The dependent coverage up to age 26 requirement first took effect in 2010.  Grandfathered plans were given a little leeway, and were permitted to exclude dependents who were eligible for other employer-sponsored coverage.  In 2014, however, the requirement to extend coverage to dependents up to age 26 — regardless of where the dependents live, their marital status or employment status — applies to all employer-sponsored plans.  Of course, small employers are not required to offer any medical coverage to employees.  If a small employer chooses to offer medical benefits and extends those benefits to dependents, the dependent eligibility must include all dependents up to age 26 under the same terms as those required of large employer sponsored-plans.

Although the dependent coverage mandate within the ACA is independent from the Employer Mandate portion of the ACA (also referred to as the Play or Pay Mandate), the two mandates create an interesting question of eligibility for tax credits through the Marketplace.  Large employers subject to the Employer Mandate are required to offer Minimum Essential Coverage that is affordable and of minimum value to all full-time employees and their dependents or risk penalties in 2015.  As the regulations are currently written, coverage sponsored by a large employer is deemed to be affordable if the cost of employee-only coverage is no more than 9.5% of an employee’s income.  As a result, large employers might subsidize the cost of employee-only coverage much more than employee+dependent or family coverage.  The requirement to extend coverage to dependents in combination with the affordability provision makes employee+dependent coverage or family coverage too expensive for some employees, but at the same time, acceptable under the Employer Mandate.

Employees (and their dependents) facing this conundrum are asking questions about their eligibility for premium tax credits through the Marketplace.  Anyone can apply for coverage through the Marketplace, but eligibility for tax credits is limited.  An employee who is eligible for employer-sponsored coverage that is affordable and of minimum value, is not eligible for premium tax credits through the Marketplace.  Generally, the same holds true for dependents who are eligible for the same employer-sponsored coverage.  There is one little twist though – a young adult who is eligible for a parent’s employer-sponsored plan but who is not claimed as a dependent on the parent’s income tax return, may be eligible for premium tax credits in the Marketplace.  Eligibility for tax credits in the Marketplace is determined by the applicant’s household income.  If a young adult is not claimed as a tax dependent, that young adult will not be considered part of the parent’s household, regardless of eligibility for the parent’s employer-sponsored plan.  If the young adult’s income is within the income guidelines, s/he may be eligible for subsidized coverage through the Marketplace.

This issue has caused some confusion even among legislators in Washington.  Judy Solomon, Vice President for Health Policy at the Center on Budget and Policy Priorities, tries to set the record straight in a blog post, later referenced by Kaiser Health News in a Q&A.

The bottom line is this:  Young adults can obtain coverage through their parents’ plan (if available), through their own employer (if available), through Medicaid (if the state they are in has chosen to expand Medicaid under the ACA), or through the Marketplace.  If not eligible for Medicaid, a young adult may be eligible for subsidized coverage in the Marketplace if they earn between 100% and 400% of the Federal Poverty Limit, are not claimed as a dependent on their parents’ income tax returns, and are not eligible for affordable coverage through their own employer.

The post The skinny on tax credits in the Marketplace for young adults appeared first on Healthcare Reform Digest.

The Affordable Care Act (ACA) does not require small employers (employers with fewer than 50 full-time equivalent employees) to offer health insurance to their employees, but it provides financial incentives for some small employers that do.  The Small Business Health Care Tax Credit, first available in 2010, increases in 2014 to up to 50% of employer-paid premium costs for qualifying small employers.  In order to access the credit, coverage must be purchased through an agent, broker or insurance company that offers plans through the SHOP and can conduct enrollment according to CMS standards.  A completed paper application for the Small Business Tax Credit will be submitted to the SHOP Marketplace either directly by the small employer, or by the agent, broker or insurance company.  Employee enrollment can begin before tax credit eligibility is determined.  If the SHOP later determines that the small business is ineligible for a tax credit, the insurance company is not required to terminate coverage.

