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GAO releases report on ACA broker fee proposals


aca-updateOne of the many ongoing battles over the Patient Protection and Affordable Care Act (PPACA) involves the federal minimum medical loss ratio (MLR) standards for private insurers. Under this provision, health insurance plans in the small group market are required to spend at least 80 percent of premiums on medical costs and no more than 20 percent on administrative costs (15 percent for the large group market). If a plan fails to meet the minimum MLR standard, the insurer is required to pay rebates to enrollees and policyholders.

One of the biggest points of contention is the requirement that insurers include agent and broker compensation as part of their non-claims costs. The insurance industry is fighting to get that changed, saying it would be much easier to meet the standards if payments to the middlemen were not calculated in the MLR.

GAO studies the issue, releases report

Given the ongoing battle, the General Accounting Office (GAO) was asked to review the effects of the MLR requirements on all stakeholders including insurers, brokers, and enrollees, and how rebates would change if agent and broker payments were excluded from the MLR. They recently issued their report, and here’s a brief rundown of what they found… 

  • The insurance industry claims the current requirement is tough on their bottom line and could mean higher premiums for customers. They also warn that the requirements could cause some insurers to leave certain markets in some states, leading to instability in those markets. 
  • Agents and brokers are also hoping for a change in the requirements, concerned that if insurers are required to count agent and broker compensation as a non-claims cost in calculating their MLR, those insurers could decrease broker compensation. According to a report from the Commonwealth Fund, agents and brokers took a $300 million hit in commissions in 2012 as a direct result of the MLR provision. That could seriously cut down on the number of agents and brokers available to help consumers choose a health insurance plan. 
  • Consumer advocates prefer to keep the law as is, saying that the requirements have resulted in greater transparency in how insurance companies use premiums. They feel that the current requirements also provide an incentive for insurers to reduce their administrative costs. They also note that refunds to consumers will be significantly less if the commissions and fees insurers pay to agents and brokers aren’t included in the MLR formula. 
  • Rebates. In 2011, the first year the new requirements were in effect, almost 13 million Americans received rebates from insurers that didn’t meet the MLR, totaling about $1.1 billion. In 2012, more insurers complied with the new standard, which dropped the total rebates to $520 million. The GAO says that had the commissions and fees insurers paid to agents and brokers been excluded from the MLR formula, these amounts would have decreased by about 75 percent, reducing the average customer rebate from $58.50 to $15.21 per person.

What lies ahead?

Clearly, this battle has yet to be decided. Health experts generally agree that exempting broker commissions from the MLR formula would make it easier for insurers to meet the MLR standards, but they feel it could also mean higher premiums and smaller rebates for consumers.

Brokers and employers alike should stay tuned for further updates on PPACA and the broker fee proposals. For the latest news, subscribe to our blog in the top right corner of this screen.

Affordable Care Act Changes: 41 and Counting


This week, we are sharing a post from the Galen Institute

By our count at the Galen Institute, more than 41 significant changes already have been made to ObamaCare: at least 23 that the Obama Administration has made unilaterally, 16 that Congress has passed and the president has signed, and two by the Supreme Court.


1. Medicare Advantage patch: The administration ordered an advance draw on funds from a Medicare bonus program in order to provide extra payments to Medicare Advantage plans, in an effort to temporarily forestall cuts in benefits and therefore delay early exodus of MA plans from the program. (April 19, 2011)

2. Employee reporting: The administration, contrary to the Obamacare legislation, instituted a one-year delay of the requirement that employers must report to their employees on their W-2 forms the full cost of their employer-provided health insurance. (January 1, 2012)

3. Subsidies may flow through federal exchanges: The IRS issued a rule that allows premium assistance tax credits to be available in federal exchanges although the law only specified that they would be available “through an Exchange established by the State under Section 1311.” (May 23, 2012)

4. Delaying a low-income plan: The administration delayed implementation of the Basic Health Program until 2015. It would have provided more-affordable health coverage for certain low-income individuals not eligible for Medicaid. (February 7, 2013)

5. Closing the high-risk pool: The administration decided to halt enrollment in transitional federal high-risk pools created by the law, blocking coverage for an estimated 40,000 new applicants, citing a lack of funds. The administration had money from a fund under Secretary Sebelius’s control to extend the pools, but instead used the money to pay for advertising for Obamacare enrollment and other purposes. (February 15, 2013)

