Monday, June 30, 2014

Labor Dept. Extends 'Full Protection of the Federal Non-Discrimination Laws' to Transgendered

This is from The Weekly Standard:
... The Office of Federal Contract Compliance Programs and Civil Rights Center, along with the Employment and Training Administration, will issue guidance to make clear that discrimination on the basis of transgender status is discrimination based on sex.  While the department has long protected employees from sex-based discrimination, its guidance to workers and employers will explicitly clarify that this includes workers who identify as transgender. The department will continue to examine its programs to identify additional opportunities to extend the law’s full protection against discrimination to transgender workers.... 

Legal Alert: Supreme Court Rejects Contraceptive Mandate for Some Companies

Quick Facts:
  • The ACA requires non-grandfathered health plans to cover certain contraceptives without cost-sharing.
  • Three closely held for-profit businesses challenged the contraceptive mandate on religious grounds.
  • The Supreme Court held that the mandate violates the RFRA for the closely held businesses because it substantially burdens their exercise of religion.
  • HHS will likely issue guidance to address how the Court’s ruling should be implemented.  
On June 30, 2014, the U.S. Supreme Court issued its ruling in two related cases challenging the Affordable Care Act’s (ACA) contraceptive coverage mandate. In these cases, three closely held for-profit corporations—Hobby Lobby Stores, Mardel and Conestoga Wood Specialties—argued that they should not be required to comply with the contraceptive mandate because covering certain types of contraceptives under their health plans violates their sincere religious beliefs.  

In these cases, the Supreme Court was asked to decide whether a for-profit business organized as a corporation has the right to “exercise” religious beliefs under the Religious Freedom Restoration Act (RFRA) and, if so, to what extent is it protected from government interference. In a 5:4 ruling, the Supreme Court held that:
  • The RFRA applies to the closely held corporations; and
  • The contraceptive mandate violates the RFRA because there are less restrictive ways for the federal government to ensure that all women have cost-free access to FDA-approved contraceptives.
ACA’s Required Contraceptive Coverage
The ACA requires non-grandfathered health plans to comply with certain preventive care guidelines for women, effective for plan years beginning on or after Aug. 1, 2012. These guidelines, which were issued by the Department of Health and Human Services (HHS), require non-grandfathered health plans to cover women’s preventive health services, including contraceptive methods, without charging a copayment, a deductible or coinsurance. Under the guidelines, plans must cover all FDA-approved contraceptive methods, sterilization procedures and patient education and counseling for all women with reproductive capacity.

The owners of Hobby Lobby Stores, Mardel and Conestoga Wood Specialties objected to providing health coverage for four types of contraceptives that are inconsistent with their sincere Christian religious beliefs that life begins at conception.

Excise Tax
Under the ACA, employers with group health plans that violate the contraceptive mandate may be subject to an excise tax of $100 per individual per day of noncompliance.

Special Rules for Churches and Nonprofit Employers
Group health plans sponsored by churches, other houses of worship and their affiliated organizations are exempt from the requirement to cover contraceptive services. 

HHS also provided a temporary safe harbor allowing nonprofit employers that do not provide contraceptive coverage to their employees because of religious beliefs to delay covering contraceptive services until the first plan year beginning on or after Jan. 1, 2014. This extension covers church-affiliated organizations that do not qualify for the exemption for churches, such as schools, hospitals, charities and universities.

For plan years beginning on or after Jan. 1, 2014, HHS created an accommodations approach for eligible nonprofit religious organizations that oppose providing coverage for some or all of the required contraceptive services based on religious objections.

Under the accommodations, eligible organizations do not have to contract, arrange, pay or refer for any contraceptive coverage to which they object on religious grounds. However, separate payments for contraceptive services are provided to female employees by an independent third party, such as an insurance company or third-party administrator (TPA), directly and free of charge.

For-profit employers that object to providing contraceptive coverage on religious grounds are not eligible for the exemption, the delayed effective date or the accommodations approach that apply to churches and nonprofit religious organizations.  

Companies Involved in the Cases
Conestoga Wood Specialties is a closely held corporation owned and operated by the Hahn family, devout members of the Mennonite Church. The Hahns believe that they are required to run their woodworking business in accordance with their Christian religious beliefs. This is reflected in their corporate vision and mission statements. Thus, the Hahns have excluded from the group health insurance plan they offer to their employees certain contraceptive methods that they believe to terminate the life of an embryo.

Hobby Lobby Stores and Mardel are two closely held corporations owned and operated by the Green family, devout members of the Christian faith. Each member of the Green family has signed a pledge to run the businesses in accordance with the family’s religious beliefs and to use the family assets to support Christian ministries. In accordance with those commitments, Hobby Lobby and Mardel stores close on Sundays, even though the Greens calculate that they lose millions in sales annually by doing so. Like the Hahns, the Greens believe that life begins at conception, and object to providing coverage for certain contraceptive methods that they consider to terminate the life of an embryo.

