Open Enrollment and Annual Compliance Checklist

Open Enrollment and Annual Compliance Checklist

To prepare for open enrollment, health plan sponsors should be aware of requirements and changes in benefit plan design, administration, and reporting for the 2015 plan year. Employers should review their plan documents to confirm that they include these required changes.

Employers should also confirm that their open enrollment materials contain certain required participant notices, when applicable.  There are also some participant notices that must be provided annually or upon initial enrollment.  To minimize cost and streamline administration, employers should consider including these notices in their open enrollment materials, if applicable.

Below is a compliance checklist for employers for the 2015 open enrollment, including some administrative items to prepare for in 2015.

PLAN DESIGN CHANGES

-Grandfathered Plan Status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered. Contact Lawley if you have questions about changes you have made, or are considering making, to your plan.

□    If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2015 plan year. Grandfathered plans are exempt from some of the ACA’s requirements. A grandfathered plan’s status will affect its compliance obligations from year to year.

□    If your plan will lose grandfathered status for 2015, confirm that the plan has all of the additional patient rights and benefits required by the ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.

-Cost-sharing Limits

Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost-sharing for essential health benefits (EHB). As enacted, the ACA included an overall annual limit (or an out-of-pocket maximum) for all health plans and an annual deductible limit for small insured health plans. On April 1, 2014, the ACA’s annual deductible limit was repealed. This repeal is effective as of the date that the ACA was enacted, back on March 23, 2010.

The out-of-pocket maximum, however, continues to apply to all non-grandfathered group health plans, including self-insured health plans and insured plans. Effective for plan years beginning on or after Jan. 1, 2015, a health plan’s out-of-pocket maximum for EHB may not exceed $6,600 for self-only coverage and $13,200 for family coverage.

□    Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2015 plan year ($6,600 for self-only coverage and $13,200 for family coverage).

□    If you have a health savings account (HSA)-compatible high deductible health plan (HDHP), keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2015, the out-of-pocket maximum limit for HDHPs is $6,450 for self-only coverage and $12,900 for family coverage.

□    If your plan uses multiple service providers to administer benefits, confirm that the plan will coordinate all claims for EHB across the plan’s service providers, or will divide the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2015.

□    Be aware that the ACA’s annual deductible limit no longer applies to small insured health plans.

-Health FSA Contributions

Effective for plan years beginning on or after Jan. 1, 2013, an employee’s annual pre-tax salary reduction contributions to a health flexible spending account (FSA) must be limited to $2,500. On Oct. 31, 2013, the Internal Revenue Service (IRS) announced that the health FSA limit remained unchanged at $2,500 for 2014. However, the $2,500 limit is expected to be adjusted for cost-of-living increases for later years. The IRS is expected to release the health FSA limit for 2015 later this year.

□    Work with your advisors to monitor IRS guidance on the health FSA limit for 2015.

□    Once the 2015 limit is announced by the IRS, confirm that your health FSA will not allow employees to make pre-tax contributions in excess of that amount for 2015. Also, communicate the 2015 health FSA limit to employees as part of the open enrollment process.

-Employer Penalty Rules

Under the ACA’s employer penalty rules, applicable large employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange. The ACA sections that contain the employer penalty requirements are known as the “employer shared responsibility” provisions or “pay or play” rules. These rules were set to take effect on Jan. 1, 2014, but the IRS delayed the employer penalty provisions and related reporting requirements for one year, until Jan. 1, 2015.

On Feb. 10, 2014, the IRS released final regulations implementing the ACA’s employer shared responsibility rules. Among other provisions, the final regulations establish an additional one-year delay for medium-sized ALEs, include transition relief for non-calendar plans and clarify the methods for determining employees’ full-time status.