6. Doubling allowed deductibles: Because some group health plans use more than one benefits administrator, plans are allowed to apply separate patient cost-sharing limits for one year to different services, such as doctor/hospital and prescription drugs, allowing maximum out-of-pocket costs to be twice as high as the law intended. (February 20, 2013)

7. Small businesses on hold: The administration has said that the federal exchanges for small businesses will not be ready by the 2014 statutory deadline, and instead delayed until 2015 the provision of SHOP (Small-Employer Health Option Program) that requires the exchanges to offer a choice of qualified health plans. (March 11, 2013)

8. Employer-mandate delay: By an administrative action that’s contrary to statutory language in the ACA, the reporting requirements for employers were delayed by one year. (July 2, 2013)

9. Self-attestation: Because of the difficulty of verifying income after the employer-reporting requirement was delayed, the administration decided it would allow “self-attestation” of income by applicants for health insurance in the exchanges. This was later partially retracted after congressional and public outcry over the likelihood of fraud. (July 15, 2013)

10. Delaying the online SHOP exchange: The administration first delayed for a month and later for a year until November 2014 the launch of the online insurance marketplace for small businesses. The exchange was originally scheduled to launch on October 1, 2013. (September 26, 2013) (November 27, 2013)

11. Congressional opt-out: The administration decided to offer employer contributions to members of Congress and their staffs when they purchase insurance on the exchanges created by the ACA, a subsidy the law doesn’t provide. (September 30, 2013)

12. Delaying the individual mandate: The administration changed the deadline for the individual mandate, by declaring that customers who have purchased insurance by March 31, 2014 will avoid the tax penalty. Previously, they would have had to purchase a plan by mid-February. (October 23, 2013)

13. Insurance companies may offer canceled plans: The administration announced that insurance companies may reoffer plans that previous regulations forced them to cancel. (November 14, 2013)

14. Exempting unions from reinsurance fee: The administration gave unions an exemption from the reinsurance fee (one of ObamaCare’s many new taxes). To make up for this exemption, non-exempt plans will have to pay a higher fee, which will likely be passed onto consumers in the form of higher premiums and deductibles. (December 2, 2013)

15. Extending Preexisting Condition Insurance Plan: The administration extended the federal high risk pool until January 31, 2014 and again until March 15, 2014, and again until April 30, 2014 to prevent a coverage gap for the most vulnerable. The plans were scheduled to expire on December 31, but were extended because it has been impossible for some to sign up for new coverage on (December 12, 2013) (January 14, 2014) (March 14, 2014)

16. Expanding hardship waiver to those with canceled plans: The administration expanded the hardship waiver, which excludes people from the individual mandate and allows some to purchase catastrophic health insurance, to people who have had their plans canceled because of ObamaCare regulations. The administration later extended this waiver until October 1, 2016. (December 19, 2013) (March 5, 2014)

17. Equal employer coverage delayed: Tax officials will not be enforcing in 2014 the mandate requiring employers to offer equal coverage to all their employees. This provision of the law was supposed to go into effect in 2010, but IRS officials have “yet to issue regulations for employers to follow.” (January 18, 2014)

18. Employer-mandate delayed again: The administration delayed for an additional year provisions of the employer mandate, postponing enforcement of the requirement for medium-size employers until 2016 and relaxing some requirements for larger employers. Businesses with 100 or more employees must offer coverage to 70% of their full-time employees in 2015 and 95% in 2016 and beyond. (February 10, 2014)

19. Extending subsidies to non-exchange plans: The administration released a bulletin through CMS extending subsidies to individuals who purchased health insurance plans outside of the federal or state exchanges. The bulletin also requires retroactive coverage and subsidies for individuals from the date they applied on the marketplace rather than the date they actually enrolled in a plan. CRS issued a memo discussing the legality of these subsidies. (February 27, 2014)

20. Non-compliant health plans get two year extension: The administration pushed back the deadline by two years that requires health insurers to cancel plans that are not compliant with ObamaCare’s mandates. These “illegal” plans may now be offered until 2017. This extension will prevent a wave cancellation notices from going out before the 2014 midterm elections. (March 5, 2014)

21. Delaying the sign-up deadline: The administration delayed until mid-April the March 31 deadline to sign up for insurance. Applicants simply need to check a box on their application to qualify for this extended sign-up period. (March 26, 2014)

22. Canceling Medicare Advantage cuts: The administration canceled scheduled cuts to Medicare Advantage. The ACA calls for $200 billion in cuts to Medicare Advantage over 10 years. (April 7, 2014)

