Tell Senate To Pass Fix To ACA’s Full-Time Employee Definition

November 17, 2014

Employers and others concerned about the financial, reporting and other burdens of complying with the Patient Protection & Affordable Care Act (ACA) “pay-or-play” employer shared responsibility rules imposed under Internal Revenue Code (Code) § 4980H and other rules should review and consider letting their elected representatives and other Senate leaders know if they support the ACA corrections H.R. 4, the “Jobs For America Act” (Act).  With key leadership appointments completed for both Houses for when the new Congress takes office January 3, 2014, now is a key time for businesses and others to let Senate and other leaders know what businesses see as the key legislative priorities that Congress should enact over the next six months.

Pending in the Senate since the House passed it on September 13, 2014, the Act as passed by the House would modify ACA.  Among other things, the Act would:

  • Raise from 30 to 40 hours per week the number of hours per week that an employee would need to work to count as a “full-time employee” for purposes of Code § 4980H’s employer “pay-or play” shared responsibility rule requirement that employers to provide health care coverage for their full-time employees;
  • Amend the Code to let an employer, for purposes of determining whether such employer is an applicable large employer and thus required to provide health care coverage to its employees under ACA to exclude employees who have coverage under a health care program administered by the Department of Defense (DOD), including TRICARE, or the Department of Veterans Affairs (VA); and
  • Repeal of Medical Device Excise Tax on medical devices.

The Act also provides for enactment of numerous reforms beyond these specifically relevant to health care that Congressional supporters say will reduce burdens on business that cost jobs by undermining the competitiveness of U.S. businesses and workers.

While President Obama has vowed to veto any attempt by Republicans that he perceives would roll back the reforms enacted as part of ACA, many members of Congress have expressed support for tightening the definition of full-time employee for purposes of the employer pay-or-play mandates and certain other reforms.  Following the designation of the members of the House and Senate that will occupy key leadership positions completed last week, committee assignments and other key leadership assignments are clarifying and members of both houses of Congress are now discussing the key legislative priorities and their work schedule for the balance of 2014 and when the new Congress is sworn in on January 3, 2014.  Consequently, business and other leaders supporting the Act’s reforms or other ACA reforms should identify the key  Congressional players on the committees influencing the Act and other legislation and begin communicating with the key leaders and their elected Congressional leaders about this support.

Interested persons can review the Act and monitor its status here.

For Advice, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here

NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.


HHS Delays Deadline To Submit ACA Reinsurance Program Enrollment Counts To 12/5

November 17, 2014

The Department of Health & Human Services (HHS) has yielded to requests for an extension of the deadline for contributing entities to submit their 2014 enrollment counts for transitional reinsurance program contributions under 45 CFR 153.405(b) required as part of the required under HHS’ rules implementing the Patient Protection &  Affordable Care Act (ACA) transitional reinsurance program. The extended deadline is now 11:59 p.m. on December 5, 2014. The January 15, 2015 and November 15, 2015 payment deadlines remain the same.

The transitional reinsurance program established as part of ACA imposes a reinsurance fee applies in 2014, 2015, and 2016. Under Final Rules published March 5, 2014, the insurer pays the fee for insured plans but where a group health plan is self-insured, the plan itself pays the fee.   Final Rules published March 5, 2014 provide that self-insured plans that are self-administered plans are exempt from the fees in 2015 and 2016.  Employers and others sponsoring self-insured plans should consult with qualified counsel about whether they fall into this exception under the applicable rules, as well as to confirm that their program meets these and other applicable requirements.

The reinsurance fee equals the yearly rate times the number of plan participants. The yearly rate is $63 for 2014, $44 for 2015, and to be announced for 2016.

The Centers for Medicare and Medicaid Services (CMS) plans to run the first risk adjustment and reinsurance calculation estimates in mid-December, 2014 using data to be collected from insurers and TPAs on the EDGE system.  It is unclear how if at all the extension announced by HHS for reporting will impact the timing of these calculations.

For Advice, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here

NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.


Some Group Health Plans Face 8/18 Deadline To Correct Form 8963 Under Notice 2014-47 Risk Adjustment Fee Guidance

August 12, 2014

Group health plan sponsors and third party administrators of certain group health plans who already filed their Form 8963, “Report of Health Insurance Provider Information,” who expect that their group health plan will be  exempt in the 2014 fee year from the temporary risk adjustment fee assessment imposed by the Patient Protection & Affordable Care Act (ACA)  based on impending guidance scheduled for publication on September 2, 2014 in Notice 2014-47 may need to act quickly to meet the August 18, 2014 deadline for filing a corrected Form 8963, “Report of Health Insurance Provider Information.”

The temporary reinsurance fee and risk adjustment provisions of ACA are intended to generate $25 billion in revenues from assessments on insured and self-insured group health plans that the federal government plans to use to partially reimburse commercial insurers writing policies in public exchanges for individuals with high health care costs.

ACA generally provides that the reinsurance fee applies to covered entities that are not excluded under ACA in 2014, 2015, and 2016. Under Final Rules published March 5, 2014, the insurer pays the fee for insured plans but where a group health plan is self-insured, the plan itself pays the fee.   Final Rules published March 5, 2014 provide that self-insured and self-administered plans are exempt from the fees in 2015 and 2016, however.

The reinsurance fee equals the yearly rate times the number of plan participants. The yearly rate is $63 for 2014, $44 for 2015, and to be announced for 2016.

ACA § 9010 generally requires payment of the temporary risk adjustment fee ($64 per covered person for 2014) by every “covered entity.  ACA § 9010 defines the term “covered entity” to include every entity that provides health insurance for any United States health risk during the calendar year in which the fee is due (the fee year) other than those excluded under ACA § 9010(c)(2).  However,  ACA § 9010(c)(2) generally excludes from the definition of covered entity:

  • Self-insured employers;
  • Governmental entities;
  • Certain nonprofit corporations; and
  • Non-employer established voluntary employees beneficiary associations under Internal Revenue Code § 501(c)(9) entities.