To prepare for the employer shared responsibility requirements, an employer should consider taking the following key steps:

□    Determine ALE status for 2015, including eligibility for the one-year delay for medium-sized ALEs;

□    For sponsors of non-calendar year plans, determine whether you qualify for the transition relief that allows you to delay complying with the pay or play rules until the start of your 2015 plan year;

□    Establish a system for identifying full-time employees (those working 30 or more hours per week);

□    Document plan eligibility rules; and

□    Test your health plan for affordability and minimum value.

-HSA Limits for 2015

If you offer a high deductible health plan (HDHP) to your employees that is compatible with a health savings account (HSA), you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2015 limits. Also, the 2015 increased HSA contribution limits should be communicated to participants. The following table contains the HDHP and HSA contribution limits for 2015.

HDHP Minimum Deductible Amount

Individual                                                         $1,300

Family                                                              $2,600

 

           

 

HDHP Maximum Out-of-Pocket Amount

Individual                                                         $6,450

Family                                                              $12,900

 

            HSA Maximum Contribution Amount

Individual                                                         $3,350

Family                                                              $6,650

           

            Catch-up Contributions (age 55 or older) $1,000

 

REINSURANCE FEES

 

Health insurance issuers and self-funded group health plans must pay fees to a transitional reinsurance program for the first three years of the Exchanges’ operation (2014-2016). The fees will be used to help stabilize premiums for coverage in the individual market. Fully insured plan sponsors do not have to pay the fee directly.

Certain types of coverage are excluded from the reinsurance fees, including HRAs that are integrated with major medical coverage, HSAs, health FSAs and coverage that consists solely of excepted benefits under the Health Insurance Portability and Accountability Act (HIPAA) (such as stand-alone vision and dental coverage). Also, for 2015 and 2016, self-insured health plans are exempt from the reinsurance fees if they do not use a third-party administrator in connection with the core administrative functions of claims processing or adjudication (including the management of appeals) or plan enrollment.

The reinsurance program’s fees will be based on a national contribution rate, which the Department of Health and Human Services (HHS) announces annually. For 2015, HHS announced a national contribution rate of $44 per enrollee per year (about $3.67 per month). The reinsurance fee is calculated by multiplying the number of covered lives (employees and their dependents) for all of the entity’s plans and coverage that must pay contributions by the national contribution rate for the year.

□    Determine whether your health plan is subject to reinsurance fees, taking into account the new exception for self-insured, self-administered health plans

□    If subject to the fee, register at www.pay.gov, the website used to report enrollment count and pay fee

□    Register at www.regtap.info, for training and documentation on the process

 

COMPARATIVE EFFECTIVENESS RESEARCH FEES

 

Healthcare Reform created the Patient-Centered Outcomes Research Institute (Institute) to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is to be funded, in part, by fees paid by health insurance issuers and sponsors of self-insured health plans. These fees are called comparative effectiveness research fees or CER fees.

 

Plan sponsors (employers) of self-funded plans and health insurance issuers of fully insured plans began paying a $1 per covered life fee for comparative effectiveness research in 2013. Fees were effective for plan years ending on or after Oct. 1, 2012. Fees increased to $2 in 2014 and will be indexed for inflation after that. Full payment of the research fees will be due by July 31 of each year. It will generally cover plan years that end during the preceding calendar year. Thus, the next possible deadline for paying the CER fees is July 31, 2015 for plan years ending on or after January 31, 2014.

 

REPORTING OF HEALTH COVERAGE

 

The ACA requires ALEs to report information to the IRS and to employees regarding the employer-sponsored health coverage. The IRS will use the information that ALEs report to verify employer-sponsored coverage and administer the employer shared responsibility provisions. This reporting requirement is found in Code section 6056.

All ALEs with full-time employees, even medium-sized ALEs that qualify for the one-year delay from the pay or play rules, must report under section 6056 for 2015.

In addition, the ACA requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to file an annual return with the IRS reporting information for each individual who is provided with this coverage. Related statements must also be provided to individuals. This reporting requirement is found in Code section 6055.

Both of these reporting requirements become effective in 2015. The first returns will be due in 2016 for health plan coverage provided in 2015.