Small employers that whish to make SHOP coverage effective for employees on January 1, 2014, must enroll by December 23, 2013.  The previous enrollment deadline of December 15 has been extended.  Access the CMS FAQs on the new direct enrollment process here and the companion blog post by HHS here.

When the SHOP website is fully functional, it is anticipated that small employers in all 50 States and the District of Columbia will be able to offer their employees a choice of plans from multiple issuers while making a single monthly payment, for coverage taking effect on or after January 1, 2015.  Currently, the direct enrollment process is available in states that are using the Federally Facilitated SHOP Marketplace (like North Carolina).  For businesses located in the few states that are running their own SHOP Marketplace, that state’s application and enrollment process must be followed.  For state status, contact your agent, broker or insurance company, or try your luck at HealthCare.gov or by calling the SHOP Employer Call Center, toll-free at 1-800-706-7893.

The post Small employers can shop, but can’t buy, on the SHOP Exchange appeared first on Healthcare Reform Digest.

Why might this be important to employers? It is important to the extent employers are communicating with their employees about their options in the Marketplace. Employees not eligible for an employer-sponsored plan may be looking to their HR department for guidance. In addition, an employer that has traditionally offered a mini-med plan to a group of employees may find itself in the position of communicating regarding the cancellation of those plans and may want to provide information about enrollment options in the Marketplace. It is also important for employers with COBRA participants on their plans. COBRA participants can terminate their COBRA coverage early and enroll in a Marketplace plan during open enrollment. Communicating to COBRA participants about the possibility of less-expensive plans in the Marketplace could be beneficial to both the employer and the former employee.

The rules regarding enrollment and effective dates through the rest of the open enrollment period remain the same. If an individual enrolls on or before the 15th of the month, coverage will begin on the first day of the following month. If an individual enrolls in the later half of the month, the coverage will not be effective until the first day of the second month following. For example, if an individual enrolls in coverage on March 31 (the last day to enroll and not be subject to a fine) the coverage will not be effective until May 1.

Next year, things will be a little different. Open enrollment for the Marketplace in 2014 was originally scheduled to coincide with Medicare open enrollment (October 15 through December 7). However, the Administration has announced that for 2014, open enrollment in the Marketplace will not begin until November 15 and will run through January 15, 2015. The expectation is that in 2015, the Marketplace open enrollment period will change again to align with Medicare open enrollment.

For more details, check out this blog post from Kaiser Health News, and this one from Health Affairs. See also the November 22 Daily Briefing from the White House.

The post New Dates for Marketplace Open Enrollment appeared first on Healthcare Reform Digest.

• Total number of enrollees selecting coverage in both state (14 states and DC) and federal (36 states) exchanges:  106, 185
• Total completed applications submitted from 10/1/2013 to 11/2/2013:  846, 184  (to cover an estimated 1,508,883 individuals)
• Total number of enrollees selecting coverage in state-based exchanges:  79, 391
• Total number of enrollees selecting coverage in federally-facilitated exchanges:  26, 794
• Individuals determined or assessed to be eligible for Medicaid or CHIP:  396,261
• Individuals determined to be eligible for a plan through an exchange: 1,081,592
• Individuals determined to be eligible for financial assistance: 326,130
• Number of individuals who have selected a plan from the exchange in North Carolina: 1,662

For more details on the data, click here for the official report from HHS.  Do you think these numbers will improve?  How close will enrollment be to the Congressional Budget Office target by year end?

The post HHS Publishes Official Data on Health Insurance Exchange Enrollment appeared first on Healthcare Reform Digest.