Notice 2014-47 scheduled for publication on September 2 by the Department of Treasury (Treasury) will clarify the group health plans exempted from the obligation to pay the temporary risk adjustment fee imposed by Section 9010 of ACA on “covered entities” in IRB 2014-36 will clarify:

  • When a group health plan qualifies as excluded from the general definition of “covered entity” under the exclusions set forth in ACA § 9010(c)(2); and
  • That a controlled group does not have to report for a controlled group member who would not qualify as a covered entity in the 2014 fee year if it were a single-person covered entities.

According to Notice 2014-47:

  • For the 2014 fee year, the IRS and Treasury will not treat any entity as a covered entity if it is excluded from the definition of a covered entity because it qualifies for one of the exclusions under § 9010(c)(2) for the entire 2013 data year or qualifies for one of the exclusions under § 9010(c)(2) for the entire 2014 fee year, which began on January 1, 2014. Since the IRS and Treasury will not treat such an entity as a covered entity, it should not report its net premiums written for the 2013 data year.
  • For the 2014 fee year, a controlled group must report net premiums written only for those persons who are controlled group members at the end of the day on December 31 of the 2013 data year and who would qualify as a covered entity in the fee year if it were a single-person covered entity. A controlled group should not report net premiums written for any controlled group member who would not qualify as a covered entity in the 2014 fee year if it were a single-person covered entity. Such entity will be treated as a member of the controlled group for other purposes, however, such as joint and several liability for the fee amount allocated to the controlled group.
  • The IRS and Treasury will publish additional guidance in the future about the scope of the exclusions in ACA § 9010(c)(2) from the general definition of the term covered entity for fee years after the 2014 fee year.
  • Any entity that needs to correct a previously submitted Form 8963, “Report of Health Insurance Provider Information,” due to the clarification provided in this notice must do so by faxing the corrected Form 8963 to 877-797-0235 (a toll-free number) no later than Monday, August 18, 2014. The IRS cannot process a Form 8963 received after this date. The IRS and Treasury recognize that entities will not know whether they qualify for one of the exclusions under § 9010(c)(2) for the entire 2014 fee year until the end of 2014. Entities that reasonably project that they will qualify for an exclusion under § 9010(c)(2) for the entire 2014 fee year may submit a corrected Form 8963 on or before August 18, 2014, even though the 2014 fee year is not yet over.

The clarifying guidance of Notice 2014-47 comes as the Department of Health & Human Services (HHS) is warning group health insurers third party administrators (TPAs) of self-insured group health plans that are covered entities to get moving on their preparations to register and conduct required interactions with the EDGE Server that HHS plans to use to collect and administer the data necessary to administer the temporary reinsurance fee and risk adjustment provisions of ACA by mid-September, 2014.

Group health plans and their administrators are urged to evaluate and confirm their status and if necessary, file a corrected Form 8963 no later than August 18, 2014.  Additionally, any health insurance issuer or non-excepted group health plan should ensure that appropriate arrangements are in place to fulfill responsibilities for registration and use of the EDGE system as required to meet the reporting requirements.

For Advice, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here

NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.


HHS Warns Insurers, TPAS Complete ACA Reinsurance & Risk Adjustment Edge Server Pre-Registration Steps By 9/27

August 8, 2014

The Department of Health & Human Services (HHS) is warning group health insurers third party administrators (TPAs) of self-insured group health plans and to get moving on their preparations to register and conduct required interactions with the EDGE Server that HHS plans to use to collect and administer the data necessary to administer the temporary reinsurance fee and risk adjustment provisions of the Patient Protection & Affordable Care Act (ACA).  HHS says insurers and TPAs have work to complete by 9/27 to prepare to comply with the EDGE system data reporting that HHS will require them to conduct as part of ACA’s reinsurance premium and risk adjustment risk sharing provisions.

The temporary reinsurance fee and risk adjustment provisions of ACA are intended to generate $25 billion in revenues from assessments on insured and self-insured group health plans that the federal government plans to use to partially reimburse commercial insurers writing policies in public exchanges for individuals with high health care costs.

ACA provides that the reinsurance fee applies in 2014, 2015, and 2016. Under Final Rules published March 5, 2014, the insurer pays the fee for insured plans but where a group health plan is self-insured, the plan itself pays the fee.   Final Rules published March 5, 2014 provide that self-insured and self-administered plans are exempt from the fees in 2015 and 2016, however.

The reinsurance fee equals the yearly rate times the number of plan participants. The yearly rate is $63 for 2014, $44 for 2015, and to be announced for 2016.

The Centers for Medicare and Medicaid Services (CMS) plans to run the first risk adjustment and reinsurance calculation estimates in mid-December, 2014 using data to be collected from insurers and TPAs on the EDGE system.

In an August 7, 2014 webinar, HHS gave issuers and TPAs an overview of the EDGE server implementation schedule and guidance on the key pre-registration tasks that must be completed prior to the start of the EDGE server registration process scheduled to begin on September 27, 2014.

HHS warned issuers and TPAs must be ready to start the EDGE registration process on September 27, 2014 in order to have sufficient time to set-up their servers and test their data submissions prior to the mid-December estimate calculations.

In the webinar, HHS outlined a series of key pre-registration activities that issuers and TPAs of self-insured health plans impacted by the new requirements need to complete between now and September 26, 2014, in order to prepare for EDGE implementation.

Review the pre-registration checklist, timeline and other information shared by CMS in the 90-minute presentation here.

For Advice, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here

NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.


House Hearings Consider Authorizing House Lawsuit Challenging Consitutionality of Obama’s Health Care Reform Actions

July 16, 2014

House Republicans are continuing to challenge President Obama’s failure to enforce and other discretionary actions in his Administration’s implementation of the sweeping health care reforms of the Patient Protection & Affordable Act (ACA) by holding with two key hearings this morning (July 16, 2014).

