With 2015 just around the corner, certain mandates under the Patient Protection and Affordable Care Act, as amended (“ACA”) are about to become effective. Health plans also have several existing enrollment and annual notice requirements. Below is a checklist of upcoming ACA mandates that employers must implement in preparation for or in 2015 and a summary of existing enrollment and annual notice requirements.
For a refresher on the ACA mandates which became effective this year, please see our 2014 group health plan checklist here.
I. ACA Requirements That Apply to All Group Health Plans (Whether Grandfathered or Not)
On or beginning with the dates specified below, a group health plan must comply with the following requirements, regardless of its status as a “grandfathered health plan”:
Obtain a Health Plan Identifier Number (HPID).
In an effort to standardize data for covered electronic transactions under HIPAA, health plans are required to obtain an HPID by November 5, 2014, although small health plans may have an additional year to comply. Regulators have confirmed that self-funded health plans are subject to this requirement, even if the plan uses an insurance company or third-party administrator for plan administration. Unfortunately, it’s not completely clear how this applies to self-funded plans, as we previously discussed. The Centers for Medicare and Medicaid Services (“CMS”) home page for HPID information may be found here.
Calculate and Pay Transitional Reinsurance Fees.
Certain self-insured group health plans offering major medical coverage, as well as health insurance issuers (“Contributing Entities”) are responsible for paying this annual fee. Contributing Entities must submit their annual enrollment count for 2014 by November 15, 2014, which will help determine the fee. Then, Contributing Entities will have the option to pay: (1) the entire 2014 benefit year contribution of $63.00 per covered life no later than January 15, 2015; or (2) two separate payments for the 2014 benefit year, with the first due by January 15, 2015 reflecting $52.50 per covered life, and the second due by November 15, 2015 reflecting $10.50 per covered life. For more information, click here or see this CMS bulletin.
Calculate and Pay PCORI Fee.
The Patient-Centered Outcomes Research Institute Trust Fund fee (“PCORI” fee) is paid by issuers of certain health insurance policies and by plan sponsors of applicable self-insured health plans. The amount is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year. Although this is not a new requirement, the applicable dollar amount for policy and plan years ending after September 30, 2014, and before October 1, 2015 was recently announced as being $2.08. Payment of this third annual PCORI fee, based on the 2014 plan year, will be due July 31, 2015, and is reported using IRS Form 720, Quarterly Federal Excise Tax Return.
II. Additional Requirement That Applies to Non-Grandfathered Plans
Group health plans that are not grandfathered for ACA purposes must comply with the following additional requirement on or after January 1, 2015:
Ensure Cost-Sharing Limitations Are Not Above Certain Ceiling Amounts.
The overall cost-sharing limits (sometimes called the “out-of-pocket maximum”) for plan years beginning in 2015 are $6,600 for self-only coverage and $13,200 for other than self-only coverage. For HSA-compatible high-deductible health plans, those 2015 limits are $6,450 and $12,900, respectively. Does your plan use one service provider for medical benefits and another for prescription drug benefits? Starting in 2015, participants cannot be asked to pay more than the above-stated out-of-pocket maximums for medical and prescription drugs combined. The out-of-pocket maximum includes deductibles, coinsurance, copayments and similar charges, but does not include premiums, non-covered expenses, and certain other items. Your plan can provide for separate maximums for each of medical and prescription drugs so long as the combined maximums do not exceed the 2015 amounts.
III. The Employer Shared Responsibility Rules (“Employer Mandate”) and IRS Health Care Coverage Reporting
Play or Pay: The Employer Mandate Takes Effect.
Beginning January 1, 2015, most employers with an average of at least 100 full-time and full-time equivalent employees during the preceding year can be subject to a penalty tax for (i) failing to offer health care coverage to 95% (for 2015 only, 70%) of their full-time employees (and their dependents); or (ii) offering minimum essential coverage that is either not affordable or under which the plan’s share of the total allowed cost of benefits is less than 60% of the actuarial value. Employers with between 50 to 99 full-time and full-time equivalent employees in 2014 will not be subject until 2016, but only if they meet certain specific requirements. Additionally, employers that maintained non-calendar-year plans as of December 27, 2012 may have until the first day of their 2015 plan year to comply, but again, only if certain specific requirements are met.
Take Steps Now to Satisfy 2016 Health Care Coverage Reporting Requirements.
Two sets of health care coverage reporting requirements will come into effect in early 2016, but employers should be preparing now. The reporting requirements are found under Code Section 6055 (“Minimum Essential Coverage Reporting”) and Code Section 6056 (“Large Employer Reporting”). Minimum Essential Coverage Reporting requires every provider of health coverage (i.e., insurers and employers who self-fund plans included) to file information returns with the IRS and provide statements to individuals covered; the reports will be used to administer the so-called Individual Shared Responsibility Requirement. For Large Employer Reporting, employers subject to the Employer Mandate (see above) must file information returns with the IRS and provide statements to their full-time employees about the health plan coverage the employer offers. Large employers with self-insured minimum essential coverage will prepare combined reports. Employers should note that even if they are not subject to the Employer Mandate until 2016 (see above), they still must engage in Large Employer Reporting for 2015.
Reports for coverage provided or offered in 2015 will be due in early 2016. However, employers will want to begin preparations now so that the information required to be reported is available. For more on these requirements, see the IRS Questions and Answers on both Minimum Essential Coverage Reporting and Large Employer Reporting. You can also visit our blog post on the topic.
