Department of Labor Releases New FMLA Forms: May 2015

Over the Memorial Day holiday weekend, the Department of Labor published new FMLA forms. The new forms are good through May 2018.

Download the new forms:

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

What is the Difference between Federal COBRA and Cal-COBRA?

When an employer offers a group health insurance plan, such as medical, dental, or vision insurance, the employee and covered dependents (“Qualified Beneficiaries”) are provided an opportunity to continue their current plan at the individual/family’s expense when they have a qualifying event. Qualified events may include termination or reduction of hours of the covered employee’s employment for other than gross misconduct; divorce or legal separation from a covered employee; the loss of dependent status by overage dependent; the covered employee becomes eligible for Medicare; or the death of the covered employee. The continuation of group coverage option is known as either “Federal COBRA” or “Cal-COBRA.”

 

Listed below are some highlights of Federal COBRA vs. Cal-COBRA:

 

  Federal COBRA Cal-COBRA
Employer size 20 or more employees more than 50% of the previous calendar year 2-19 employees
Who is eligible? Covered Individual and covered spouse/dependents at the time of the qualifying event Covered Individual and covered spouse/dependents at the time of the qualifying event
Who sends the COBRA Notice to the individual and qualified beneficiaries? Either the employer or a third-party administrator sends the COBRA notice within 30 days of the qualifying event. Employer must notify the insurance carrier and the carrier is responsible for sending out the Cal-COBRA notifications to the individual and qualified beneficiaries.
How long do they have to elect the COBRA/Cal-COBRA coverage? Employee and/or qualified beneficiary must elect coverage within 60 days of the qualifying event. Employee and/or qualified beneficiary must elect coverage within 60 days of the qualifying event.
How much does it cost to continue coverage? Cost is 102% of the regular premium for 18 months.NOTE: premium may change within that period, depending on plan year and renewal rates with insurance carriers. Cost is 110% of the regular premium for 18 months.NOTE: premium may change within that period, depending on plan year and renewal rates with insurance carriers.
Duration of Coverage Continuation Generally extends health coverage for 18 months. Individuals with certain qualifying events may be eligible for a longer extension (i.e. 29 or 36 months). Cal-COBRA allows individuals to continue their group coverage for up to 36 months. For individuals covered under Federal COBRA, Cal-COBRA may also be used to extend health coverage for a combined period of up to 36 months.

 

We typically recommend that employers with 20 or more employees outsource the COBRA administration to one of our preferred third-party administrators (TPA), as COBRA requires a number of plan notifications to take place at different stages in the COBRA process. Some of the notifications include:

 

The other option for Insurance coverage for individuals and qualified beneficiaries may be to elect Individual coverage, either “on” or “off-Exchange” plans, providing it is within their “Special Enrollment” period. If it is not “open enrollment” for individual coverage for on or off-Exchange plan and they had a qualifying event (as seen above), then they have up to 60 days to enroll under the special enrollment period. See blog post:   Help…I lost my job…Should I take COBRA or Covered California (Exchange)?

 

For more information, please do not hesitate to contact MNJ Insurance Solutions at (714) 716-4303.

 

Additional COBRA Information:

 

This material is for informational purposes only and not for the purpose of providing legal advise.  You should always contact your attorney to determine if this interpretation is appropriate for your particular situation.

Help…I Lost my Job…Should I Take COBRA or an Individual Policy?

COBRA is a federal law that requires employers of 20 or more employees with group health plans to offer employees, their spouse and dependents a temporary period of continued health care coverage if they lose coverage through the employer’s group health plan.  Employers who have not continuously had 20 employees are covered if they had at least 20 employees on more than 50% of  the typical business day in the previous calendar year.  Both full-time and part-time employees are counted to determine whether the plan is subject to COBRA.

 

Individuals are not obligated to participate in COBRA after leaving an employer or having a reduction in hours.  However, if an individual declines the initial offer of COBRA, he/she may qualify for “special enrollment” in Covered California health insurance or an “off-exchange plan” outside of the annual Open Enrollment period for Individual/Family coverage.  An “off-exchange plan” are plans that are offered by the carrier direct, rather than through Covered California.  In order t take advantage of the special enrollment in Covered California or “off-exchange plan,” the individual/family losing group coverage must apply for coverage no later than 60 days after their employer-sponsored plan ends.  It is also important to note that if an individual were to terminate their COBRA coverage during Open Enrollment of Covered California or elect an off-exchange plan, he/she cannot change their mind to go back to COBRA.