At 10 a.m. Eastern Time, the U.S. House of Representatives Rules Committee began its hearing on a draft House Resolution available here, which if passed by the House of Representatives, will authorize Speaker of the House Republican John Boehmer to sue President Obama for alleged violations of the Constitution in his implementation and administration of various provisions of the Patient Protection & Affordable Care Act (ACA). See Legislative hearing on a Committee Discussion Draft of H. Res. ____, Providing for authority to initiate litigation for actions by the President inconsistent with his duties under the Constitution of the United States.

Meanwhile, the House Committee on Energy and Commerce Subcommittee on Health is simultaneously is holding a hearing on “Failure to Verify: Concerns Regarding PPACA’s Eligibility System,” which is investigating concerns about the Obama Administration’s failure to timely establish and implement processes and procedures to verify eligibility of individuals slated to quality for subsidies for enrolling in health care coverage through the Health Insurance Exchanges established under ACA. Written testimony of Department of Health & Human Services Assistant Inspector General, Office of Audit Services, Kay Daly, and Regional Inspector General, Office of Evaluations and Inspections, Joyce Greenleaf is available for review here.

The hearings reflect a growing emphasis by House Republicans on highlighting and challenging the Constitutionality of discretionary decisions made by President Obama to waive or delay enforcement or implementation of major provisions of the law and other exercises of discretion and executive license when implementing the guidance and enforcement practices which Republicans charge exceed his authority and violate his duty to faithfully administer the laws passed by Congress.

For Advice, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here

NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.


Use Care Before Using “Skinny Plan” Option As Code Section 4980H Tool

March 9, 2014

Employers considering skinny plans and the brokers, third party administrators (TPAs), insurers and consultants recommending the use of these arrangements alone or as part of a broader health plan design should seek qualified legal advice for help with structuring and implementing these arrangements to avoid potential traps and missteps that could trigger unanticipated benefits, costs and/or tax consequences.  While offering some potential for certain employers, employers must carefully evaluate the potential suitability, benefits, risks and resultant responsibilities of including skinny plan options in their group health benefit offerings and ensure that any such arrangements are properly designed and administered to comply with applicable requirements.

Why Code Section 4980H Has Fueled Growing Skinny Plan Option Hype

Over the past year, many brokers and consultants have advocated that employers adopt a “preventive only” or “skinny plan” to low paid or other groups of employees as a means of avoiding liability for the potential $165 per month “employer shared liability payment” now scheduled to take effect for employers of more than 100 employees on January 1, 2015 and later for employers of more than 50 employees under Internal Revenue Code (Code) Section 4980H(a) (the “A Penalty”).

The Code Section 4980H rules are only one of a plethora of federal mandates and rules applicable to group health plans and their employers under federal law as a result of the health care reforms of the Patient Protection & Affordable Care Act (ACA) as well as a host of previously enacted federal laws.

Enthusiasm for the skinny plan option has been fueled by IRS guidance originally in IRS Notice 2013-54 and its subsequent publication in February 2014 of its final regulations implementing Code Section 4980H that reflect that most plans that pay or provide for reimbursement of medical care costs might qualify as the “minimum essential coverage” necessary to avoid triggering the penalty under Code Section 4980H(a) as long as the arrangement is not an “excepted benefit plan” for purposes of ACA.

While a properly implemented “skinny plan” option may work for many employers with self-insured health plans, getting past the Code Section 4890H(a) employer shared responsibility payment doesn’t necessarily mean that the employer won’t face liability under Code Section 4980H.  Furthermore, getting past Code Section 4980H isn’t all that employers, insurers, brokers and consultants need to consider when designing group health plans.  In fact, an improperly designed skinny plan that avoids triggering liability under Code Section 4980H could trigger much greater liability than the penalty that the employer hoped to avoid by using the skinny plan.

While a full understanding of all the potential implications that may affect a decision to offer a skinny plan is beyond the scope of this short article, it often is helpful to begin by understanding first the mechanics of Code Section 4980H and its employer-shared responsibility payments.

Code Section 4980H Employer Shared Responsibility Penalty Basics

The A Penalty is one of two potential employer shared responsibility payments that Code Section 4980H may impose against a “large employer” that fails to provide the necessary coverage mandated to avoid triggering liability under Code Section 4980H.  Under Code Section 4980H, there are two potential penalties that could be triggered:  the penalty under Code Section 4980H(a) commonly called the “A Penalty” or the penalty under Code Section 4989H(b) commonly called the “B Penalty.”  Understanding the skinny plan hype starts with understanding the basics and applicability of these two potential penalties.

First, the Code Section 4980H penalty doesn’t apply as long as the employer either doesn’t have 50 or more full-time employees or non of its full-time employees enroll in subsidized health coverage through a health insurance exchange.  Also, neither penalty under Code Section 4980H applies to any employer until at the earliest, January 1, 2015, when under the delayed effective date announced by the Obama Administration, employers with 100 or more full-time employees will become subject to Code Section 4980H.  Employers of 50 to 99 full-time employees enjoy an even further delayed effective date and employers of fewer than 50 full-time employees are exempt.

The A Penalty under Code Section 4980H(a) results when a large employer fails to offer employee and dependent coverage providing “minimum essential coverage” to is full-time employees.  The month A-Penalty amount generally will equal the result of the total number of all full-time employees of the employer minus 30, multiplied by $165 per month.

Just because an employer avoids the A Penalty by offering a plan providing minimum essential coverage to all employees does not necessarily mean it avoids liability under Code Section 4980H.  An employer offering the minimum essential coverage under a group health plan to all employees needed to get past the A Penalty generally still risks liability under Code Section 4980H to pay the “B Penalty” of $250 per month for any employee who actually enrolls in health care coverage through a Health Insurance Exchange whose family adjusted gross income is less than 400% of the Federal Poverty Level (approximately $98,000), unless the skinny plan or another group health plan offered to the employee by the employee both:

  • Provides both minimum essential coverage and the required “minimum value” within the meaning of Code Section 4980H; and
  • Doesn’t require the full-time employee to contribute more than 9.5% of his family adjusted gross income to qualify for the coverage offered under the group health plan.