23. More Funds for Insurer Bailout:  The administration said it will supplement risk corridor payments to health insurance plans with “other sources of funding” if the higher risk profile of enrollees means the plans would lose money. (May 16, 2014)


24. Military benefitsCongress clarified that plans provided by TRICARE, the military’s health-insurance program, constitutes minimal essential health-care coverage as required by the ACA; its benefits and plans wouldn’t normally meet ACA requirements. (April 26, 2010)

25. VA benefitsCongress also clarified that health care provided by the Department of Veterans Affairs constitutes minimum essential health-care coverage as required by the ACA. (May 27, 2010)

26. Drug-price clarificationCongress modified the definition of average manufacturer price (AMP) to include inhalation, infusion, implanted, or injectable drugs that are not generally dispensed through a retail pharmacy. (August 10, 2010)

27. Doc-fix taxCongress modified the amount of premium tax credits that individuals would have to repay if they are over-allotted, an action designed to help offset the costs of the postponement of cuts in Medicare physician payments called for in the ACA. (December 15, 2010)

28. Extending the adoption creditCongress extended the nonrefundable adoption tax credit, which happened to be included in the ACA, through tax year 2012. (December 17, 2010)

29. TRICARE for adult childrenCongress extended TRICARE coverage to dependent adult children up to age 26 when it had previously only covered those up to the age of 21 — though beneficiaries still have to pay premiums for them. (January 7, 2011)

30. 1099 repealedCongress repealed the paperwork (“1099”) mandate that would have required businesses to report to the IRS all of their transactions with vendors totaling $600 or more in a year. (April 14, 2011)

31. No free-choice vouchersCongress repealed a program, supported by Senator Ron Wyden (D., Ore.) that would have allowed “free-choice vouchers,” that the Hill warned “could lead young, healthy workers to opt out” of their employer plans, “driving up costs for everybody else.” The same law barred additional funds for the IRS to hire new agents to enforce the health-care law. (April 15, 2011)

32. No Medicaid for well-to-do seniors: Congress saved taxpayers $13 billion by changing how the eligibility for certain programs is calculated under Obamacare. Without the change, a couple earning as much as much as $64,000 would still have been able to qualify for Medicaid. (November 21, 2011)

33. CO-OPs, IPAB, IRS defundedCongress made cuts to agencies implementing Obamacare. It trimmed $400 million off the CO-OP program, cut $305 million from the IRS to hamper its ability to enforce the law’s tax hikes and mandates, and rescinded $10 million in funding for the controversial Independent Payment Advisory Board. (December 23, 2011)

34. Slush-fund savingsCongress slashed another $11.6 billion from the Prevention and Public Health slush fund and $2.5 billion from Obamacare’s “Louisiana Purchase.” (February 22, 2012)

35. Less cash for Louisiana: One of the tricks used to get Obamacare through the Senate was the special “Louisiana Purchase” deal for the state’s Democratic senator, Mary Landrieu. Congress saved another $670 million by rescinding additional funds from this bargain. (July 6, 2012)

36. CLASS Act eliminated: Congress repealed the unsustainable CLASS (Community Living Assistance Services and Supports) program of government-subsidized long-term-care insurance, which even the Democratic chairman of the Senate Finance Committee dubbed a “Ponzi scheme of the first order.” (January 2, 2013)

37. Cutting CO-OPsCongress cut $2.2 billion from the “Consumer Operated and Oriented Plan” (CO-OP), which some saw as a stealth public option, blocking creation of government-subsidized co-op insurance programs in about half the states. Early reports showed many co-ops, which had received federal loans, had run into serious financial trouble. (January 2, 2013)

38. Trimming the Medicare trust-fund transferCongress rescinded $200 million of the $500 million scheduled to be taken from the Medicare Part A and Part B trust funds and sent to the Community-Based Care Transition Program established and funded by the ACA. (March 26, 2013)

39. Eliminating caps on deductibles for small group plans: Congress eliminated the cap on deductibles for small group plans as part of the SGR “doc fix.” This change gives small businesses the freedom to offer high deductible plans that may be paired with a Health Savings Account. (April 1, 2014)


40. Medicaid expansion made voluntary: The court ruled it had to be voluntary, rather than mandatory, for states to expand Medicaid eligibility to people with incomes up to 138 percent of the federal poverty level, by ruling that the federal government couldn’t halt funds for existing state Medicaid programs if they chose not to expand the program.

41. The individual mandate made a tax: The court determined that violating the mandate that Americans must purchase government-approved health insurance would only result in individuals’ paying a “tax,” making it, legally speaking, optional for people to comply.

