Health Care Reform – Delayed Compliance Date for Summary of Benefits and Coverage

The Patient Protection and Affordable Care Act (PPACA) adds to the list of necessary health plan disclosures by requiring plans and issuers to distribute a summary of benefits and coverage (SBC) to applicants and enrollees. The SBC is intended to be a relatively short document that provides important plan information in plain language so that health consumers can better understand their coverage options. This disclosure requirement applies to both grandfathered and non-grandfathered plans.

On Aug. 22, 2011, the Departments of Health and Human Services, Labor and Treasury (Departments) issued proposed regulations for the SBC. The proposed regulations include guidance on providing and preparing the SBC as well as a proposed template for the SBC. The SBC regulations are not final. The Departments have indicated that they will likely make changes to the SBC regulations before they are finalized.

On Nov. 17, 2011, the Department of Labor (DOL) issued a set of Frequently Asked Questions (FAQs) that addresses when plans and issuers must start providing the SBC. The proposed regulations provided that plans and issuers must start providing the SBC by March 23, 2012. However, in the FAQs, the DOL delays the compliance date for providing the SBC. The DOL provides that plans and issuers can wait to start providing the SBC until after the final regulations are released. Thus, the March 23, 2012 deadline no longer applies.

It is uncertain when the final SBC regulations will be released. However, according to the DOL, plans and issuers will be given sufficient time after the final regulations are released to get ready for complying with the new requirements.

This delay is significant because it gives plans and issuers more time to develop the SBC. Also, because plans and issuers can wait until final regulations are released to complete the SBC, they will not need to prepare the SBC based on the proposed regulations only to have to update it later for the final guidance.

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Important Employer Notice Requirement on CHIPS Program

On February 4, 2009, President Obama signed into law the Children’s Health Insurance Program Reauthorization Act of 2009.  The state children’s health insurance program (CHIP) provides health insurance for children whose families cannot afford private healthcare but do not qualify for federal Medicaid. 

Employers are required to provide these notices by the latter of the first day of the first plan year after Feb. 4, 2010, or May 1, 2010. Accordingly, for plan years beginning from Feb. 4, 2010, through April 30, 2010, the Employer CHIP Notice must be provided by May 1, 2010. For employers whose next plan year begins on or after May 1, 2010, the Employer CHIP Notice must be provided by the first day of the next plan year (Jan. 1, 2011, for calendar-year plans). CHIP Notice.

The DOL plans to update the notice annually, with current information about which states are providing premium assistance programs. For more information go to CHIP Reauthorization Act of 2009 Legislative Brief.

Upon review, please let me know if you have any questions.

New Excise Tax Reporting Effective January 1, 2010 for Violations of COBRA, HIPAA and Other Health Plan Mandates

Effective January 1, 2010, employers who sponsor group health plans now will be required to report and pay excise taxes for failing to satisfy certain federal group health plan mandates, unless timely corrected. The Internal Revenue Service (IRS) issued final regulations regarding new reporting requirements. Starting in 2010, employers (and certain third parties) must self-report and pay excise taxes for failing to comply with the following:

  1. COBRA
  2. HIPAA portability, access, renewability and nondiscrimination rules
  3. The Genetic Information Nondiscrimination Act (GINA)
  4. Mental health parity rules
  5. Minimum hospital stays under the Newborns’ and Mothers’ Health Protection Act
  6. Continued group health plan coverage of postsecondary dependent children on a medically necessary leave of absence under Michelle’s Law
  7. Health savings account (HSA) comparable employer contributions rules, see IRS Regs
  8. Archer medical savings account (MSA) comparable employer contributions rules, see IRS Regs

Affected parties must report the excise taxes on Form 8928, “Return of Certain Excise Taxes under Chapter 43 of the Internal Revenue Code.” Failure to file Form 8928 and pay excise taxes may lead to the imposition of penalties and interest. Form 8928 is available on the IRS Web site.

Employer Practice Points

Dipa N. Sudra of Davis Wright and Tremaine, LLP suggests;

Employers should have procedures in place to identify potential excise tax issues; and relevant employees, such as human resources personnel, should be familiar with the excise taxes noted above. Employers should consider creating checklists of potential excise tax violations and periodically review the checklists.

For example, employers should work with their advisors or COBRA administrators to ensure that there are no COBRA violations.

Employers must also ensure that relevant employees are familiar with recent changes, such as:

  • The two new events under HIPAA permitting special enrollment in a group health plan for loss of eligibility for coverage, or entitlement to a state premium assistance subsidy, under Medicaid or a state child health plan. (Employers should watch out for model notices expected to be issued in 2010 regarding these new events, and should update the notice of special enrollment rights given to employees.)
  • Prohibitions under GINA against using genetic information for underwriting or certain other purposes. In particular, note that there may be violations of GINA if genetic information was obtained before, but used after, its effective date (such as information collected as part of a health risk assessment).
  • Parity requirements for medical benefits and mental health or substance use disorder benefits.
  • Michelle’s Law.

Congress Introduces COBRA Subsidy Expansion Bills

Two separate bills have been introduced, one which is more expansive than the other. The smaller of the two bills is HR 3966, which would only extend the ARRA subsidy for involuntary terminations and loss of coverage occurring through June 30, 2010.  However, the larger bill is HR 3930, and includes the following provisions:

Qualifying events with the 18-month COBRA period would be extended to 24 months for any termination of employment (voluntary or involuntary) or reduction of hours that occurred during the 21-month period starting on April 1, 2008, and ending on December 31, 2009. Further, if an individual’s COBRA coverage already expired before the law is passed, affected qualified beneficiaries would have a second election right to obtain the additional six months of coverage.

The ARRA subsidy would be extended for involuntary terminations and loss of coverage occurring through June 30, 2010. Further, all ARRA subsidies would continue for up to 15 months (current 9 months plus an additional 6 months under the proposal), but all subsidies would end by December 31, 2010 regardless of the new 15-month rule.

These bills have been introduced in the House and are currently in committee; however, they have not reached the House floor for a full vote.  The Senators Brown and Casey have introduced S.2730 in the Senate, a bill which extends COBRA as would HR 3930, but would also increae the subsidy from 65% TO 75%.  Stay tuned to the Health and Wellness as a Business Strategy blog for updates on these bills.

Updated information provided by Joanne Flora.

DOL Releases ARRA COBRA Model Notices

 

The DOL has released the new model notices today. We will be reviewing all new notices and sharing with you via email under which circumstances to use these new notices.  COBRA NOTICES 

 

DOL creates website on COBRA coverage under the American Recovery and Reinvestment Act of 2009

All employers and employees now have a site that answers questions about the COBRA coverage under ARRA. Individuals who request treatment as an assistance eligible individual and are denied such treatment by their group health plan may have the right to appeal to the DOL. The DOL is currently developing a process and an official application form that will be required to be completed for appeals. According to the website, The DOL is actively working to issue additional guidance regarding the COBRA premium reductions.  I expect to see the DOL’s final notices regarding changes under ARRA next week.  Important IRS forms are also available in spanish and english at this site.  Stay tuned for more information.

Go to DOL COBRA ARRA site

Final rule will expand FMLA for military families and clarify rules for workers and employers

The U.S. Department of Labor has published a final rule on Nov. 17 to update its regulations under the 15-year-old Family and Medical Leave Act (FMLA) — a measure that will help workers and their employers better understand their rights and responsibilities, and speed the implementation of a new law that expands FMLA coverage for military family members.

 

This final rule, for the first time, gives America’s military families special job-protected leave rights. Click here for new rules

 

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