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.

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.

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.

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.

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.

Once available tax credits are applied, the cost of the second-lowest cost silver plan becomes the same, no matter what state you are in.  This is because of a premium cap based on income.  For example, the cost of the second-lowest cost silver plan for individuals earning between 250% and 300% of the Federal Poverty Limit is capped at no more than 9.5% of income.  The cost of the same coverage for an individual earning between 150% and 200% of the FPL is caped at 6.3% of income.  Those with income levels between 100% and 250% of the FPL will also be eligible for cost-sharing subsidies for out-of-pocket costs.

BCBSNC is offering 26 different health-insurance plans in the North Carolina Marketplace.  The plans range in price from a low of $145 for a catestrophic plan (available only to those under 30 years old or who qualify for a hardship exemption) to a high of $947 for a platinum plan.  BCBSNC is the only carrier offering plans in all 100 counties.   Coventry Health Care of the Carolinas and FirstCarolinaCare are also offering plans in the North Carolina markeptlace.  Not much is know yet about the Coventry plans, but FirstCarolinaCare has published the rates of the plans it expects to offer.  FirstCarolinaCare is offering 16 plans in 6 counties, and the prices range from a low of $80 for a catestrophic plan (for individuals age 20 and under) to a high of $1,112 for a gold plan for individuals 65 years of age and older.  FirstCarolinaCare is not offering platinum level plans.

The post The Cost of Coverage in NC appeared first on Healthcare Reform Digest.

The report provides state-by-state estimates for the cost of coverage for a 25-year-old, a 40-year-old, and a 60-year-old, as well as the impact of tax credits on those rates.  For example, the monthly premiums for the second-lowest-cost silver plan for a 40-year-old range from $201 in Portland, Oregon, to $413 in Burlington, Vermont.  Application of tax credits to these premium rates reduces the variation.  A 40-year-old with an annual income of approximately $29,000 would be eligible for tax credits that would reduce the monthly premium to $193 in each of the 18 markets represented in the study.  Monthly premium cost for this 40-year-old is reduced to between $97 and $168, depending on the market, if he or she chooses to purchase the lowest cost bronze plan instead of the silver plan.  The report also includes examples for a family of four and an older couple in each of the 18 cities represented.

For more side-by-side comparisons, view the Kaiser report.  For estimates not represented in the report, use the Kaiser subsidy calculator to plug in your own numbers.

The post A Sneak Peek at Premiums in the Marketplace Across the Country appeared first on Healthcare Reform Digest.

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The Affordable Care Act (ACA) requires individuals to share responsibility with employers and insurance carriers to improve the availability, quality, and affordability of health insurance coverage.  The Individual Mandate ensures that individuals do not wait until they are sick to purchase insuarance, by requiring individuals to purchase insurance when they are well.  Final regulations issued by the IRS on August 27th confirm that the Individual Mandate will begin in 2014.

Starting in 2014, every individual is required to have basic health insurance coverage (aka minimum essential coverage or MEC), qualify for an exemption, or make a shared responsibility payment when filing a federal income tax return.  Coverage that satisfies the MEC requirement includes employer-sponsored coverage (including COBRA coverage and retiree coverage),  coverage purchased in the individual market, Medicare Part A, Medicaid, Children’s Health Insurance Program (CHIP), certain types of Veterans health coverage, and TRICARE.  Vision and dental care, workers’ compensation, or coverage only for a specific disease or condition do not satsify the MEC requirement.

Starting in early 2015, individuals filing a tax return for 2014 will indicate which members of their family (including themselves) had insurance coverage.  For each family member who did not have coverage, the taxpayer will owe a shared responsibility payment.  The shared responsibility payment in 2014 is 95$ per individual (1/2 for individuals under age 18) or 1% of household income, whichever is greater.