Supreme Court Ruling
The RFRA prohibits the federal government from substantially burdening a person’s exercise of religion, even if the burden comes from a rule of general applicability. If the federal government substantially burdens a person’s exercise of religion, the RFRA entitles the person to an exemption from the rule, unless the government can show that the rule furthers a compelling governmental
interest and is the least restrictive means of furthering that interest.

In its ruling, the Supreme Court noted that the RFRA provides very broad protection for religious liberty. According to the Court, the RFRA protects individuals who wish to run their businesses as for-profit corporations in a manner that is consistent with their religious beliefs. Thus, the Court held that the closely-held for-profit corporations involved in these cases have the right to exercise their religious beliefs under the RFRA.

In addition, the Court ruled that HHS’ contraceptive coverage guidelines substantially burden the companies’ exercise of religion. According to the Court, the companies’ owners have a sincere religious belief that life begins at conception. Thus, they object on religious grounds to providing health insurance that covers methods of birth control that may result in the destruction of an embryo. By requiring the owners to arrange for this coverage, HHS’ guidelines force them to engage in conduct that seriously violates their religious beliefs. In addition, if the owners and their companies do not comply with the mandate, heavy excise taxes will apply.

Although the Court assumed that the contraceptive mandate serves a compelling government interest, it ruled that the mandate is not the least restrictive means of serving that interest. According to the Court, there are other ways Congress or HHS could equally ensure that women have access to contraceptives on a cost-free basis. For example, the federal government could assume the cost of providing contraceptive coverage to women who are unable to obtain coverage due to their employers’ religious objections. Also, the Court noted that HHS could extend the accommodations approach that applies to nonprofit religious organizations to for-profit corporations with religious objections.

Impact of Ruling on Contraceptive Coverage Mandate
The Supreme Court’s ruling creates a narrow exception to the ACA’s contraceptive mandate for closely held businesses that object to providing coverage for certain types of contraceptives based on their sincere religious beliefs. For all other for-profit employers, the contraceptive coverage mandate will continue to apply. HHS will likely issue guidance in the future to address how the Court’s ruling should be implemented.

In addition, the Court cautioned that its decision only applies to the ACA’s contraceptive mandate. Other insurance coverage requirements, such as immunizations, may be supported by different interests (for example, the need to combat the spread of infectious diseases) and may involve different arguments about the least restrictive means of providing them.

The Court also warned that its decision does not provide a shield for employers that try to cloak illegal discrimination (for example, discrimination in hiring on the basis of race) as a religious practice to escape legal sanction. According to the Court, the federal government has a compelling interest in providing an equal opportunity to participate in the workforce without regard to race, and prohibitions on racial discrimination are precisely tailored to achieve that critical goal.

More Information
The Supreme Court’s ruling is available on its website.
For a PDF of this alert, click here.
For more detail from Alston & Bird, LLP, see here.  

This Health Care Reform Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. Design ©2014 Zywave, Inc.

The information provided should not be considered tax or legal advice. Please consult with your individual tax advisor and/or attorney regarding your individual circumstances. Insurance products and services are offered by BB&T Insurance Services, Inc., or McGriff, Seibels & Williams, Inc., both subsidiaries of BB&T Insurance Holdings, Inc. BB&T Insurance Services, Inc., CA Lic #0C64544. Precept Insurance Solutions, LLC, CA Lic # 0747466. McGriff, Seibels & Williams, Inc., CA license #0E83682.

© 2014, Branch Banking and Trust Company. All rights reserved. 

Saturday, June 28, 2014

California's Paid Family Leave Program Expands the Definition of a Family Member on July 1

This is from Nixon Peabody
On the tenth anniversary of California’s Paid Family Leave (“PFL”) insurance program, the program has been amended to expand the categories of family members for whom workers may take time off to provide care. Since 2004, the PFL program has provided up to six weeks of partial income replacement for employees who take time off work to care for a seriously ill child, spouse, parent or registered domestic partner, or to bond with a new child. On July 1, 2014, the program will expand to provide paid leave benefits for workers to care for
  • parents-in-law,
  • grandchildren,
  • grandparents and
  • siblings. ... 
In addition, San Francisco recently passed the Family Friendly Workplace Ordinance, which provides employees the right to ask for flexible or predictable working arrangements for their family caregiving responsibilities. The Ordinance also prohibits an employer from discharging, threatening to discharge, demoting, suspending or otherwise taking adverse employment action against any person on the basis of caregiver status. ...

Friday, June 27, 2014

Bureaucrats Finally Preparing to Roll Out Another Tier of Healthcare Handouts. And This One Is Even Less Understood (Cost Sharing Reduction Subsidies)

Everybody has heard about the subsidies to help cover premiums for Americans that are at or below four times the federal poverty level.  What most people don't know, and is sure to be massively confusing to administer and monitor, is that folks under 2.5 times the federal poverty level are also entitled to help in paying for copays and coinsurance at the point of service.  It looks like bureaucrats are finally ready to begin administration of this program. 