This list was originally published HERE on and has been published on National Review Online. It was updated to 29 changes on December 10, 2013.

December 13, 2013 UPDATE: 30 changes (PCIP extension)
December 19, 2013 UPDATE: 31 changes (Hardship waiver)
January 14, 2014 UPDATE: 32 changes (Union reinsurance fee exemption)
January 14, 2014 UPDATE: (PCIP extended again)
January 21, 2014 UPDATE: 33 changes (Equal employer coverage delay)
February 3, 2014 UPDATE: 34 changes (Subsidies may flow through federal exchanges) (List is now ordered chronologically)
February 10, 2014 UPDATE: 35 changes (Second employer mandate delay)
March 5, 2014 UPDATE: 36 changes (Subsidies extended outside of exchanges)
March 5, 2014 UPDATE: 37 changes (Consumers can keep non-compliant plans until 2017)
March 26, 2014 UPDATE: 38 changes (Sign-up deadline delayed)
April 7, 2014 UPDATE: 39 changes (Small group deductible cap eliminated-passed by Congress and signed into law)
April 8, 2014 UPDATE: 40 changes (Cuts to Medicare Advantage in 2015 canceled)
May 22, 2014 UPDATE: 41 changes (More funds for insurer bailout)

What Happens When Your Employee’s Dependent Turns 26?


Age-26-RuleAs an employer, you face tough questions from employees every day – particularly now as you both navigate the changing landscape of health care reform. If the “age 26” question hasn’t come up yet, you’ll likely encounter it soon. To help you be prepared, we’ve prepared the hypothetical scenario below.

The hypothetical question posed by employee, John Jones:

My daughter is about to turn 26 this summer. I suspect that after her birthday, she will no longer eligible for my health insurance, but I’m not sure. I’m also not sure what her options are since the next federal Marketplace enrollment isn’t until the fall. What can you tell me?

How would you answer? 

  • Answer One: “It’s okay. Your plan continues providing dependent coverage through the end of the plan year.” 
  • The Background: This is true of some plans. Other plans terminate coverage for dependents immediately on their 26th birthday or on the last day of the month in which he or she turns 26. Take the initiative to find out how long, under the benefits package you offer, your employee’s daughter will retain coverage after turning 26.
  • Answer Two: “When your daughter turns 26 and loses dependent status, the good news is, she becomes eligible for COBRA.” 
  • The Background: There are a variety of “triggering” life events which make a person eligible for COBRA coverage – see the full list here. With COBRA, your employee’s daughter can keep the same benefits she has now for an additional 18 months. That said, she will be responsible to pay the full cost of coverage.
  • Answer Three: “Her coverage will end on her birthday, but don’t worry. This is considered a qualifying life event for Marketplace Special Enrollment.” 
  • The Background: As we mentioned earlier this year, “all of the qualifying events associated with COBRA are now also considered triggering life events under PPACA and cause special Marketplace enrollment to be available when they occur.” This means your employee’s 26-year-old can apply for her own health insurance plan through ACA special enrollment as soon as she loses her dependent status. Go here to start that process.
  • Answer Four: “Is it possible for her to get benefits through her employer?” 
  • The Background: Your employee’s daughter may be able to get health benefits through her own place of employment, if benefits are offered and she satisfies the plan eligibility requirements. Because she was covered under your plan and is now losing coverage, she qualifies for a special enrollment period under her employer’s plan.

So as you can see, there are several correct answers to your employee’s dilemma. As always, be proactive, educate your team about their options, and do your part to provide the information they need to make smart choices.

Also, don’t forget to subscribe to the COBRA blog in the top right corner of this screen.

Recent IRS guidance on ACA a game changer for many employers


Affordable-Care-Act-UpdateIf you were hoping to save money on healthcare costs by sending your employees to the exchanges and helping them with premiums through tax-free contributions, think again. Thanks to recent IRS guidance on an IRS ruling made last year, you’ll have to come up with a Plan B.

The employer mandate of the Affordable Care Act (ACA) requires larger employers to offer health insurance coverage to their full-time workers or be subject to penalties. But after running the numbers, many employers decided it would cost less to give each employee a pre-tax sum of money to cover health insurance purchased individually rather than provide group coverage directly.

These arrangements are certainly nothing new. Employers have been helping out their employees by reimbursing them for health insurance premiums and out-of-pocket expenses for decades. But this new federal ruling is a game changer.