Earlier this year, HHS published final rules on exemptions from the shared responsibility payment.  The final rules confirm nine categories of exemptions.  Individuals can apply through the Marketplace for a religious conscience exemption or a hardship exemption.  The hardship exemption is available for individuals who would be eligible for Medicaid but for a state’s choice not to expand Medicaid eligibility.  In additional, the hardship exemption is available on a case-by-case basis for individuals who face other unexpected personal or financial circumstances that prevent them from obtaining coverage.

Exemptions are also available through the IRS (i.e. through the tax return filing process) for individuals who are not lawfully present, taxpayers with household income below the filing threshold, individuals who cannot afford coverage, and individuals with short (less than three months) gaps in coverage.  The final three exemption categories — for members of a health care sharing ministry, individuals who are incarcerated and members of Indian tribes — are available through either the Marketplace or the IRS tax return filing process.

A note on partial-month coverage:  The IRS final regulations clarify how partial months of coverage or exemption are treated.  An individual is treated as having coverage for an entire month so long as he or she has coverage for any one day of that month.  Similarly, an individual who is eligible for an exemption for any one day of a month is treated as exempt for the entire month.

A note about non-calendar year employer-sponsored plans:  Generally, employer-sponsored plans do not permit employees to enroll in the plan after the beginning of a plan year unless certain triggering events occur.  In order to avoid paying the Indivdual Shared Responsibility Payment for lack of coverage, employees eligible to enroll in non-calendar employer-sponsored plans would need to enroll in coverage in 2013, when the individual shared responsibility provision does not yet apply.  Enrolling in the plan in in 2013 would provide the employee with coverage for the plan months in 2014 when the individual shared responsibility provision applies.  Earlier this year, the IRS issued Notice 2013-42, providing transition relief for employees in this position.  The transition relief allows an employee, or an individual with a relationship to the employee, who is eligible to enroll in a non-calendar year employer-sponsored plan with a plan year beginning in 2013 and ending in 2014, exemption from the shared responsibility payment until the end of the 2013-2014 plan year.  The result is that employees and dependents who choose to wait until the 2014-2015 plan year to enroll in coverage will not be subject to the shared responsibility provision for the months in 2014 that are part of the 2013-2014 plan year.

Sources:  The final IRS regulations published last week (primarily adopting the proposed regulations without change) together with the HHS final rules published earlier this year, explain the Individual Mandate and clarify the eligibility rules and process for receiving an exemption.

For more information about the Individual Mandate, the IRS hosts a web page “Questions and Answers on the Individual Shared Responsibility Provision.”  For more information about health insurance through the Health Insurance Marketplace, including how to sign up for email updates and tips on how to prepare for open enrollment in October 2013, visit: http://www.healthcare.gov/marketplace/index.html.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

The post The Final Word on the Individual Mandate appeared first on Healthcare Reform Digest.

North Carolina insurance officials have approved the health plans that will be available through the Marketplace, and the plans now await approval from the U.S. Department of Health and Human Services (HHS).  Rates, deductibles and other details of the plans are considered trade secrets and will remain under wraps until posted online by HHS sometime before October 1 when the Marketpalce opens for enrollment.

Blue Cross and Blue Shield of North Carolina plans to offer subsidized coverage through the Marketplace in all 100 counties of the state.  Coventry Health Care of the Carolinas will offer subsidized plans in some parts of the state and FirstCarolinaCare will operate in just six counties.  More than 1 million North Carolinians are expected to sign up for subsidized insurance through the Marketplace this fall.

The Affordable Care Act (ACA) requires all indivdiuals to have health insurance and provides subsidies to offset the cost of plans in the Marketpalce for individuals and families within certain income levels.  Indivdiduals with annual income up to $45,960 a year, and a family of four with household income up to $94,200, will be eligible to recieive subsidies.  In addition, individuals with pre-existing conditions will be able to get coverage and will not be charged more because of their health condition.  Premiums in the Marketplace can vary depening on age, tobacco use and county of residence, but cannot vary based on the medical history of the individual.  For more information about the Affordable Care Act visit www.HealthCare.gov.

Read the full News & Observer article by John Murawski here.

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