This is from Allison Bell writing at LifeHealthPro:
The federal government is supposed to do more than help moderate-income consumers pay the premiums for "qualified health plan" (QHP) coverage. The Patient Protection and Affordable Care Act (PPACA) also calls for the government to help purchasers of silver-level QHPs who earn enough to qualify for QHP premium subsidies, but less than 250 percent of the federal poverty level, handle out-of-pocket expenses -- deductibles, co-payments and coinsurance amounts. 
The Centers for Medicare & Medicaid Services (CMS) talk a little about the "cost-sharing reduction" (CSR) program in a routine paperwork review notice that's set to appear in the Federal Register Friday.

CMS officials say that, once the CSR system is working the way the parent of CMS, U.S. Department of Department of Health and Human Services (HHS), wants the system to work, the QHP issuers will get advance CSR payments throughout the year.  
After the end of the year, CSR program managers will use a reconciliation process to see whether it paid the QHP issuers the right CSR amounts. Program managers are supposed to send more money to issuers that got too little, and take money from issuers that got too much. ...
The paperwork review notice covers the data elements managers will need to get to run the reconciliation process. Many consultants are trying to give the QHP issuers advice about how to handle the reconciliation process. ...
If you find yourself wondering just how this will work, you are not alone.  Many of us in the industry foresee this being a massive boondoggle, rife with confusion and frustration.

And this is from Kathryn Mayer at BenefitsPro detailing more confusion around these lesser known subsidies:
Consumers who are eligible for cost-sharing subsidies under the Patient Protection and Affordable Care Act are still likely to pay high out-of-pocket costs on medications and other services. 
That’s because of “inconsistent reductions in spending” depending on which plan a consumer chooses, according to analysis from Avalere Health. While almost all plans reduce deductibles and out-of-pocket caps in cost-reducing plans, researchers say, many don’t lower cost-sharing for other treatments and services, particularly specialty drugs.
“Many people assume that the lowest-income exchange enrollees will have reduced cost-sharing across all services, but the reality is quite different,” said Caroline Pearson, vice president at Avalere Health. 
“While all plans must have reduced out-of-pocket limits for individuals earning less than 250 percent of poverty, how consumers will reach those limits differ significantly. For example, consumers may not experience reduced cost-sharing amounts for drugs or physician visits in many plans.” 
Avalere looked at the silver and cost-sharing reduction plans offered in federally facilitated exchanges in 34 states, and found substantial differences in how carriers adjust cost-sharing benefits.

“While the Affordable Care Act requires CSR plans to lower maximum out-of-pocket limits, health insurers have broad flexibility about how to adjust cost-sharing for other services to reach the required actuarial values,” the report said. “Notably, plans do not evenly reduce cost-sharing across all types of benefits; in fact, plans vary substantially in how they alter cost-sharing for each of the benefits examined in this analysis.”... 

Wednesday, June 25, 2014

This Week's 28 Newly Documented Examples of Employers Cutting Work Hours to Dodge ObamaCare. List Now at 429 Employers

This is from Jed Graham writing at Investors Business Daily:
The hits keep on coming — to the work hours of special education aides, school bus drivers, cafeteria workers, custodians, home-care workers, adjunct faculty and college students. 
With this week's addition of 28 documented examples of employers cutting work hours to dodge fines levied under ObamaCare's employer insurance mandate, IBD's list now includes 429 employers. 
(The ObamaCare Employer Mandate List, substantiated with links to news sources and public documents, is available for downloading at 
Among the new additions are seven school districts, bringing the total to 130 districts where hours have been cut or permanent staff outsourced to avoid taking on new costs for employees who work at least 30 hours a week — considered full time under ObamaCare....

IBD's list of ObamaCare job and hours cuts is dominated by public-sector employers, but that undoubtedly reflects their relative transparency about work policies, some of which come up for votes before school boards or county commissions. 
Bureau of Labor Statistics data show that the workweek has also been depressed for modest-wage workers in the private sector, and the evidence points to ObamaCare's mandate as an important factor. 
One way to test for an ObamaCare effect on the workweek — suggested by White House economists, no less — is to look at whether there is a shift in the ratio of workers clocking 31 to 34 hours per week compared to those working 25 to 29 hours. 
If that ratio were stable or rising, it would be a sign that ObamaCare wasn't affecting work hours in a meaningful way, the White House has suggested. But the data signal the opposite: The ratio has plunged to the lowest level in almost 14 years....