On May 13, 2014, the IRS issued Q&A’s summarizing IRS Notice 2013-54, issued last September 13. The new guidance clarifies that an employer payment plan is considered a group health plan, and it doesn’t meet the requirements of the ACA. But, as the notice states, "An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation."

For employers who provide coverage, their contributions average more than $5,000 a year per employee and aren’t counted as taxable income to the employees. But the IRS says employers can’t meet their obligations under the healthcare law just by reimbursing employees for premium costs.

Bottom line: If you use an “employer payment plan,” you could be in for a costly surprise at tax time.

According to the IRS, you could be hit with an excise tax of $100 a day – up to $36,500 per year – for each applicable employee. You do the math. If you’re a larger business, you could be looking at a tax bill in the millions. And keep in mind, that’s on top of the potential $3,000 per employee penalty you’ll pay for failing to comply with the employer mandate once it goes into effect in 2015.

Do you have options?

Actually, there’s nothing stopping you from canceling your company plan and leaving your workers to buy individual policies sold through the exchanges — as long as you’re willing to pay the taxes and penalties. Or, you can raise salaries and tell your employees to buy health insurance through the exchange with the extra money. But keep in mind, that extra compensation is taxable on both ends, and the worker may see it as a reduction in their benefits and cry foul.

Clearly, the federal government wants employers to continue providing coverage to workers and their families, and they’re pushing hard to keep employers in the group insurance market and reduce the incentives for them to drop coverage. And with the recent crackdown by the IRS, employers need to be aware that if they’re engaging in what is considered an employer payment plan, they’ll probably raise some red flags when tax time rolls around.

To get updates about the Affordable Care Act and stay informed about the evolving health insurance Marketplace, subscribe to our blog. Look for the “Subscribe via Email” box on the top right.


COBRA and Marketplace Payment Collection – Timing is Everything!


COBRA CONUNDRUMS is reprinted from the April, 2014 issue of Health Insurance Underwriter Magazine featuring our very own Robert Meyers.

Willie Nelson once said, “The early bird gets the worm, but the second mouse gets the cheese.”

For the past 10 years I’ve said, “The best brokers and agents help their clients with COBRA but don’t do it for them.” Those of you familiar with COBRA know exactly why. Because timing is everything and now, more than ever, it’s crucial that employers understand essential timelines.

That’s because now, the employer may be the second mouse! Let me explain …

If there is one part of COBRA administration with which every COBRA administrator struggles (and is also the number one reason employers outsource their COBRA administration), it is premium billing and collection to and from COBRA qualified beneficiaries.

Even before the Affordable Care Act (ACA), back when employers could be the “early birds,” they didn’t relish the collection process. In fact, according to a Charles D. Spencer & Associates survey, the premium collection process is the biggest pain point for employers. Why? Because employer representatives feel very uncomfortable collecting premiums from their former associates and they do not like enforcing the grace periods or terminating coverage when or if the grace periods are missed.

A quick history

Grace periods of 45 days for the first COBRA payment and 30 days for each subsequent payment have forever been the place where the rubber meets the road in COBRA administration. The best COBRA administrators handle premium billing and collection quickly, efficiently, and in-step with COBRA rules.

The ACA uses the terms “pay-or-play” with regard to the employer mandate, but the concept isn’t new. For nearly 30 years, COBRA’s “pay or play” philosophy has meant that former employees who desire COBRA continuation had to PAY for their coverage on a timely basis in order to keep it, or PLAY the health care market – either finding coverage elsewhere, or choosing to go without. 

As we discussed last month, when open enrollment in the Marketplace ends, those on COBRA who did not choose to switch to the Marketplace will have to keep their COBRA until their coverage exhausts or until the next Marketplace open enrollment period occurs. COBRA participants are not eligible for subsidies (as of the writing of this article) if they stop paying their premiums prior to the next Marketplace open enrollment and their COBRA coverage ends as a result.

A new day

Now, under the ACA, patients who buy health plans through the Marketplace have a 90-day grace period to get caught up on premium payments before coverage can be canceled. The law states that insurance companies must pay providers for claims incurred in the first 30 days of the grace period. However, carriers can pend payments for services incurred in the second or third month until premium is received. If the premium is not received, the carrier can cancel coverage and refuse to pay pended claims. Providers are then on the hook for directly collecting the cost of treatment from patients without coverage.