 

If an individual were to elect COBRA and loses his/her coverage (i.e. due to non-payment), he/she will NOT be eligible for special enrollment through Covered California, nor opt to an off-exchange individual plan at that time.  Outside of Open Enrollment, individuals qualify for special enrollment with Covered California or off-exchange individual plans if one of the following apply:

  • If former employer was responsible for remitting payments for the COBRA premium and fails to do so in a timely manner, therefore participant is cancelled due to group non-payment;
  • The COBRA participant moves out of the plan coverage area and there is not another option available (i.e. former employer offers HMO only plan and COBRA participant moves out of state and the HMO would no longer be a good option);
  • If the former employer cancels the group plan, therefore, COBRA is no longer available; or
  • The beneficiary has maximized their COBRA duration available under the plan.

 

Listed below are pros and cons of Electing COBRA vs. Enrolling in Covered California after an individual and qualified beneficiaries have had a qualifying event.

 

PROS CONS
ELECTING COBRA
  • The network of doctors and hospitals available in each plan and individual can continue the current benefits.
  • Covers more Rx than individual plans.
  • Transition and electing COBRA is typically an easier process than enrolling in Covered California.
  • If you are currently seeking treatment or under the care of a physician, it is easier to continue care under COBRA.
  • The total monthly premiums for the individual and qualified beneficiaries (family members previously enrolled on the plans) are paid by individual.
  • If the individual and qualified beneficiaries enrolled in COBRA, they cannot drop their COBRA plan and enroll in Covered California plan unless it is Open Enrollment for Covered California.
  • Depending on the level of benefits previously provided by the employer, the COBRA monthly premiums may be more expensive than desired coverage through Covered California (i.e. if employee or dependents may not need the rich covered previously offered by the employer).

 

ENROLLING IN COVERED CALIFORNIA OR “OFF EXCHANGE PLANS” WITH THE CARRIER
  • Depending on income, the individual and qualified beneficiaries may qualify for tax credit and/or subsidy (depends on household income – chart for 2015) with Covered California.
  • Copays and deductibles may vary with options for Covered California or “off-exchange plans.”
  • Individual has options to move to another carrier (plans for 2015) than what may be provided through their former employer.

 

  •  Doctors and hospitals may not be in the network for the Covered California or “off-exchange” plan option.  It is important to confirm preferred doctors before selecting a plan to ensure they are in the network.
  • Prescription plans offered through Covered California individual plans or “off-exchange” plans often cover a smaller list of formulary drugs than group plans.

 

Note: If you have a qualifying event, your spouse has other group coverage offered through his/her employer, you may also want to explore adding onto their group plan as an additional alternative.  If this is an option through his/her employer, it must be done within 30 days of the loss of coverage.

If you have questions regarding your personal situation, MNJ Insurance Solutions are able to assist and can be reached at (714) 716-4303.

 

More Resources:

COBRA vs. Exchange Coverage – Covered CA

 

Disclaimer:  The views and opinions expressed are those of the author and do not necessarily reflect the official policy or position of Covered California.  Any content provided by our bloggers or author is of their opinion and are not intended to malign any organization, company, government entity, anyone or anything.

This document is for general information only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy or completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice from their own attorneys and tax advisors with respect to their individual circumstances.

HSA, HRA, or FSA…What is the Difference?

high-interest-savings-account

Health care accounts are not all created equal. That’s why you need an experienced, trusted adviser to help you understand health care accounts. MNJ Insurance Solutions is here to help you understand the complex, and sometimes confusing, health care accounts and their acronyms, like HSAs, HRAs, and FSAs, so you can make an informed decision about the type of health plan and corresponding health account that is right for you.

Below is a chart to help compare Health Savings Accounts (HSA), Health Reimbursement Arrangements (HRA), and Flexible Spending Accounts (FSA) and highlight their differences in benefits.