Tuesday, June 24, 2014

Obamacare Security Breach a Possible Inside Job

This is from The Identity Theft Resource Center:
Citizens in the state of Connecticut had reason for alarm recently when news broke of a security breach of the state’s Affordable Care Act agency. While not the same as the federal website that has been at the center of so much technological criticism and concern, the state’s agency—known as Access Health CT—allowed people to sign up through the state office for health care coverage. 
But the Hartford-based Access Health CT office received a call from local law enforcement officials about a potential data breach when a backpack filled with handwritten note pads was found across the street from the agency’s offices. The notepads contained the names, Social Security numbers, and other personal information of more than four hundred applicants. 
This recent security breach isn’t a political issue or a show of support or condemnation for the ACA, but hopefully reminds the public of an even bigger threat to their personally identifiable information. Whether we like it or not, opportunistic criminals are everywhere and can be found in just about any industry. The combination of low wages and high debt can lead people to take advantage of an opportunity that sits right in front of them on their computer screens, eight hours a day. 
There seems to be no workplace that is completely immune from the danger of an employee stealing its customers’ identities. The hotel and restaurant industries are actually the single largest source of “inside job” identity thefts, but many other workplace environments lend themselves to this kind of crime. Medical offices are notorious for incidences in which billing office staff or medical transcriptionists—two positions that are often outsourced to third party companies or individuals—gather personal information and sell it to identity thieves. Public schools have also been the subject of multiple investigations, and reports have surfaced that staff members had stolen and sold the Social Security numbers of as many as four hundred students in one Florida elementary school alone. Even police officers have been arrested for using the state’s driver’s license database to steal citizens’ identities. ...

Medical Costs to Rise 6.8% in 2015 According to Early Trend Forecast

This is from Kaiser Health News:
... If health plans stay unchanged, PwC sees medical costs rising by 6.8 percent in 2015, up from a projected increase of 6.5 percent this year. (PwC defines medical costs as per-capita health expenses for private insurers and large, self-insured employers. This is different from the government’s measure of health spending, which includes outlays for the government programs Medicaid and Medicare.) 
But PwC doesn’t expect plans to stay the same. In a separate study, the consulting firm forecasts that employers and insurers will continue to raise deductibles and give members other incentives to mind the price of care. (The deductible is what patients pay before insurance kicks in.) 
Those changes should slow growth in the total cost of care to 4.8 percent, PwC says, as greater exposure to price tags prompts workers to undergo fewer treatments and tests. (PwC expects the deceleration from 6.8 percent to 4.8 percent to come solely from changes in consumer behavior, not money employers save by shifting costs to workers.) 
Employers increasingly offer plans with deductibles of several thousand dollars, making members responsible for routine medical costs, and often for large portions of hospitalizations and other expensive treatment. 
Two-thirds of the companies surveyed by PwC offer high-deductible plans. Nearly a fifth of employers offer nothing but a high-deductible plan. Forty-four percent of the rest are considering it, PwC said. Other research shows the same trend. ...

Obamacare Exchanges Are ‘Disappointing’ With Fewer Than 4 Million Newly Insured. The Government Hoped for 26 Million.

This is one of the very best summaries on the present status of Obamacare's overall success to date from Sharyl Attkisson, writing at the Daily Signal  The entire piece is absolutely worth reading.  

Monday, June 23, 2014

'Gluten Free' Often Means Less Fiber and Vitamins with More Sugar

  • About two million to three million Americans, less than 1% of the population, suffer from that hereditary condition, known as celiac disease.  
  • There is no scientific evidence that people without celiac disease should avoid gluten. 
This is from Julie Jargon writing at the Wall Street Journal:
... Many health experts say there is no proven benefit to going gluten-free except for a small sliver of the population whose bodies can't process the protein. Indeed, according to nutritional food labels, many gluten-free foods contain fewer vitamins, less fiber and more sugar. It is a point some food makers don't dispute, saying they are simply responding to consumer demand without making health claims. ... 
Some doctors began suggesting eliminating gluten from patients' diets to address mysterious maladies. Celebrities began jumping on the bandwagon, touting it as a way to lose weight and boost energy. In the course of a few years, the mold was set: Today, gluten-free products can be found in every traditional supermarket and mass retailer, including specialty brands and established names like Tyson and General Mills Inc. There's even gluten-free dog food. ...

Ms. Carroll, the food historian, said the food makers' response to the gluten-free demand echoes what happened when the federal government in the late 1970s issued dietary guidelines calling on Americans to consume less fat. Food companies responded with a number of low-fat products that often contained more sugar, and the same number of calories as other products. 
"Everyone thought they were healthy so people ate more of those foods and ended up gaining weight," said Ms. Carroll. "Fat consumption went down and obesity rose at the same time in the 1980s."... 