So, during a time of transition (i.e. COBRA eligibility), it will be more important than ever for employers to notify their COBRA-qualified beneficiaries quickly and help them facilitate the decision process so they don’t stretch out their COBRA eligibility period too long. In short, help your employer clients be compliant but close the COBRA window as quickly as the law allows. This has long been a best practice among COBRA administrators and it will be even more important in the future. Consider the alternative: The COBRA participant seemingly leaves the plan in favor the Marketplace plan only to find it unaffordable and return to the employer-based group coverage via COBRA, bringing a large bag of claims (and premium payments from angry unpaid providers) right back with them. If you haven’t figured it out, that’s what it means to be the second mouse!

As always, make sure that your clients are adopting best practices and strategies related to COBRA administration and compliance. By doing so, you help protect your clients’ plans and help them keep their cheese. 

HIPAA Certificate of Creditable Coverage: Obsolete form, but crucial data


Certificates-Of-Creditable-CoverageAs everyone knows by now, the Affordable Care Act (ACA) is doing away with preexisting condition exclusions under group health plans, applicable for plan years beginning on or after January 1, 2014. There’s an important change in the reporting requirements too.

No more Certificates of Creditable Coverage after Jan. 1, 2015

Anytime the government does away with another form to fill out, it’s a good thing. And that’s what’s happening with Certificates of Creditable Coverage, a provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

In the past, employer-sponsored group health plans have been required to provide individuals who lose their coverage (or would lose it if they didn’t get continuing coverage through COBRA) with a Certificate of Creditable Coverage. The certificate has been used to provide proof of coverage that might reduce the length of a pre-existing condition exclusion under another health plan – especially important when an employee changes companies and health plans.

But with preexisting condition exclusions no longer allowed, Certificates of Creditable Coverage are going away too, and the Departments of Labor, Treasury, and Health and Human Services recently issued their final regulations eliminating the requirement effective December 31, 2014.

Certificates of Creditable Coverage may soon be obsolete, but it’s still crucial to document the dates of creditable coverage – including COBRA early termination notices.

For individuals who leave a company and lose their health coverage, COBRA coverage is generally available for a maximum period up to 18, 29, or 36 months. But group health plans can terminate that coverage early under certain circumstances, including: 

  • Payments not made timely
  • A qualified beneficiary begins coverage under another group health plan after electing COBRA coverage
  • A qualified beneficiary becomes entitled to Medicare benefits after electing COBRA coverage
  • A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving COBRA coverage, such as submitting a fraudulent claim

If COBRA coverage is terminated early, the plan administrator is required to give the qualified beneficiary a Notice of Early Termination of Continuation Coverage as soon as practicable following the decision to terminate COBRA coverage. And whether it’s one of your former employees on COBRA or a new hire that’s been on COBRA and is now signing on to your group health plan, the individual needs documentation of when their previous coverage ended.

Without that paper trail showing who provided coverage and when, the COBRA person could have difficulty tracking their coverage for tax purposes, employers could be in for some sticky overlapping coverage issues, HR nightmares, and unnecessary costs. (If you would like an example, click here to download our report about one employer’s $24,000 oversight!) There has to be a defined cutoff date to facilitate coordination of benefits among everyone involved in administering the old and new plans. After all, insurance companies aren’t likely to pay for anything for which coverage should never have been in place.

The ACA has forever altered the healthcare landscape, and with the evolving regulations and requirements, the need for accurate records, clear communication, and efficient plan administration is greater than ever. Making sure dates of creditable coverage are well documented is one way to keep things running smoothly.

Want more COBRA administration and health reform updates? Subscribe to our blog in the upper right corner of this screen.

ACA Update: Are State Marketplaces Throwing in the Towel?


ACA-UpdateFor consumers, the end of open enrollment is no big news. We saw it coming, and its meaning is simple: Anyone who doesn’t yet have insurance will just have to wait till the next enrollment period to get coverage (unless they qualify for special enrollment, Medicaid or CHIP).

For health insurance Marketplaces, the conclusions are less cut-and-dried. Now that the roller coaster of open enrollment has ended, state Marketplaces are struggling to respond to the problems that haunted their performance. In many cases, performance in the state exchange left something to be desired. In a few cases, it was an outright failure.

Take the Washington Marketplace, for example. Here, “system defects and data issues” allowed certain consumers to sign up and pay without actually receiving coverage. Some of them were informed of the glitch; others received incorrect bills.

Oregon, meanwhile, “built what is widely regarded as the worst-functioning state exchange in the nation.”

Massachusetts was the first state to introduce its own exchange – and last week the original Marketplace software was scrapped for a different solution. While we can assume its administrators are holding out hope that the new software will solve their problems, they’re also preparing for the possibility that it won’t work either. If that’s the case, they’ll turn private enrollment over to the federal exchange.