Thus, while offering a skinny plan to all full-time employees may allow an employer to avoid liability for the A Penalty, an employer offering a skinny plan risks liability for the B Penalty of $250 per month for each employee whose family adjusted gross income is less than 400% of the Federal Poverty Level who actually choses to enroll in the richer health care coverage offered through the Health Insurance Exchanges rather than the skinny plan offered by the employer.

Since ACA provides subsidies for many employees with family adjusted gross incomes of less than 400% of the Federal Poverty Level, offering only a skinny plan alone creates a risk for employers that employ a significant number of these lower paid employees that employees will choose to enroll in health insurance coverage offered through the Health Insurance Exchange with subsidies rather than the skinny plan.  To the extent that this occurs, the offering of the skinny plan actually may increase the liability under Code Section 4980H of that employer for that employee from $165 per month to $250 per month.  Some skinny plan proponents may pooh-pooh this risk, arguing that the cost for an employer that incurs the B Penalty will not be higher because See Code § 4980H(b)(2) caps the amount of the B Penalty at the amount of the A Penalty.  While it technically is true that this means that the amount of the B Penalty will not exceed the amount of the A Penalty that the employer would have incurred had it not provided any coverage, the fact remains that the cost to the employer could still be greater because in addition to the B Penalty, the employer also will have incurred the cost of coverage and compliance to provide the skinny plan in addition to the B Penalty incurred.  Accordingly, employers considering this approach need to carefully evaluate their workforce to assess the potential exposure to B Penalties before assuming that avoiding the A Penalty is the best option for their organization and options to mitigate their downside exposures.

To reduce this risk, many consultants and brokers may suggest that the employer adopt a group health plan that offers all full-time employees the option to choose either to enroll in a skinny plan, to enroll in a group health plan coverage option that provides minimum essential coverage offering minimum value at a higher cost than the cost of the skinny plan coverage, or to forego coverage under the group health plan.  Since current IRS guidance states that offering group health plan coverage under a group health plan providing both minimum value and minimum essential coverage with an employee premium of less than 9.5 percent of family adjusted gross income will avoid liability under for the B Penalty for an employee even if an employee who otherwise would qualify for a subsidy choses to enroll in health insurance coverage through the Health Insurance Exchange, this design, properly implemented, may allow the employer to avoid liability under Code Section 4980H.  However, this is not all that an employer needs to worry about.  In fact, unless the group health plans including the skinny plan meets other rules and the discrimination rules applicable to the group health plan and the cafeteria plan through which the enrollment choices are offered meet applicable nondiscrimination requirements, the employer may create unanticipated exposures equal to or greater to the Code Section 4980H liability that the employer seeks to avoid.

Other Traps To Step To Beyond Code Section 4980H May Carry Bigger Risks

Code Section 4980H is only one of several issues that employers contemplating offering skinny plan designs alone or along with an alternative minimum essential coverage, minimum value group health plan coverage option must consider a plethora of other applicable laws and regulations, some of the most significant of which are highlighted in the following paragraphs.

First, when deciding the skinny plan or other group health plan design, employers and their insurers, brokers, administrators and consultants need to ensure that the benefit plan coverage, benefits and other terms meet all applicable mandates of applicable federal, and in the case of insured, multiple employer welfare arrangements (MEWAs) and certain staffing and leasing company arrangements, ACA’s insured plan mandates and other applicable state insurance rules.  Federal law imposes a wide range of mandates on group health plans beyond the requirements of Code Section 4980H.  These include additional coverage, benefit, and nondiscrimination rules added to the Employee Retirement Income Security Act (ERISA), the Code, the Public Health Services Act and other provisions of the Social Security Act, by laws like the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the Health Insurance Portability & Accountability Act (HIPAA), Code health and cafeteria plan nondiscrimination rules, federal laws mandating coverage for breast cancer, newborns and mothers, mental health and substance abuse, ACA’s coverage, benefit, non-discrimination, procedural and other reforms and various other requirements.  Where a group health plan is or is treated as insured, ACA, as well as state insurance regulations impose additional mandates.  Any group health plan must be designed to meet these rules.  Because ACA and state insurance requirements for insured, MEWA and other arrangements subject to regulation as insured group health programs generally mandate that the arrangement meet ACA’s essential health benefit requirements as well as other ACA and state insurance mandates, current federal and state regulations generally make it unlikely that a skinny plan option that qualifies as minimum essential coverage plans can be offered through an insured, a MEWA or other arrangement subject to regulation as an insured program.  Even where the arrangement is self-insured, ACA and other the inclusion of prescription drug or wellness benefits covering a wide range of conditions and treatments along with an otherwise skinny plan design many trigger mental health parity or other mandates often overlooked by brokers and consultants promoting these arrangements. While guidance is still evolving, there also exists a risk that the scope of mandates also can be greater than expected if the skinny plan is offered with an insured “limited benefit” or other insurance benefit arrangement in a manner that is considered integrated with the skinny plan. Furthermore, regardless if the arrangement is insured or self-insured, failure to comply with these mandates can trigger significant liability including in the case of many of these rules, the obligation to self-identify, self-report, self-assess, and pay penalties under Code Section 6039D of a minimum penalty of the greater of $2500 or $100 per day, as well as any other liability as otherwise applies under ERISA and the Code to participants, the IRS and DOL, or both.

Second, even if the arrangement is self-insured, employers, their administrators, brokers, consultants and advisors need to monitor whether the arrangement is discriminatory under the group health plan nondiscrimination rules or cafeteria plan discrimination rules of the Code.  Particularly where it is possible that highly compensated or key employees will enroll in coverage or a richer coverage option, while lower paid workers will forego enrollment or chose the skinny plan over enrolling in a richer minimum value, minimum essential coverage option, an employer must test to determine if the arrangement discriminates in favor of key or highly compensated employees for purposes of Code Section 125.  If so, at minimum, the employer will want to ensure that its cafeteria plan is drafted to require and that discriminatory contributions are recharacterized and reported to highly compensated and key employees as after-tax, taxable contributions.  It also is equally important that the discriminatory status of the arrangement under Code Section 105(h) be considered for a self-insured program and to the extent that the arrangement is discriminatory that income be reported to highly compensated employees as well.  It should be noted that the harsh nondiscrimination rules and draconian liabilities that can result from offering a discriminatory insured group health plan would add nondiscrimination concerns to the challenges of designing an insured skinny plan that could comply with applicable mandates discussed earlier.