ALEs with self-funded plans will be required to comply with both reporting obligations, while ALEs with insured plans will only need to comply with section 6056. To simplify the reporting process, the IRS will allow ALEs with self-insured plans to use a single combined form for reporting the information required under both section 6055 and 6056.

Prepare for Health Plan Reporting:

□    Determine which reporting requirements apply to you and your health plans.

□    Start analyzing the information you will need for reporting and coordinate internal and external resources to help track the required data.

 

ACA DISCLOSURE REQUIREMENTS

□    Summary of Benefits and Coverage

The ACA requires health plans and health insurance issuers to provide a summary of benefits and coverage (SBC) to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees).

Federal agencies have issued a template for SBCs, which should be used for 2015 plan years. The template includes information on whether the plan provides minimum essential coverage and meets minimum value requirements. The SBC template (and sample completed SBC) are available on the Department of Labor (DOL) website.

In connection with your plan’s 2015 open enrollment period, the SBC should be included with the plan’s application materials. If plan coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.

For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should work with your health insurance issuer to determine which entity will assume responsibility for providing the SBCs. Please contact your Lawley representative for assistance.

□    Grandfathered Plan Notice

If you have a grandfathered plan, make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as summary plan descriptions (SPDs) and open enrollment materials. Model language is available from the DOL.

□    Notice of Patient Protections

Under the ACA, non-grandfathered group health plans and issuers that require designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Also, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for obstetrical/gynecological care.

If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant, such as open enrollment materials. If your plan is subject to this notice requirement, you should confirm that it is included in the plan’s open enrollment materials. Model language is available from the DOL.

OTHER EMPLOYEE BENEFIT NOTICE REQUIREMENTS

Group health plan sponsors should consider including the following enrollment and annual notices with the plan’s open enrollment materials.

□    Initial COBRA Notice – Plan administrators must provide an initial COBRA notice to participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD. A model initial COBRA Notice is available from the DOL.

□    HIPAA Privacy Notice – If a group health plan is required to maintain a privacy notice, it must be distributed to new participants when they enroll for coverage. For fully insured plans, the issuer is generally responsible for providing the privacy notice to new enrollees.

□    Notice of HIPAA Special Enrollment Rights – At or prior to the time of enrollment, a group health plan must provide each eligible employee with a notice of his or her special enrollment rights under HIPAA.

□    Annual CHIPRA Notice – Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual notice about the available assistance to all employees residing in that state. The DOL has provided a model notice.

□    WHCRA Notice – Plans and issuers must provide notice of participants’ rights under the Women’s Health and Cancer Rights Act (WHCRA) at the time of enrollment and on an annual basis. Model language for this disclosure is available on the DOL’s website in the compliance assistance guide.

□    NMHPA – Plan administrators must include a statement within the Summary Plan Description (SPD) timeframe describing requirements relating to any hospital length of stay in connection with childbirth for a mother or newborn child under the Newborns’ and Mothers’ Health Protections Act. Model language is available at www.dol.gov/ebsa/publications/CAG.html (in Appendix C of the compliance assistance guide).

□    Medicare Part D Notices – Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals as to whether or not their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the plan and each year before Oct. 15 (when the Medicare annual open enrollment period begins). Model notices are available at www.cms.gov/creditablecoverage.

□    Summary Plan Description (SPD) – ERISA requires plan administrator to provide this detailed summary of the plan and how it operates automatically to participants within 90 days of becoming covered by the plan.

 

W-2 REMINDER

 

Healthcare Reform requires employers to report the aggregate cost of employer-sponsored group health plan coverage on their employees’ Forms W-2. This reporting requirement was originally effective for the 2011 tax year. However, the IRS later made reporting optional for 2011 for all employers.

 

The IRS further delayed the reporting requirement for small employers (those that file fewer than 250 Forms W-2) by making it optional for these employers until further guidance is issued. For the larger employers, the reporting requirement was mandatory for the 2012 Forms W-2 and continues.

 

 

 

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This Lawley 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.