  Health Savings Account (HSA) Health Reimbursement Arrangement (HRA) Flexible Spending Account (FSA)
Account definitions A tax-advantaged account used to pay for qualified medical expenses of the account holder, spouse, and/or dependents. An employer-funded arrangement used to reimburse employees for out-of-pocket qualified medical expenses. An employer-established and optional tax-advantaged account funded by the employee to pay for qualified medical expenses with pre-taxed dollars.
Who can open the account? The employee or employer as long as the employee is enrolled in an HSA-compatible health plan. The employer. The employer.
Who can contribute? Employers, employee/account holder, or any third party, IF the employee has a HSA-compatible health plan. The employer. The employee.
Who owns the account? The employee/account holder. The employer. The employee, but unused account balances revert back to the employer at the end of the plan year.
Is there an annual contribution limit? In 2013, limits are $3,250 and $6,450, respectively. See HSA limits per applicable year. Yes, as determined by the employer’s plan design. Yes, as determined by the employer’s plan design, and subject to maximums redefined by ACA.
Do unused funds carry over to the next year? Yes. Possibly, as determined by employer’s plan design. Possibly, if the plan document includes the rollover provision.   See your Section 125 FSA Summary Plan Description for more details.
Can you take the account funds with you if you change jobs, change health plans, or retire? Yes. No. Section 125 FSA plans are a COBRA eligible benefit.   Therefore, an employee may opt to take COBRA for the unused benefits for the duration allowed.
Can you use the account for retirement income? Yes, after age 65, you can withdraw funds for any reason with no penalty. Although, if not used for qualified medical expenses, withdrawals will be taxed as income and an excise tax will be applied. No. No.
Is the account tax advantaged? Yes, account holders contribute tax-free, any interest or investment gains are tax-free, and when used for qualified expense, you withdrawals are tax-free. No. Yes, employees’ contributions are made through pre-taxed payroll deductions.
Can the account earn interest? Yes, and after the account balance reaches a minimum balance requirement (typically $2,000), you can invest in funds available with your HSA third-party administrator and any gains are also tax-free. No. No.
Can the account reduce the out-of-pocket health care expenses of the account holder? Yes. Yes. Yes.

Additional Information Resource:

ACA impact on health reimbursement arrangements (HRAs)

 

If you have any questions or would like to further explore HSA, HRA, and/or FSA options for your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

DOL Revised FMLA Definition of “Spouse”: February 25, 2015

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The Family and Medical Leave Act (FMLA) entitles eligible employees of covered employees of covered Employers to take unpaid, job-protected leave for specified family and medical reasons.  The FMLA also includes certain military family leave provisions.  On February 25, 2015, the U.S. Department of Labor revised Family Medical Leave Act definition of a “spouse.”   The Final Rule’s definition of spouse expressly includes individuals in lawfully recognized same-sex and common law marriages and marriages that were validly entered into outside of the United States if they could have been entered into in at least one state.

 

The DOL noted in its Fact Sheet on the Final Rule that the definitional change means that eligible employees, regardless of where they live, will be able to take:

  • FMLA leave to care for their lawfully married same-sex spouse with serious health conditions,
  • Qualifying emergency leave due to their lawfully married same-sex spouse’s covered military service,
  • Military caregiver leave for their lawfully married same-sex spouse,
  • FMLA leave to care for a stepchild, regardless of whether the in loco parentis (in the place of parents) requirement of providing day-to-day care or financial support for the child is met,
  • FMLA leave to care for a stepparent, who is same-sex spouse of the employee’s parent, regardless of whether the stepparent ever stood in loco parentis to the employee,
  • FMLA leave for their own serious condition, or
  • FMLA leave for the birth of a child or the placement of a child for adoption or foster care and bonding.

 

Action Items for Employers:

Employers that are required to provide FMLA should train and familiarize their Human Resources, Leave Administrators, and Managers/Supervisors with this new rule if they are involved with the leave management process, as benefits available to certain employees may change with the Final Rule.

In addition, we recommend that employers update their FMLA policy in their Employee Handbook, forms, and notices, if they specifically defined “spouse” in any matter, so that the documentation reflects the new changes of the DOL’s definition, which takes effect March 27, 2015.

 

Additional Information on the Final Rule:

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

Section 125: Who CANNOT Participate in a Cafeteria Plan, FSA, or HRA

taxes

We often receive the question of “Who can and cannot participate in a Section 125 Cafeteria Plan, Flexible Spending Account (FSA), or HRA?”  From time to time, we find clients who are participating in tax-favored benefits who should not, as they are not eligible, or they do not have a plan document in place.  Of course, these items can be an issue!