Use Care When Considering Or Using Skinny Plan Design

Accordingly, while some employers may benefit from including a properly designed and implemented skinny plan option in their group health plan design, employers need to act carefully to ensure that the design is appropriate and properly integrated and administered. Those considering these plans should use care (a) to ensure that the plan is self-insured and not an insured plan or MEWA subject to ACA’s insurance reforms and/or state mandates; (b) meet all required federal and state mandates; (c) are tested for potential discrimination issues under Code sections 125 and 105(h); (d) are not paired with insurance contracts considered to be excepted insurance policies in a way that is considered integrated to trigger unexpected mandates and costs; and (e) when an employer group has a large group of subsidy-eligible employees, that the offering of a skinny plan doesn’t result in an increase in the employer’s Code Section 4980H liability by triggering the larger Code Section 4980H(b) penalty of $250 per month instead of the smaller Code Section 4980H(a) penalty of $165 per month.

For Advice, Training & Other Resources

If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

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NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.


Essential Health Benefit Definition Built On Expensive Mandated Benefit Plan Likely To Be Expensive For Employers, States & Individuals

July 20, 2012

Learn More & Get A 2012 Health Plan Compliance Checkup at 7/24 Health Plan Update WebEx Workshop!

Concerned about how the mandates and costs of  the Patient Protection & Affordable Care Act will impact your corporate and family finances following the Supreme Court’s June 28, 2012 National Federation of Independent Business v. Sebelius ruling upholding the constitutionality of the individual mandate of the Patient Protection & Affordable Care Act (ACA)? Businesses, individuals, states and federal and state Congressional and regulatory leaders others looking for opportunities to manage these costs should carefully scrutinize how the Department of Health & Human Services (HHS) plans to define “essential health benefits” (EHBs).

Essential Health Benefit Determinations Impact Program Designs and Costs

The definition of EHBs is pivotal to determining the benefits required to be offered by payers and purchased by individuals under the Affordable Care Act now as well as when full Affordable Care Act implementation happens in 2014. Of course, the already effective Affordable Care Act’s restrictions on lifetime and annual dollar limitations on EHBs provided under covered health plans and insurance policies already have impacted the plan designs and costs of existing coverages.

Beginning in 2014, the Affordable Care Act will require that all non-grandfathered health plans in the insured individual and small group market and certain covered state and federal programs will cover at least the EHB as defined by HHS. Although the Affordable Care Act does not directly obligate self-insured group health plans, large group market health plans, and grandfathered health plans to design their plan to provide the coverage included in the required EHB package after 3014, the EHB package design also will affect the costs of these plans by prohibiting these plans from imposing annual and lifetime dollar limits on EHBs even though the final process for determining what is an EHB for these employer-sponsored health plan purposes has yet to be finalized.

Furthermore, since the Affordable Care Act currently restricts both insured and self-insured health plans of all sizes from imposing lifetime and annual dollar limits on benefits and services listed in the Affordable Care Act as required EHBs, the statutory list of EHBs already is having significant cost implications for employers and health plans and their health plan designs. These implications will only grow as full implementation of the Affordable Care Act reform occurs in 2014. Thus, the definition of EHB and how it is a key determinant of the ultimate cost of the Affordable Care Act mandates for individuals, employers, insurers, states, the federal government and ultimately taxpayers.

HHS Guidance Promotes Benefit-Rich EHB Program Mandate For States & Individual & Small Group Insured Programs & Policies

The current approach of the HHS to determining the services and benefits for non-grandfathered individual and small group market insured plans and covered state and federal benefit programs will be skewed toward the benefit rich plan design of federal and state employee health plans and benefit mandate-laden small group insurance plans even though the majority of employer sponsored health plans are self-insured plans that contain more limited benefit packages.

The Affordable Care Act directs that the EHB reflect the scope of benefits covered by a “typical employer plan” and cover at least the following general categories of items and services: categories of items and services: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care (Listed EHB).

An overly-rich EHBs definition will require that individual and insured small group employer health plans, insurers, state Medicaid and Exchanges and the federal exchanges provide, and individuals in these programs purchase, a much richer set of benefits than is currently provided to the majority of employees under the self-insured, employer-sponsored health plans under which they are covered when most are struggling to deal with already over-extended budgets.

Although 60% or more of all employer-sponsored health plans nationwide and 82% of plans sponsored by companies employing more than 200 workers are “self-insured” health plans exempt from the obligation to provide the state mandated benefits that apply to insured plans under state insurance regulations, HHS is largely ignoring the practices of these self-insured health plans for purposes of defining the EHBs package that plans and other payers must offer as EHBs.

Unlike insured health plans, self-insured health plans generally are exempted from the obligation to comply with mandated benefits requirements of state insurance laws pursuant to the preemption provisions of the Employee Retirement Income Security Act (ERISA).   Avoidance of the cost of providing state mandated benefits typically is one of the primary reasons that an employer chooses to offer health plan coverage on a self-insured rather than insured basis. Consequently, the care and services covered by self-insured health plans typically are less generous in many respects than those provided by state and federal employee health plans or individual or group health insurance policies regulated by state insurance law.

Even knowing that the majority of employer-sponsored coverage is provided on a self-insured basis and that federal, state, employer and individual budgets are already strained, HHS nevertheless set up the process so that practices of the government employee health programs and state-regulated insurance policies subject to a wide range of state benefit mandates will determine the EHBs package.

Both state-regulated insured health plans and federal and state employee plans generally are loaded with a long list of mandated benefits that self-insured health plans don’t provide or provide only on a more limited basis. Because self-insured plans are exempt from the duty to comply with state insurance mandated benefit regulations, the benefit package provided under a self-insured plan typically is not as extravagant as the benefit package offered by insurance plans required to comply with state benefit mandates or by the federal or state employee health insurance programs paid for with taxpayer dollars, the process ensures a richer EHB package.