Throwing in the state towel seems to be a trend. In fact, some “health-care experts” recently told CNBC that “almost half of the existing state-run Obamacare Marketplaces could, in the coming years, end up turning enrollment operations in private insurance plans over fully to the federally run for a variety of reasons.”

While the federal government is willing to absorb the operation of failed state Marketplaces, the situation is not what it would call ideal. The original idea behind the Affordable Care Act was that most (if not all) states would successfully launch their own local insurance Marketplaces, providing coverage to any state citizen who wasn’t already insured through their place of work. Yet only 14 states have chosen to build their own Marketplaces – some failing publicly.

Time will tell if existing state Marketplaces will get their feet under them, and if new Marketplaces will appear from any of the 36 remaining states ... or if, on the other hand, the local health insurance landscape will continue to slide toward the federal Marketplace.

Join our blog to stay informed about how the health insurance Marketplace is evolving. You’ll get updates about the Affordable Care Act, as well as info about COBRA. Look for the “Subscribe via Email” box on the top right.

HHS and DOL Announce Special Marketplace Enrollment for COBRA Participants


COBRA-Special-Marketplace-EnrollmentThis past Friday afternoon, the Centers for Medicare and Medicaid Services (part of HHS) issued a bulletin to deal with Special Enrollment Periods (SEPs).

HHS is concerned that former Model COBRA Continuation Coverage Election Notices (Model Election Notices) published by the Department of Labor and other documents provided by employers did not address, or did not sufficiently address, Marketplace options for persons eligible for COBRA.

The concern? Persons eligible for COBRA and their qualified beneficiaries may have had insufficient information to understand that they cannot voluntarily drop COBRA and enroll in the Marketplace outside of Marketplace open enrollment. 

As a result, in accordance with 45 CFR 155.420(d)(9), HHS is providing an additional special enrollment period based on exceptional circumstances so that persons eligible for COBRA and COBRA beneficiaries are able to select Qualified Health Plans (QHPs) in the Federally Facilitated Marketplace (

Affected individuals have 60 days from the date of this bulletin, that is, through July 1, 2014, to select QHPs in the Marketplace. These individuals should contact the Marketplace call center at 1-800- 318-2596 to activate the special enrollment period. They should inform the Marketplace call center that they are calling about their COBRA benefits and the Marketplace. Once determined eligible for the special enrollment period, consumers can then view all plans available to them and continue the enrollment process over the phone or online through creating an account on or logging into their existing account.

In addition, COBRA beneficiaries are able to choose QHPs in the Marketplace during the annual open enrollment period and if they are determined eligible for any other special enrollment periods outside of the open enrollment period.

There are still many remaining questions to be answered surrounding notification of the 60-day special enrollment window Including:

  • Will employers be required to notify only those in an active COBRA status as of May 1, 2014?
  • Will employers be required to notify former employees who were eligible for COBRA at any time during the open enrollment period (which ended March 31)?
  • What method(s) is/are required for notification? (i.e. US MAIL?  E-Mail? Phone?)
  • What sort of ‘proof’ should each plan administrator have to show that they communicated to the right qualified beneficiaries in a timely manner?
  • Should employers and/or plan administrators re-send Initial Rights Notices for their 2014 active populations?

If you are one of our clients, you need not worry.  We will handle this notification for you prior to July 1. Given the limited COBRA enrollment window, employers who are not COBRAGuard clients may want to create a notification process of their own.  For now, this appears to be a courtesy notice rather than a requirement.

How to Coordinate COBRA with PPACA as Open Enrollment Ends


COBRA CONUNDRUMS is reprinted from the March, 2014 issue of Health Insurance Underwriter Magazine featuring our very own Robert Meyers.

Under PPACA, the open enrollment period for 2014 Marketplace coverage ends on March 31, 2014. If your clients offer health benefits, this date is important because of its impact on COBRA coordination. This is the first of several articles in which I will outline how to coordinate COBRA administration with PPACA after open enrollment ends on March 31. 

As you already know, the responsibility to provide COBRA continuation coverage did not end with health reform. In fact, thanks to PPACA, COBRA administration has become more important and more complex for a number of reasons – some of which we’ll cover here. 

While employers do not have to be Marketplace experts, they certainly need to stay informed. Their employees and former employees will likely rely on them (and you as their broker) for answers as they evaluate their health insurance options during times of transition.

