAAA), the Genetic Information Nondiscrimination Act (GINA), the Employee Retirement Income Security Act (ERISA), Internal Revenue Code (IRC), the Patient Protection and Affordable Care Act (PPACA), the Health Insurance Portability and Accountability Act (HIPAA), Title VII and other EEOC regulations, and state law, being mindful that adherence to one regulation, e.g., PPACA, does not guarantee compliance with another, e.g., ADA or GINA.

The last three months have seen as many complaints filed by the EEOC against wellness programs. On August 20, 2014, the EEOC brought its first direct challenge of a wellness program under Title I of the ADA against Orion Energy Systems, Inc. (Orion suit). On September 30, 2014, the EEOC initiated its second ADA action against Flambeau, Inc.’s wellness program (Flambeau suit). The latest suit was filed on October 27, 2014, against Honeywell International, Inc.’s wellness program (Honeywell suit), and it included counts under both the ADA and GINA. 

In the following days, I will briefly review the various statutory and regulatory language governing wellness programs, outline the employers’ wellness programs that are the center of current litigation, address the EEOC’s concerns, and discuss what employers should do to guard against running afoul. 

For more data on wellness programs and other plan design trends, download the 2014 Health Plan Executive Summary. This survey – which has been conducted every year since 2005 – is the nation’s largest health plan survey and provides more accurate benchmarking data than any other source in the industry.  You can contact a UBA Partner Firm for a customized benchmark report based on industry, region and business size.

OSHA’s New Reporting and Recordkeeping Rule Goes into Effect on January 1, 2015

On September 11, 2014, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced a final rule which updates the reporting and recordkeeping requirements for injuries and illnesses, found at 29 C.F.R. 1904. The rule goes into effect on January 1, 2015. Changes to recordkeeping requirements Under OSHA’s recordkeeping regulation, certain covered employers … Continued

 

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