More required benefits means more required costs and the required EHB package determines the benefits required.  Thus, HHS’s decision to model the Affordable Care Act’s definition of EHBs upon federal and state employee health plans and insured state policies when the sponsors of those programs already are struggling to pay for the costs of the plush benefit packages dictated by law merely promises to overburden the fiscal resources of these sponsors and the individuals required to participate and contribute to these programs.

Nevertheless, driven by an administration firmly entrenched in the utopian delusions that money is no object when it comes to promising health care benefits, HHS is diligently proceeding on a path to ensure that the benefit-rich, more expensive government employee health plan/state regulated insured plan model determines the required EHBs.

Under the intended process announced by HHS Center for Consumer Information and Insurance Oversight (CCIIO) on December 16, 2011, HHS announced that it would allow each state to decide the EHBs package on a state-by-state by choosing a “benchmark health plan” that meets HHS standards. While HHS touted the decision as allowing states significant choice, as outlined in more detail in the paragraphs that follow, in reality the parameters within which HHS will require states to exercise this choice provides little flexibility for states to control costs by adopting a limited EHB package. Furthermore, final regulations published in the July 20, 2012 Federal Register that define the data that HHS will rely upon to define and update the EHB definition going forward also layout a process that will almost certainly result in a much richer package of EHBs than what most employees covered by self-insured employer or union-sponsored health plans enjoy today.

In December 2011, HHS announced its intention to allowing states the “flexibility” to define EHB on a state by state basis provided that the state’s EHB definition meets minimum standards required by HHS. Under this approach, the benefits and services included in the benchmark health insurance plan selected by the state would be the EHBs package. States in deciding the required EHB package could modify coverage within a benefit category so long as they do not reduce the value of coverage.

To set the EHBs package for its state, HHS intend that a state will decide the benefits and services required in the EHBs package by choosing one of the following programs, (supplemented as necessary to ensure that the benchmark health plan covers each of the 10 categories of benefits listed in the Affordable Care Act) as the benchmark health insurance plan for that state:

  • One of the three largest small group plans in the state by enrollment;
  • One of the three largest state employee health plans by enrollment;
  • One of the three largest federal employee health plan options by enrollment; or
  • The largest HMO plan offered in the state’s commercial market by enrollment.

None of these options would allow for a state to elect for the EHBs package that more closely tailors the more cost-effective, less mandated benefit heavy designs more typically used in the self-insured employer-sponsored programs sponsored by more than 60% of U.S. employers offering employee health insurance coverage. Therefore, individuals covered by individual health insurance and small employers providing coverage through small group market insurance policies can expect to be required to offer a rich benefit package regardless of the state in which they are based.

Concerning which EHB package will apply when a small employer has employees or operates in multiple states, existing guidance specifies that the EHB benchmark for the State in which the insurance policy is issued would determine the EHB for all participants, regardless of the employee’s State of residence.

Individual and small group insurance plans and policies and government benefit programs required to provide essential benefits also should not anticipate that required scope of the required EHB package will narrow over time if HHS proceeds as planned.

The final rule on “Patient Protection and Affordable Care Act; Data Collection To Support Standards Related to Essential Health Benefits; Recognition of Entities for the Accreditation of Qualified Health Plans” (EHB Data Rule) published on July 24, 2012 also does not take into account the practices of self-insured health plans for purposes of defining and updating EHB package.

The EHB Data Rule outlines the data that health insurers offering coverage under qualified health plans pursuant to Health Care Exchanges will be required to collect and report to HHS for HHS to use to determine the definition and update the EHBs package. This final rule also establishes a process for the recognition of accrediting entities for purposes of certification of qualified health plans.

The EHB Data Rule ignores and excludes reference to any data based on self-insured health plan coverage. Instead, in its current form the EHB Data Rule relies only collects data reported by insured plans. Reliance only upon data collected under the EHB Data Rule will further skew the plan design for all plans – insured or self-insured – to be designed in accordance with the more benefit rich mandates of governmental employee plans funded by taxpayer dollars and fully-insured group health plans forced to include a broad range of state benefit mandates in their programs. Consequently, it appears that HHS intends that self-insured employee health plans will be required to provide the same extremely benefit rich EHBs package as required in a fully-insured health plan even though ERISA section 514 bars the states from enforcing state mandates against self-insured plans.

By disregarding the practices of self-insured plans in the current process of setting expectations for the EHB package the planned HHS process for determining the EHB package provides for a much richer and more expensive benefit package than what is provided in the typical self-insured health plan offered by 60% of U.S. employers nationwide.

Implications & Action Items For Employer Plan Sponsors, Insurers, Employers, Individuals & States Concerned About Costs

Because the determination of the EHB package plays such a significant role in determining the premiums and other amounts that employers, individuals, states and taxpayers will have to expend to fund promised benefits, all parties concerned with the need to appropriately manage these and other related costs should push for HHS and the other Departments, as well as members of Congress to insist that the benefits and services treated as EHBs be carefully tailored.

As the history of state mandated benefits already demonstrates, the cost of funding the benefits promised in the program for all parties will increase the more services included in the definition of EHB. With state, employer, individual and the federal government budgets already strained in a tight economy, a utopian definition of EHBs that results in overburdening costs is a luxury that no one can avoid.

Taken together, the final regulations and HHS’s intended approach to allowing states to define essential health benefits on a state-by-state basis promises under the process established by HHS will result in the imposition of a much richer and more expensive required EHB package on individuals that is richer and more expensive than would result if the self-insured group health plan practices and data were included. As a result, states, small group market insurers and their employer customers and the individuals participating in these plans can expect to be required to pay for a more costly package of benefits than might apply if HHS had elected to use a more holistic approach to defining the EHB package that took into account the practices of self-insured employer and union-sponsored health plans.