This action by the Agencies is in direct response to a soliciation for public comments regarding changes to the “use it or lose it” rule in IRS Notice 2012-40 and some legislative activity to consider possible changes to the rule that would make contributions to a health FSA more palatable after implementation of the $2,500 cap.  In a rather surprising move, the Agencies also provided that the $500 carryover will not impact the ability of an individual to contribute the full salary reduction amount of $2,500 for the next plan year.  However, there is one caveat.  While the Agencies have not changed the ability of an employer to utilize the allowed grace period for use of health FSA funds, this new guidance does clarifiy that an employer may use the grace period or the carryover, but not both.  Employers that currently utilize the permitted grace period should consider whether to continue using the grace period or to utilize the new carryover feature, and to amend their Section 125 cafeteria plan documents accordingly.  Employers may also specify an amount lower than $500 that employees may carryover if this new provision is utilized.

Employers may be able to take advantage of this new carryover feature during 2013 for the 2014 plan year.  For more information about the carryover, see the Treasury Press Release and IRS Notice 2013-71.  The associated fact sheet may be accessed through the press release.

The post IRS to Allow Limited Carry Over in Healthcare Flexible Spending Arrangements appeared first on Healthcare Reform Digest.

The Affordable Care Act (ACA) requires nearly all individuals, beginning on January 1, 2014, to maintain health insurance coverage or pay a tax penalty.  The regulations implementing this provision, commonly referred to as the Individual Mandate, allow a grace period such that an individual can go without coverage for a period of time “less than three full calendar months” in a calendar year and avoid the tax penalty.  The announcement yesterday effectively extends this grace period in 2014 to four months.

According to the current Marketplace rules, if you enroll in coverage between the 1st and the 15th of the month, the coverage will be effective on the first day of the following month.  If you enroll in coverage after the 15th of the month, the coverage is not effective until the first day of the second month following the enrollment date.  Under the current regulations, an individual seeking insurance through the Marketplace would have to enroll in coverage on or before February, 2014 in order to have coverage effective on April 1st and avoid a tax penalty.  (Remember, the grace period is not three consecutive months, but “less than” three consecutive months.)  Yesterday’s announcement elongates the grace period by exempting from penalty individuals who enroll by March 31st.  Coverage for those who enroll between March 15 and March 31 will not be effective until May 1, 2014.  These individuals will not have had coverage for four full months in 2014, but according to the announcement yesterday, will still not be subject to a tax penalty.  The tax penalty for individuals without coverage in 2014 is $95 or 1% of income, whichever is greater.  The penalty goes up to $695 or 2.5% of income, whichever is greater, in 2016.

With open enrollment available through March 31, 2014, many individuals might expect they would avoid a tax penalty as long as they enrolled by the end of open enrollment.  The change announced by HHS yesterday aligns the regulations with that common expectation.

Read the news reports about the HHS announcement at Kaiser and The New York Times and The Washington Post.  Read the IRS final regulations about the shared responsibility payment for not maintaining minimum essential coverage here.

The post Avoid Individual Mandate Penalties – Sign up for Coverage by March 31, 2014 appeared first on Healthcare Reform Digest.

• Aged, blind or disabled;
• Infants, children and families;
• Long-term care; and
• Medicare recipients.

*Click here for the N.C. Medicaid Eligibility Chart

So what is the result?  Childless, low income adults will be impacted the most.  Individuals with household incomes between 100% and 400% of the Federal Poverty Level may be eligible for premium tax credits or cost-sharing subsidies for coverage purchased through a health insurance Marketplace if they do not have access to other minimum essential coverage.  Currently, 100% of the Federal Poverty Level for 2013 is $11,490.  A childless adult making less than $11,490 will not qualify for Medicaid because they do not meet the Medicaid eligibility requirements, at least in North Carolina.  And, because the adult’s income is less than 100% of the Federal Poverty Level, they also will not qualify for premium tax credits or cost-sharing subsidies.  An adult in this situation would be left with limited options: (1) going without coverage; (2) paying the full premium for a health plan through the Marketplace; or (3) enrolling in employer-sponsored coverage, if employed and eligible for the employer’s benefits.  Although these options are not very appealing, the U.S. Department of Health and Human Services (HHS) has made an accomodation.  In a final rule published on June 26, 2013, HHS provided an exemption from the individual mandate tax penalty for individuals ineligible for Medicaid solely because a state declined to expand Medicaid under PPACA.