Benefit Availability is of Key Concern After April 1

Of course, employees will continue to change jobs and experience other benefit-eligibility triggering events between April 1 and the next Marketplace open enrollment period, which begins November 15, 2014.  As you’ll see in the chart below, all of the qualifying events associated with COBRA are now also considered triggering life events under PPACA and cause special Marketplace enrollment to be available when they occur. And, under PPACA, there are several additional triggering events that do not apply to COBRA, shown in red.


Events that Trigger COBRA-Eligibility

Events that Trigger Special Enrollment ACA-Eligibility

Termination of Employment

Reduction in Hours




New Employment

Loss of Dependent Status

Becoming Eligible for Medicare

Exhausting COBRA benefits

Loss of eligibility for Medicaid CHIP




Income changes (For those already enrolled in the Marketplace)




Change in immigration status




Error by a government agency or navigator




Move to a state outside one’s plan area




(*Details in this chart may change as the ACA rollout evolves.) 

Timelines and Notable Details

Note: Under PPACA, eligible individuals have 60 days to complete their special enrollment period and coincidentally, the COBRA election period also has 60 days. However, it is unclear if the calculation of the dates is identical, so for now let’s just note the similarity.

For the life events that trigger both COBRA and PPACA eligibility, individuals can choose between COBRA or Marketplace coverage. However, events that cause special enrollment in the Marketplace do not also allow them to access benefits outside the Marketplace.

The important thing for brokers to communicate to clients is that COBRA is ongoing and timely COBRA notices continue to be essential – even when individuals can also access coverage through the Marketplace.

Also, if qualified beneficiaries are actively participating in COBRA, they can only go to the Marketplace when their COBRA benefits are exhausted. If they simply stop paying COBRA premiums, they cannot access the Marketplace until the next open enrollment period. 

It is also worth noting that active employees who have access to coverage through their employers can go to the Marketplace during open enrollment to shop for alternate benefit packages. However, it is unlikely they will be eligible for the subsidy because employer-sponsored coverage is available.

In Summary

The first open enrollment period is almost over and many politicians will breathe a temporary sigh of relief. Both sides will try to claim victory. Meanwhile, those of us who deal with this every day will be very, very, busy. By staying on top of the details and keeping your clients informed, you can help employers claim the victory of achieving compliance during a very complex and challenging time!

How Does IRS Same-Sex Guidance Impact COBRA Administration?


In 2012 the United States Supreme Court ruled on United States v. Windsor, recognizing the legitimacy of legal same-sex marriage for the purpose of federal law.

In 2014, the IRS released guidance on how that decision will affect employer-sponsored retirement plans.

You wouldn’t think these events would have any impact on COBRA; at least not at first glance. After all, the new IRS guidance was limited to retirement plans qualified under Internal Revenue Code Section 401.

By upholding Windsor, the Supreme Court struck down the Defense of Marriage Act (DOMA) – those waves are much bigger and are not limited to the retirement plan community.

Before Windsor, DOMA defined the word “marriage” to mean the legal union of one man and one woman. DOMA allowed plans to withhold benefits from same-sex couples who had been legally married in a State or country where same-sex marriage was allowed. 

“DOMA’s limitations on the definitions of ‘marriage’ and ‘spouse’ affected a myriad of federal laws, including the Internal Revenue Code, ERISA, COBRA, and HIPAA, and thus deprived same-sex couples legally married under the laws of certain states of certain legal protections and preferred tax treatment under spousal retirement and health care benefits” (source).

With the end of DOMA, those effects have come undone. As a result, the federal laws which had been affected are no longer operating on DOMA’s definition. In short, Windsor represents ground-shaking political changes with extraordinary personal ramifications for many Americans – and it affects COBRA, too.  Still, not everything’s different. Here’s how the ruling does (and doesn’t) affect COBRA.

What’s Different?

By lifting DOMA’s restriction on what it means to be married, the Supreme Court required COBRA coverage to extend to an employee’s same-sex spouse.

If you’re an employer or HR manager, take note! The Windsor decision means that if your employee is legally married to someone of the same sex, you must offer COBRA to their spouse.

What’s the Same?

Otherwise, your responsibilities as an employer remain unchanged. As always, it’s your duty to provide your COBRA administrator with accurate information about your employees. And as always, one facet of that information is their legally married status.

Questions about these developments? Please don’t hesitate to contact us. We’re happy to provide COBRA administration information and guidance whenever you need it.

Could you benefit from having access to COBRA info and tools right at your fingertips? Take a look at our proprietary web-based solution by requesting a demo here.


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