If Current Obamacare Bailout Scheme is Insufficient, CMS Maintains It Can and Will Make up a NEW Fee to Soak Taxpayers

This is from Dr. Scott Gottlieb, writing at Forbes:   
... [CMS maintains that] if funding for the risk corridors [what's being referred to most often as 'insurer bailouts'] can’t be financed off the money that gets clawed away from profitable insurers (therefore allowing the entire scheme to remain budget neutral) then CMS has the authority, if not the intention to impose additional “user fees” on all health insurers to cover the higher losses experienced by the Obamacare plans. ... 
At issue is what’s being referred to as the “three R’s.” These are Obamacare policy constructs that are designed to offset losses that insurers will take as a result of the mostly older, and less healthy mix of patients that enrolled in the exchanges. 
These three R’s include: A reinsurance fund of about $25 billion (financed off a fee on commercial insurance plans) that compensate health plans that enroll a costlier pool of patients; “Risk corridors” that substantially limit insurance company losses by shifting these costs to taxpayers; and Risk adjustment that balances health plans that enroll a disproportionate share of costlier patients. 
The money drawn off the newly proposed user fees (tax) would be used to finance the risk corridors. This scheme is largely aimed at shifting money between insurers that lost excessive amounts of money, and those that were profitable. 
Problem is, almost everyone lost money. Few if any Obamacare plans had excess profits this year, owing to the rocky rollout. So there isn’t any money to shift around — absent, of course, some new cash infusion. That’s where the user fee comes into play.... 

Departments Release ACA Final Rule on Orientation Period and the 90-Day Waiting Period Limitation

90-days may now mean 120 if employers revise handbooks and other employer communication documentation to reflect the addition of a 1-month orientation period to be tacked on prior to a 90-day (or first-of-the-month-following 60-day) waiting period for benefits.

Note, however, that California has still not officially repealed its 60-day limit on waiting periods for fully insured health plans in the state. That repeal seems to be headed for likely passage before the end of 2014.

On Friday afternoon, June 20th, ​​the U.S. Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) released final regulations clarifying the maximum allowed length of any reasonable and bona fide employment-based orientation period under the Affordable Care Act (ACA).

During an orientation period, the Departments envision an employer and employee evaluate whether each party is satisfied with an employment situation, and then begin a standard orientation and training process.  Final regulations provide that one month is the maximum allowed length of a reasonable and bona fide employment-based orientation period.  Under these final regulations, one month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee's start date in a position that is otherwise eligible for coverage. 

For example, if an employee’s start date in an otherwise eligible position is May 3, the last permitted day of the orientation period is June 2. Similarly, if an employee’s start date in an otherwise eligible position is October 1, the last permitted day of the orientation period is October 31. If there is not a corresponding date in the next calendar month upon adding a calendar month, the last permitted day of the orientation period is the last day of the next calendar month. For example, if the employee’s start date is January 30, the last permitted day of the orientation period is February 28 (or February 29 in a leap year). Similarly, if the employee’s start date is August 31, the last permitted day of the orientation period is September 30.

Determining whether an orientation period is "reasonable" and "bona fide" should be a facts and circumstances analysis.

For any period longer than one month that precedes a waiting period, the Departments refer back to the general rule, which provides that the 90-day period begins after an individual is otherwise eligible to enroll under the terms of a group health plan. While a plan may impose substantive eligibility criteria, such as requiring the worker to fit within an eligible job classification or to achieve job-related licensure requirements, it may not impose conditions that are mere subterfuges for the passage of time.
Example ... [from the published regulations]. 
(i) Facts. Employee H begins working full time for Employer Z on October 16. Z sponsors a group health plan, under which full time employees are eligible for coverage after they have successfully completed a bona fide one-month orientation period. H completes the orientation period on November 15.

(ii) Conclusion. In this Example 11, the orientation period is not considered a subterfuge for the passage of time and is not considered to be designed to avoid compliance with the 90-day waiting period limitation. Accordingly, plan coverage for H must begin no later than February 14, which is the 91st day after H completes the orientation period. (If the orientation period was longer than one month, it would be considered to be a subterfuge for the passage of time and designed to avoid compliance with the 90-day waiting period limitation. Accordingly it would violate the rules of this section.)
Effective: 60 days after publication in the Federal Register [anticipated publication date June 25, 2014], the final regulations apply to group health plans and group health insurance issuers for plan years beginning on or after January 1, 2015.  

Monday, June 16, 2014

Employer Alert: PCORI Fees Due by July 31, 2014, for Self Funded Plan Years Ending in 2013

The Affordable Care Act (ACA) requires health insurance issuers and sponsors of self-insured health plans to pay Patient-Centered Outcomes Research Institute fees (PCORI fees). The fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return).

PCORI fees are due by July 31, 2014, for plan years ending in 2013. The IRS provided instructions for filing form 720, which include information on reporting and paying the PCORI fees.

Overview of PCORI Fees
The ACA created the Patient-Centered Outcomes Research Institute to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is funded, in part, through fees paid by health insurance issuers and self-insured health plan sponsors. These fees are widely known as PCORI fees, although they may also be called PCOR fees or comparative effectiveness research (CER) fees.