This outcome certainly is not dictated by the language of the statute. A more balanced definition of EHBs tailored to meet the economic and budget realities of the times certainly is attainable within the current statutory framework without the need for legislative action. Indeed, given that the majority of group health plans are self-insured, many question the appropriateness of HHS’s reliance upon the practices and data of state regulated, mandated benefit laden insured health plans to define the EHB of a “typical employer plan.”  Concerned employers, insurers, and individuals should urge HHS to reconsider its approach and adopt an alternative definition of EHB focused on defining essential in light of the cash-strained times. 

To the extent that the existing regulators are unwilling to temper the zealousness of idealism to meet today’s budget and economic realities, employers, insurers and the individuals who will be required to bear the burden of the resulting costs should pressure Congress to act to clarify the EHB definition so as not to overburden the system.

Self-insured group health plans, large group market health plans, and grandfathered health plans also need to recognize the need to participate in the dialogue. These programs and their employer and union sponsors are still in limbo, awaiting guidance from HHS about what standards HHS will impose for purposes of determining what constitutes an EHB and how this decision will impact their costs and plan design and other implications even as the Affordable Care Act requires them to decide without guidance what EHBs are for purposes of complying with its lifetime and annual dollar limit prohibitions. 

According to a “Frequently Asked Questions on Essential Health Benefits Bulletin” published by HHS earlier this year, the Departments of Labor, Treasury, and HHS still are deciding how they will determine if a self-insured group health plan, a large group market health plan, or a grandfathered group health plan used a permissible definition of EHB for purposes of meeting their responsibilities under the Affordable Care Act. HHS as indicated they are considering deeming the plan’s definition of EHB appropriate if the plan uses “a definition authorized by the Secretary of HHS (including any available benchmark option, supplemented as needed to ensure coverage of all ten statutory categories).

Regardless, until that additional guidance is forthcoming, the need to administer their group health plans in accordance with the already-effective Affordable Care Act restrictions on lifetime and annual dollar limits on EHBs means all affected group health plans that contain any annual limits on benefits, their sponsors and fiduciaries should take steps to ensure that these provisions are supported and administered using an appropriate definition of EHB supported by the necessary analysis and documentation to position the health plan to demonstrate this effort at good faith compliance until HHS issues further clarifying guidance.

Get Health Plan Compliance Check up at 7/24 Health Plan Update

Health plans, their employer and other plan sponsors, fiduciaries, administrators, brokers and consultants and other service providers are invited to get a 2012/2013 Health Plan Compliance Checkup by participating in the Health Plan Update Workshop Solutions Law Press, Inc. is hosting on July 24, 2012 as part of its 2012 Health Plan-U Coping with Health Care Reform Workshop Series beginning with the kickoff program, “2012 Health Plan Update” on July 24, 2012. 

The Workshop offers the opportunity for employer and union health plans, their sponsors, fiduciaries, insurers, administrators and service providers to catch up on the latest requirements and guidelines impacting employer and union sponsored group health plans under ACA and other federal health plan regulations.

The 2012 Health Plan Update Workshop is scheduled for July 24, 2012 from 12:30 P.M.-2:30 P.M. Eastern, 11:30 A.M.-1:30 P.M. Central, 10:30 A.M-12:30 P.M. Mountain and 9:30 A.M-11:30 A.M. Pacific Time.

Participants may choose to attend the live briefing in Addison, Texas or take part via WebEx for a registration fee of $125.00. Texas Department of Insurance Continuing Education Credit and other professional certification credit may be requested by qualifying participant for an added charge.

The Coping With Healthcare Reform: 2012 Health Plan Update Workshop will cover the latest guidance on Affordable Care Act and other federal health plan regulatory changes impacting employment-based group health plans and other key information employer and other group health plan sponsors, group health plans, insurers, plan administrators, fiduciaries, brokers and advisors and others working with these plans need to understand and cope with 2012-2013 ACA and other health plan requirements including:

  • ACA Summary of Benefits And Communications Mandates & Their Implications On Plan Documents, SPDs & Administration
  • ACA Culturally and Linguistically Appropriate Mandates
  • ACA External & Internal Review, ERISA Claims & Appeals, & Other Federal Claim Handling Requirements: What rules apply to which plans? What to do to minimize the impact of changing requirements?
  • ACA “Essential Health Benefit” Rules & Their Implications For Health Plans & Their Sponsors Now & After 2014
  • ACA, ADA & Other Federal Health Plan Nondiscrimination Rules
  • ACA W-2 & Other Federal Reporting, Notice & Disclosure Requirements
  • ACA grandfathered plan status: Do you have it? How do you lose it? What it does for your program?
  • ACA, COBRA, HIPAA, GINA, FMLA, Military Leave, Michelle’s Law & Other Federal Eligibility Mandates
  • Preventive care coverage & wellness program rules under Affordable Care Act, GINA, ADA & other federal regulations
  • Mental health & substance abuse, provider choice & other benefit mandates under ACA, Mental Health Parity & other federal rules
  • Federal Health Plan Notice & Communication Rules
  • ERISA Fiduciary Responsibility, Reporting & Disclosure & Other Rules
  • New HIPAA Privacy Rules & Audits & How Plans & Plan Sponsors Should Respond
  • Consumer Driven Health Plan Communication Strategies
  • Tips To Help Review & Update Plans, Communications, Vendor Agreements & Processes
  • Expected & Proposed ACA & Other Federal Health Plan Rules
  • Practical Strategies For Monitoring & Responding To New Requirements & Changing Rules
  • Participant Questions
  • More

The Supreme Court’s June 28, 2012 National Federation of Independent Business v. Sebelius ruling upholding the health care reform law means health plans, their employer and other sponsors, fiduciaries and administrators, and insurers must quickly update their health plan documents, summary plan descriptions and other communications, administrative procedures, contracts, reporting and other arrangements to meet Affordable Care Act and other federal rules that have, or by plan year end will, take effect pending the full rollout of the law in 2014.  The 2012 Health Plan Update Workshop on July 24, 2012, kicks off a series Solutions Law Press, Inc. is offering to help health plans and their leaders quickly and cost-effectively get up to speed with and respond to these requirements.   Other upcoming programs offered as part of the Health Plan-U 2012 Coping With Health Care Reform Series include:

