This week, our blog article is provided by our friend Jason Cogdill at ProBenefits.
IRS Notices Released This Week Address Individual Mandate & Subsidy Details
On Wednesday, the IRS released two important notices clarifying individual rights and responsibilities in 2014. Both are short, and I recommend reading when you have an opportunity (each is linked in this section). In Notice 2013-42, the IRS provides transition relief from the individual mandate for employees eligible for a group plan that operates on a non-calendar plan year. Prior to this transition relief, an employee in a non-calendar plan that waived coverage at 2013 enrollment could be subject to an individual tax penalty for not having minimum essential coverage during the period between 1/1/14 and the employer’s 2014 renewal. With this ruling, the individual will not be penalized for the lack of coverage prior to employer’s 2014 renewal. In the Notice, the IRS cites as its rationale the qualified transition relief available to employers offering non-calendar year plans as well as the ability of an employer to permit election changes during the exchange open enrollment period. Examples are listed in the notice.
In Notice 2013-41 regarding eligibility for the premium tax credit on the exchange, the IRS provides guidance on whether or when an individual is eligible for minimum essential coverage under government-sponsored programs or other plans. In addition to clarifying Medicare, Medicaid, CHIP, and TRICARE details, the IRS notes that HHS has designated state high risk pools and self-funded student health coverage offered by universities as minimum essential coverage. The notice provides further details.
Reminder/Refresher on PCOR Fees
As a reminder, the first round of PCOR fees are due for fully insured plans and self-funded health plans (including HRAs) on July 31. There is still a significant amount of confusion and misinformation on this topic. To confirm, only group health plans with plan years ending 10/1/12 – 12/31/12 are required to file by 7/31/13. All plan years that end on or after 1/1/14 will file by 7/31/14 rather than this year. The health insurers are responsible for paying the fee for fully insured plans, and the employer plan sponsor is required to file for self-funded plans.
HRAs are required to file a PCOR fee regardless of being linked to a group health plan. For a summary of the PCOR rule and applicable deadlines and details, see the attached one-pager from ProBenefits.
Details Regarding HRA Impacts on Minimum Value and Small Employer Cost-Sharing Limits
I am receiving a number of questions regarding whether HRAs can be used by employers in 2014 in order to (1) meet minimum value, or (2) help small employer plans meet the deductible and cost-sharing limits of the essential health benefits package. The short answer to both is yes. Of course, that approach will depend in part on whether fully insured plans are available from the carriers that will be below minimum value (for small or large plans) or outside of the cost-sharing limits for small employer plans.
I will keep it short in the interest of time and space here, but send me an email if you would like a full written summary on how HRAs will count toward the minimum value calculations or cost-sharing limits in 2014. Also note that HSA bank account contributions by the employer may be used to help meet these requirements as well.
Watch Continues for Employer Mandate Guidance
As of today, the final guidance on the employer mandate has still not been released. This continues to be the most significant item that we are waiting on in terms of employer planning and strategy for 2014. As soon as the final guidance is released (unless it is during my vacation July 6-13), I plan to share a summary by email and also host a short webinar on the final regs.
Also, once the final mandate guidance is issued, we will also be finalizing our Advanced Workshop model that we will present beginning in August. This session is designed to be a follow-up to our large employer Workshops that we have conducted from January until now. If you would like more information on our Advanced Workshop or our continuing large employer Workshops, small employer Workshops, or employer consultations, contact us. My colleague, Tyler Newkirk, is the contact for HCR education and advising services.
Finally, an early Happy Fourth of July week to all. Enjoy the fireworks, ice cream, and baseball. We all need to take a breather now or sometime this summer, because it is going to be quite a stretch run in the fall and winter.
Thanks for the great update Jason! Want to stay informed on the latest health care reform and COBRA developments? Subscribe to the COBRA blog in the upper right section of your screen.