The PCORI fees apply for plan years ending on or after Oct. 1, 2012, but do not apply for plan years ending on or after Oct. 1, 2019. For calendar year plans, the fees will be effective for the 2012 through 2018 plan years. Issuers and plan sponsors will be required to pay the PCORI fees annually on IRS Form 720 by July 31 of each year. It will generally cover plan years that end during the preceding calendar year. Thus, the deadline for filing Form 720 is July 31, 2014, for plan years ending in 2013.

Reporting PCORI Fees on Form 720
Issuers and plan sponsors will file Form 720 annually to report and pay the PCORI fee, no later than July 31 of the calendar year following the policy or plan year to which the fee applies. The PCORI fee applies separately to “specified health insurance policies” and “applicable self-insured health plans,” and is based on the average number of lives covered under the plan or policy.

Using Part II, Number 133 of Form 720, issuers and plan sponsors will be required to report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans. That number is then multiplied by the applicable rate for that tax year, as follows:
  • $1 for plan years ending before Oct. 1, 2013 (that is, 2012 for calendar year plans). 
  • $2 for plan years ending on or after Oct. 1, 2013, and before Oct. 1, 2014. 
  • For plan years ending on or after Oct. 1, 2014, the rate will increase for inflation. 
The fees for specified health insurance policies and applicable self-insured health plans are then combined to equal the total tax owed.

Issuers or plan sponsors that file Form 720 only to report the PCORI fee will not need to file Form 720 for the first, third or fourth quarter of the year. Issuers or plan sponsors that file Form 720 to report quarterly excise tax liability for the first, third or fourth quarter of the year (for example, to report the foreign insurance tax) should not make an entry on the line for the PCORI tax on those filings. 

This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2013-2014 Zywave, Inc. All rights reserved. 6/13; BK 5/14. 
The information provided should not be considered tax or legal advice. Please consult with your individual tax advisor and/or attorney regarding your individual circumstances. Insurance products and services are offered by BB&T Insurance Services, Inc., or McGriff, Seibels & Williams, Inc., both subsidiaries of BB&T Insurance Holdings, Inc. BB&T Insurance Services, Inc., CA Lic #0C64544. Precept Insurance Solutions, LLC, CA Lic # 0747466 McGriff, Seibels & Williams, Inc., CA license #0E83682.  
© 2014, Branch Banking and Trust Company. All rights reserved.

Summertime PPACA Compliance Checklist for Employers

BB&T Insurance Services of California, Inc.

As we enter into summer, it's a good time to start thinking about 2015 Health Care Reform compliance. Over the past four years, the Affordable Care Act (ACA) has made a number of changes to group health plans. To prepare for 2015, employers should assess the upcoming requirements and take steps for compliance strategies, including:
  • Determination of Applicable Large Employer status (100 full-time employees, including FTEs)
  • Determination of possible one-year delay of employer penalty for medium-size groups (50-99)
  • Review of possible transition relief for non-calendar-year plans
  • Clarify whether your plan is subject to reinsurance fee filings
  • Plus more, all highlighted in the checklist linked below
2015 Compliance Checklist

Saturday, June 14, 2014

PPACA Income Verification Nightmare, Flowchart Fun

Source: LifeHealthPro

One More Year of Eased SBC Enforcement

Federal regulators will maintain an overall emphasis on cooperation with plan sponsors over Summary of Benefit Coverage (SBC) duties, rather than penalty enforcement for plan years beginning in 2014 and 2015. 

As long as plan sponsors have worked "diligently and in good faith" to fulfill SBC duties on their own. Penalties will apply only in the case of "willful' failure to provide required SBC information. 

Source: DOL Q & A, May 2014.

Friday, June 13, 2014

Must Know Facts About the Coordination of Severance Benefits, COBRA, and Obamacare

In a common occurrence throughout corporate America, an employee terminates employment and as a result will lose company-provided health care coverage. To obtain health care coverage, the employee has two options: 
     1) elect health care coverage for up to 18 months under COBRA, or 
     2) purchase coverage by utilizing the marketplace established pursuant to the Affordable Care Act (“ACA”). 
In a severance situation, it is not uncommon for the employer to also pay, pre-tax, the COBRA premium for a few months, enabling the employee to have additional time to consider the available health plan options. While this situation is common and seems straightforward, the coordination of health coverage under COBRA and the ACA contains a number of potential traps for both the employer and the employee. An understanding of the basic coordination problems, and the potential solutions as set forth below, is essential for anyone dealing with employee terminations and severance. In addition, there is a limited opportunity for special relief through July 1, 2014.   
COBRA Election 
If an employee leaves the company, the employee is generally entitled to continue health coverage under COBRA, provided the employer employs 20 or more employees. The employee can elect coverage within 60 days after receiving the COBRA Notice and the coverage is retroactive to the date of the loss of coverage. However, COBRA coverage may be more expensive than coverage provided under the ACA marketplace. In addition, the COBRA Notice is often mailed weeks after the employee’s termination, so the employee may already have medical needs before the Notice is received. 
ACA Election 
An employee can also obtain coverage by purchasing an ACA marketplace plan. However, the coverage is prospective. In addition, an employee can only purchase marketplace coverage during the annual open enrollment (Nov. 15 to Feb. 15) or during a “special enrollment period,” within 60 days of a “qualifying life event,” i.e., loss of health coverage, change in family size, move to a new coverage area, change in premium tax credit eligibility, experience government error, or change in citizenship status. If the employee misses the open enrollment or special enrollment opportunity, the employee must wait until the next open enrollment date. If the employee elects coverage under either the ACA or COBRA and voluntarily drops the coverage, the employee must wait until the next open enrollment period. ... 
Click here for remainder of story.