Claims & Appeals Bootcamp*
July 31, 2012
12:30 P.M.-2:00 P.M. Eastern | 11:30 A.M.-1:00 P.M. Central | 10:30 A.M-12:00 P.M. Mountain | 9:30 A.M-11:00 A.M. Pacific

HIPAA Bootcamp*
August 14, 2012
12:30 P.M.-2:30 P.M. Eastern | 11:30 A.M.-1:30 P.M. Central | 10:30 A.M-12:30 P.M. Mountain | 9:30 A.M-11:30 A.M. Pacific

Health Plan Communications Bootcamp: SBCs, SPDs & Beyond*
August 28, 2012
12:30 P.M.-2:00 P.M. Eastern | 11:30 A.M.-1:00 P.M. Central | 10:30 A.M-12:00 P.M. Mountain | 9:30 A.M-11:00 A.M. Pacific

The Workshops are designed to help health plans, their employer and other sponsors, fiduciaries, administrators, brokers and consultants and others with responsibilities for these plans quickly learn key steps that they may need to take to update and administer their health plans to meet existing and emerging ACA, Employee Retirement Income Security Act (ERISA), Internal Revenue Code (Code) and other federal mandates.

Attorney Cynthia Marcotte Stamer Leads Workshops

The 2012 Health Plan Update and other Coping With Healthcare Reform Workshops in the Solutions Law Press, Inc. Health Plan-U Coping With Health Care Reform Series will be lead by attorney Cynthia Marcotte Stamer. 

A Fellow in the American College of Employee Benefits Counsel, recognized in International Who’s Who, and Board Certified in Labor & Employment Law, Ms. Stamer has 25 years experience advising and representing private and public employers, employer and union plan sponsors, employee benefit plans, associations, their fiduciaries, administrators, and vendors, group health, Medicare and Medicaid Advantage, and other insurers, governmental leaders and others on health and other employee benefit. employment, insurance and related matters.

Also a well-known and prolific author and popular speaker Board Certified in Labor & Employment Law, Ms. Stamer presently serves as Co-Chair of the ABA RPTE Section Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Committee, an ABA Joint Committee on Employee Benefits Representative, an Editorial Advisory Board Member of the Institute of Human Resources (IHR/HR.com) and Employee Benefit News, and various other publications.

A primary drafter of the Bolivian Social Security privatization law with extensive domestic and international regulatory and public policy experience, Ms. Stamer also has worked extensively domestically and internationally on public policy and regulatory advocacy on health and other employee benefits, human resources, insurance, tax, compliance and other matters and representing clients in dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, HUD and Justice, as well as a state legislatures attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators.

A prolific author and popular speaker, Ms. Stamer regularly authors materials and conducts workshops and professional, management and other training on employee benefits, human resources and related topics for the ABA, Aspen Publishers, the Bureau of National Affairs (BNA), SHRM, World At Work, Government Institutes, Inc., the Society of Professional Benefits Administrators and many other organizations. She also regularly serves on the faculty and planning committees of a multitude of symposium and other educational programs.

For more details about Ms. Stamer’s services, experience, presentations, publications, and other credentials or to inquire about arranging counseling, training or presentations or other services by Ms. Stamer, see http://www.CynthiaStamer.com.

Registration, Continuing Education & Other Details

Register Now! The Registration Fee per course is $125.00 per person (plus an additional $10 service fee for each individual seeking Texas Department of Insurance Continuing Education Credit). Registration Fee Discounts are available for groups of three or more. Payment required via website registration required 48 hours in advance of the program to complete registration. Payment only accepted via website PayPal. No checks or cash accepted. Persons not registered at least 48 hours in advance will only participate subject to system and space availability.
Texas Department of Insurance and Other Continuing Education Credit.

All Health Plan-U Coping With Health Care Reform programs are approved to be offered for general certification credit by the Texas Department of Insurance, World At Work and HRCI education credit for the time period offered subject to fulfillment all applicable Texas Department of Insurance requirements, completion of required procedures and payment of the additional service processing fee of $10.00. The HIPAA Bootcamp program is Texas Department of Insurance-approved for 1.5 hours of General Credit and .5 Hours of Ethics Credit. The Texas Department of Insurance possesses the final authority to determine whether an individual qualifies to receive requested continuing education credit. Neither Solutions Law Press, Inc., the speaker nor any of their related parties guarantees the approval of credit for any individual or has any liability for any denial of credit. Special fees or other conditions may apply.

Cancellation & Refund Policies

In order to receive refund credit, written cancellation (either fax or e-mail) must be received at least 48 hours in advance of the meeting and are subject to a $10.00 refund processing fee. Refunds will be made within 60 days of receipt of written cancellation notice.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides business and management information, tools and solutions, training and education, services and support to help organizations and their leaders promote effective management of legal and operational performance, regulatory compliance and risk management, data and information protection and risk management and other key management objectives. Solutions Law Press, Inc.™ also conducts and assists businesses and associations to design, present and conduct customized programs and training targeted to their specific audiences and needs. For additional information about upcoming programs, to inquire about becoming a presenting sponsor for an upcoming event, e-mail your request to info@Solutionslawpress.com These programs, publications and other resources are provided only for general informational and educational purposes. Neither the distribution or presentation of these programs and materials to any party nor any statement or information provided in or in connection with this communication, the program or associated materials are intended to or shall be construed as establishing an attorney-client relationship, to constitute legal advice or provide any assurance or expectation from Solutions Law Press, Inc., the presenter or any related parties. If you or someone else you know would like to receive future Alerts or other information about developments, publications or programs or other updates, send your request to info@solutionslawpress.com.

CIRCULAR 230 NOTICE: The following disclaimer is included to comply with and in response to U.S. Treasury Department Circular 230 Regulations. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN. If you are an individual with a disability who requires accommodation to participate, please let us know at the time of your registration so that we may consider your request

©2012 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.