One item that bears consideration before the end of 2014 is the requirement to report taxpayer identification numbers or TINs (usually, but not always, Social Security numbers). To comply with Large Employer Reporting, the TIN of each full-time employee must be provided, with no exceptions. With respect to the Minimum Essential Coverage Reporting, the TIN of every covered individual must be reported. This may be difficult for employers who self-insure their health plans but do not collect Social Security numbers for covered spouses or dependent children. Recognizing this, the IRS has provided that, with respect to Minimum Essential Coverage Reporting, if a covered individual such as a spouse or dependent does not have a TIN or you cannot obtain a TIN after making reasonable efforts, you may report the date of birth of the individual instead. For early 2016 reporting, the IRS will consider the following efforts as reasonable: 1) request the TIN by December 31, 2014, and if not provided at that time, 2) make a second request by December 31, 2015. If the second request is also unsuccessful, the reporting entity would not be penalized if the early 2016 report contained a date of birth in place of a TIN for the individual in question. One additional request must be made by December 31, 2016, to continue to use the date of birth in lieu of the TIN after 2016.
IV. Existing Notice and Filing Requirements
Upon Hire of New Employee – Marketplace Notice.
Employers subject to the Fair Labor Standard Act are required to distribute notices to new employees within 14 days of hire, informing them of the availability of health insurance through the Marketplace/Exchange and of any employer-offered health coverage. The Department of Labor (“DOL”) has provided employers with two sample form notices that can be used to comply with this requirement: one for employers who sponsor a group health plan and one for employers who do not.
1) COBRA Notice.
Plan administrators must provide an initial written notice of rights under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) to each employee and his or her spouse when group health plan coverage first commences. Additionally, plan administrators must provide a COBRA election notice to each qualified beneficiary of his or her right to elect continuing coverage under the plan upon the occurrence of a qualifying event. Each of these notices must contain specific information, and the DOL has issued model notices. The model election notice was updated last year to include a discussion of Marketplace coverage options.
2) HIPAA Privacy Notice.
If the group health plan is required to maintain a notice of privacy practices under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the notice must be distributed upon an individual’s enrollment in the plan. Notice of availability to receive another copy must be given every three years. Plan sponsors should confirm that the notices of privacy practices for their group health plans have been revised to reflect the requirements under Subtitle D of the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) and the final omnibus rule released in 2013. Following a material modification, which includes any change required pursuant to HITECH or the omnibus rule, the revised notice of privacy practices must be distributed to plan participants within 60 days after the change to the notice.
3) Special Enrollment Rights.
A group health plan must provide each employee who is eligible to enroll with a notice of his or her HIPAA special enrollment rights at or prior to the time of enrollment. Among other information, this notice must describe the rights afforded under the Children’s Health Insurance Program Reauthorization Act.
4) Summary of Benefits and Coverage.
A Summary of Benefits and Coverage (“SBC”) must be provided to participants and beneficiaries prior to enrollment or re-enrollment. At open enrollment, an SBC must be provided for each benefit package offered for which the participant or beneficiary is eligible. Upon renewal, only the summary for the benefit package in which the participant is enrolled needs to be furnished no later than 30 days prior to the first day of the new plan year, unless the participant or beneficiary requests a summary for another benefit package. The SBC must also be furnished to special enrollees within 90 days after enrollment pursuant to a special enrollment right. Finally, ACA requires that a plan sponsor provide 60 days’ advance notice to participants before the effective date of any material modifications to its plan. Such notice must be given only where the material modification(s) would affect the information required to be included in the SBC. The advance notice may be either in the form of an updated SBC or a separate document describing the material modification(s).
Annual Notice Requirements.
The following notices must be provided to participants and beneficiaries each year. An employer may choose to include these notices in the plan’s annual open enrollment materials.
1) Women’s Health and Cancer Rights Act Notice.
The Women’s Health and Cancer Rights Act requires that a notice be sent to all participants describing required benefits for mastectomy-related reconstructive surgery, prostheses, and treatment of physical complications of mastectomy. This notice must be given to plan participants upon enrollment and then annually thereafter. The DOL has developed model language to fulfill this requirement.
2) Medicare Part D Notice.
Group health plans providing prescription drug coverage must provide a notice to any individual covered by or eligible for the group health plan who is eligible to be covered under Medicare Part A or for Medicare Part B (an “eligible individual”). The notice must explain whether the plan’s prescription drug coverage is creditable. Coverage is creditable if it is actuarially equivalent to coverage available under the standard Medicare Part D program. To satisfy the distribution timing requirements, the notice is generally distributed upon an individual’s enrollment in the plan, each year during open enrollment (before the new enrollment commencement date of October 15), and during the plan year if the status of the coverage changes (either for the plan as a whole or for the individual). Model notices are available from the Centers for Medicare and Medicaid Services here.
3) CHIP Premium Assistance Notice.
Employers must also provide notices annually to employees regarding available state premium assistance programs that can help pay for coverage under the plan and how to apply for it. A model notice from the DOL is available here.
ERISA’s General Notice Requirements.
It is important to keep current with ERISA’s general notice requirements, as to both timing and content. For example, changes in plan design must be reflected in Summaries of Material Modifications (“SMMs”) or updated summary plan descriptions (“SPDs”) timely distributed to eligible employees. If a plan change involves a material reduction in covered services or benefits, an SMM or an updated SPD must be furnished within 60 days after adoption of the change. Note that this obligation is independent of the ACA requirement to issue a revised SBC or notification of material modification at least 60 days before a material modification to a SBC becomes effective (as discussed above); however, satisfaction of the ACA requirement will satisfy this requirement with respect to changes disclosed in the updated SPD. Restated SPDs must be furnished every five years if the plan has been amended within five years of publication of the most recent SPD, and every ten years if the information has not been changed.