Aetna: Half of Your 2015 Premium Increase Will be Due to ObamaCare

From Reuters:
Health insurer Aetna Inc is submitting premium rates to regulators for Obamacare insurance plans for 2015 that generally increase less than 20 percent from 2014, its Chief Executive Officer Mark Bertolini said on Wednesday. 
"We have rates that are in the zero category. On average, it's in the low double digits, as a rate increase across the population," Bertolini said. 
Bertolini's comments, made during a Goldman Sachs healthcare conference outside Los Angeles, come as insurers prepare next year's health plans for the insurance exchanges created under the Affordable Care Act, known as Obamacare. 
About 8 million people have signed up for these plans, which are provided by commercial subscribers and come with income-based government subsidies.
While Aetna and other insurers say they have lost money providing these plans this year, insurers are expanding into new markets for 2015 to capture a growing customer base. 
Bertolini said about half the rate of increases the insurer has submitted for 2015 were due to changes in Obamacare. ... 

Tuesday, June 10, 2014

The Congressional Budget Office Quits Obamacare: PPACA's Been Butchered So Dramatically from What Originally Passed the CBO Can't Score It

This is from Paul M. Krawzak at Roll Call:   
For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act would actually reduce the federal budget deficit, despite the additional costs of extending health insurance coverage to the uninsured. 
Four years after enactment of what is widely viewed as President Barack Obama’s key legislative achievement, however, it’s unclear whether the health care law is still on track to reduce the deficit or whether it may actually end up adding to the federal debt. In fact, the answer to that question has become something of a mystery. 
In its latest report on the law, the Congressional Budget Office said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. And without a clear picture of the law’s overall financing, it could make it politically easier to continue delaying pieces of it, including revenue raisers, because any resulting cost increases might be hidden. ... 

ADA Update: 10th Circuit Says a Leave of Absence of More Than Six Months Is Virtually Never a Required Accommodation

“[R]easonable accommodations…are all about enabling employees to work, not to not work.”*  This fundamental insight guides the recent decision by the U.S. Court of Appeals for the Tenth Circuit, holding that a six-month, inflexible leave policy is virtually always “more than sufficient” to comply with the Rehabilitation Act, and by implication, the Americans with Disabilities Act (ADA).**  The court provided employers with refreshingly clear guidance on how to best structure leave policies to avoid exposure for disability discrimination claims. ...

Essentially, the court's logic boils down to this: step one is to determine whether the length of the leave request is reasonable. If it is not, proceed no further. If it is reasonable, then engage in a dialogue about whether other options are available, or whether other options might shorten the needed leave of absence. To support this analysis, the court cited to a later provision in the [EEOC's] Enforcement Guidance, which states 'six months is beyond a reasonable amount of time' to retain an employee in the hopes that a job which she or he can perform will become available.  
The court further justified this holding by recognizing that firm policies ensure clarity and consistent treatment and, therefore, they are more desirable. Policies which permit more discretion allow discriminatory motives to be disguised. The court analogized its reasoning to the Supreme Court’s rejection of the notion that inflexible seniority policies discriminate against the disabled. ... 
  *    Hwang v. Kansas State Univ., No. 12-3070, 2014 WL 2212071, *1 (10th Cir. May 29, 2014).
  **  Id.  

Case citation: Hwang v. Kansas State Univ., No. 13-3070 (10th Cir. May 29, 2014)