Some of the states that have not expanded Medicaid may do so at a later date. Until then, this coverage gap could only be remedied by legislative action.

The post Low Income Adults Fall Into PPACA’s “Coverage Gap” appeared first on Healthcare Reform Digest.

In addition, 2015 will bring new reporting requirements to employers that will require them to harness an unprecedented amount of data on the health care benefits offered to their employees.  Specifically, Section 6056 of the ACA requires employers to report to both the IRS and employees, details on who received an offer of health insurance coverage, who enrolled in the coverage, what the coverage included, and the value of the coverage.  Although this minimum essential coverage reporting will not be carried out until January 2016, the information to be reported will be from the 2015 calendar year.  Employers should use 2014 to ensure their human resource, payroll, accounting and benefits data systems are collecting the necessary information for the employer to satisfy its reporting obligations.  The accuracy of the information gathered and reported in 2016 will impact the penalties the IRS will look to impose on an employer under the employer mandate.

If an employer uses more than one payroll system or more than one benefit provider, they will have to work to consolidate the reporting from each system to satisfy the Section 6056 reporting to the IRS and employees.  Similarly, employers with separate systems for human resources, payroll and benefits data should expect fulfilling the reporting requirements to be much more complex than if all the information necessary was gathered in one system.  Employers should consider building a data warehouse or hiring a third-party service provider to ensure the data is accurate, consistent and in a format compatible with the reporting requirements.  The final rules for the reporting requirements have not yet been released, but in the meantime, employers can begin to assess their obligations with a quick review of the proposed rules, found here.

The post Is your IT system glitch-free? Lessons from the Marketplace appeared first on Healthcare Reform Digest.

SHOP Exchanges will provide a new avenue for small businesses to purchase group health insurance for employees.  Despite this delay of the online enrollment function, small businesses will still be able to apply for coverage through a SHOP Exchange on October 1, but will be required to mail or fax their SHOP enrollment information to the SHOP.  This delay impacts the SHOP Exchanges in the 34 states that have chosen not to operate their own state-based SHOP Exchange.  Some states that elected to operate their own small business health insurance exchanges, including Maryland and Washington, have delayed access to their state-based small business health insurance exchanges.

For more information about the SHOP online enrollment delay, the Washington Post, CNN, New York Times (subscription required), and Wall Street Journal (subscription required) report.

The post SHOP Exchange Online Enrollment Delayed appeared first on Healthcare Reform Digest.

If your company is covered by the Fair Labor Standards Act (FLSA), the ACA and implementing regulations require you to provide a written notice to all employees about the Health Insurance Marketplace by October 1, 2013.  However, neither the ACA nor the regulations provide for any penalties if an employer fails to meet this requirement (not yet anyway).

Nevertheless, providing information about the Marketplace to employees may be in the employer’s best interest.  First, accurate and effective communication about an employer’s benefits are good for employee relations.  Second, useful and digestible information about the employer’s plan and how it may impact an employee’s eligibility for tax credits or cost sharing subsidies in the Marketplace can get ahead of any questions that might start flooding into to HR as Marketplace advertisements heat up.

Employers seeking to satisfy the Notice requirement should prepare written materials that inform employees:

• About the Health Insurance Marketplace;
• That, depending on their income and what coverage may be offered by the employer, they may be able to get lower cost private insurance in the Marketplace; and
• That if they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits

The DOL has two model notices to help employers comply.  One is for employers who do not offer a health plan and another is for employers who offer a health plan to some or all employees:

• Model Notice for employers who offer a health plan to some or all employees
• Model Notice for employers who do not offer a health plan

The model notices are also available in Spanish and MS Word format at the DOL’s Affordable Care Act webpage.  Employers can use one of these models or a modified version.

The post No Fine for Failure to Provide the Notice of Exchange appeared first on Healthcare Reform Digest.