Wednesday, June 4, 2014

Yet Another Prominent Obamacare Supporter Argues Against the Employer Mandate

This is from Professor Timothy Jost writing at the Health Affairs Blog.  Professor Jost's post is very long and goes on to talk about different ways the government could get involved in compelling employers to provide healthcare.  That discussion is largely theoretical in light of the political divide in Washington, D.C.  Below I've excerpted his arguments against PPACA's Employer Mandate.  This is significant as he has been one of Obamacare's most vocal and prominent defenders.  He is now the third, prominent such person/group to come out against the employer mandate in the last year (Urban Institute, Ezra Klein and now Prof. Jost).  You can read his entire post here.  
... The employer mandate ... is resulting in a host of problems. To begin, implementing the mandate has proven to be an incredibly complex task. As already noted, the mandate only applies to large employers, those with at least 50 full-time or full-time equivalent employees. But an employer’s number of employees is not always easy to count, and the 50-employee threshold seems quite arbitrary. 
Second, employers are only required to insure full-time employees. The ACA defines a full-time employee as one who works at least 30 hours a week. But workers’ hours often fluctuate. And while counting hours can be fairly straightforward for hourly wage workers, it is more difficult for salaried workers. For many employees — adjunct faculty, seasonal farm workers, airline pilots, or high school coaches, among others — counting hours makes little sense at all. 
The ACA allows employers to impose a waiting period of up to 90 days before covering workers. But determining when the 90 days begins to run is sometimes itself complicated — for example, when an employee moves from part-time to full-time status. To make the law work, employers must report to the federal government and to their employees a great deal of information regarding the health benefits they offer and to whom they are offered. Employers will no doubt spend hundreds of thousands of hours compiling this information and the government thousands more hours processing it. 
The employer mandate is also already having an effect on business arrangements and on the labor market, although the full extent of this effect is difficult to know. Small employers approaching the 50-employee threshold have reportedly constrained growth to avoid becoming subject to the mandate. Some employers have cut the hours of part-time employees to below 30 to avoid having to offer them coverage. Other employers have reportedly dropped coverage for spouses of employees who had access to other coverage, as the rules implementing the mandate do not require spousal coverage. 
Despite all of this, it is not even clear that the employer mandate will actually result in decent coverage for employees. To avoid the $2000-for-every-full-time-employee penalty, employers need simply offer “minimum essential coverage.” “Barebones” coverage, however, which pays for preventive services and does not violate other specific provisions of the law, qualifies as minimum essential coverage. Employees who accept “barebones” minimum essential coverage are exempt from the individual mandate penalty and thus need not obtain real insurance, even though they are effectively uninsured. 
If an employer additionally offers adequate coverage (with at least 60 percent actuarial value) that is affordable (can be purchased for 9.5 percent or less of an employee’s wages), the employer escapes all penalties, even if not a single employee accepts coverage. If an employer fails to offer coverage to a low-income employee, moreover, and that employee ends up on Medicaid, the employer suffers no consequences. 
It gets worse.  Because the ACA is built on the assumption that individuals with employee benefits have coverage, it prevents individuals who accept employer coverage — however barebones and inadequate — from qualifying for premium tax credits and cost-sharing reduction payments. Even an offer of “adequate” and “affordable” coverage can disqualify individuals from tax credits, whether or not it is accepted. Indeed, the offer of affordable individual employer-sponsored coverage to an employee disqualifies the employees’ entire family from subsidized exchange coverage, even if family coverage is clearly unaffordable. 
Individuals are required by the individual mandate to purchase health insurance, but if employer coverage is unaffordable (costs more than 8 percent of household income), they are exempted from the requirement. But the tasks of determining whether an individual should be exempt from the mandate because employer-sponsored insurance is not affordable, or whether an individual is eligible for premium tax credits because employer-sponsored coverage is unaffordable or inadequate, add greatly to the work of the exchanges. 
The Administration’s response. Not surprisingly, the administration has delayed enforcement of the employer mandate as it struggles with its complexities. Unable to figure out how to implement the employer reporting requirement, it announced in the summer of 2013 a delay of both the employer reporting requirement and the mandate itself until 2015. The administration subsequently announcedthat employers would only need to achieve 70 percent compliance for 2015, while also delaying the mandate for employers with between 51 and 100 employees and required coverage for dependents until 2016 under certain circumstances. Even after 2016, the final regulations implementing the mandate require only 95 percent, rather than full compliance. ... 
Why not just repeal it? If the employer mandate is so problematic, why not simply repeal it? One obvious argument against repeal is that without the mandate employers will drop coverage, leaving their employees uninsured or forced to seek tax-subsidized coverage through the exchanges. This will impose greater costs on the federal government and on employees themselves.  
There are good reasons to believe, however, that most employers would continue to provide coverage in the absence of the mandate. The vast majority of employers subject to the mandate offered coverage before it went into effect (99 percent of employers with more than 200 employees and 91 percent of employers with between 50 and 199 employees). Health benefits have long been regarded as essential for recruiting and retaining skilled and competent employees, and they contribute to increased productivity and reduced absenteeism. Employer coverage can usually be provided with lower administrative expenses than individual coverage, and thus provides good value for employers and employees. 
Perhaps most importantly, employment-based benefits are already heavily subsidized through the tax system. They are exempt for both the employer and employee not only from the federal income tax, but also from Social Security, Medicare, and federal unemployment tax, as well as state income tax. The employer mandate penalties impose only a marginal additional incentive to obtain coverage. ...