First, it is important to note, an employer’s eligibility rules may not discriminate in favor of highly compensated individuals. Pursuant to Code section 125(g)(3), a plan does not discriminate in favor of highly compensated individuals if it meets all of the following:

  • The plan benefits a classification of employees that does not discriminate in favor of highly compensated individuals;
  • The same employment requirement applies to all employees and the plan does not require more than three years of employment to participate; and
  • Entry into the plan is not delayed.

While there are some exceptions, generally an employer can define which classes of employees and former employees are eligible to participate in a Section 125 plan. However, the following individuals are NOT eligible to participate in Section 125 Cafeteria Plan, Flexible Spending Account (FSA), or Premium Only Plan (POP), or any of its qualified benefits:

  • More than 2% shareholder of an S-corporation, or any of its family members,
  • Sole proprietor,
  • Partner in a partnership, or
  • Non-employee director, solely serving on a corporation’s board of directors, and not otherwise providing services to the corporation as an employee. (26 CFR Section 1.125-1(g)(2)(i).

There are a few exceptions to the above-mentioned rule:

  • Dual-status individuals are eligible IF they are both an employee and provide services to the employer as a director or independent contractor.  This rule is not available for partners or more than 2% S-corporation shareholders. (26 CFR Section1.125-1(g)(2)(iii).
  • Employee spouse of self-employed individuals are eligible if they are bona fide employees and are not themselves self-employed.  State laws relating to ownership (especially in community property states) may also affect their status.

NOTE:  Sole proprietors, partnerships, and S-corporations may still sponsor Section 125 Cafeteria Plans and FSAs to their employees, and there are benefits to both the employer and employee for doing so.  In addition, the more than 2% shareholders in a S-corporation can still deduct health insurance premiums paid or reimbursed by the S-corporation, but must report these payments as income.  (Notice 2008-1).

Health Reimbursement Arrangements (HRA)

Self-employed individuals cannot participate in HRAs.  The same rules described above for Cafeteria Plans and their qualified benefits also apply to HRAs.  Informal guidance by the IRS suggests that the self-employed individuals cannot participate in a HRA even if they are taxed on the value of the benefits they receive.

Other Things to Take into Consideration:

Non-discrimination Testing:  Since self-employed individuals are not eligible to participate in Cafeteria Plans, qualified benefits and HRAs, they should not be included in the non-discrimination testing for such plans.  However, for Section 125 testing, understand that employee-spouses will almost always qualify as Key Employees under the ownership attribution rules, and may make a plan susceptible to failing the Key Employee Concentration Test.

Consequences of Non-compliance:  The Section 125 Cafeteria Plan Regulations provide a non-exhaustive list of 11 operational failures that will disqualify the tax-favored status of a Cafeteria Plan and all of its qualified benefits, including a FSA, forcing all such benefits for participants to be reclassified as taxable income.  Similarly, an HRA with ineligible participants would lose its tax-favored status for all participants.

 

If you have any questions or would like to further discuss how a Section 125 can benefit your company and its employees, reduce benefit costs, and improve employee engagement, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

Section 125: Advantages for the Employer AND Employee

save on taxes

Section 125 Cafeteria Plan

A Section 125 cafeteria plan is an employee benefits program designed to take advantage of the pre-taxed savings through the Section 125 of the Internal Revenue Code. The cafeteria plan allows employees to pay certain qualified expenses, such as health insurance premiums, on a pretax basis, and therefore reducing their taxable income and increasing their spendable/take-home income. Funds set aside in a flexible spending accounts (FSA) are not subject to federal, state, or Social Security taxes. On average, employee save from $0.25 to $0.49 for every dollar they contribute to the FSA.

Premium Only Plan (POP)

Employers may deduct the employees portion of the company sponsored insurance premium directly from eligible employees paycheck before taxes are deducted.

Flexible spending account (FSA)

In a FSA, employees may set aside on a pre-taxed basis of pre-established amount of money per plan year. The employee can use the funds in the FSA to pay for eligible medical, dependent care, or transportation expenses, depending on the plans the employer offers.

 

Benefits to the Employer:

Employers may add a FSA plan as a key element in their overall benefit package. Because an FSA plan offers a tax advantage, employers experience tax savings from reduced FICA, FUTA, SUTA, and Worker’s Compensation taxes on participating employees. These tax savings reduce or eliminate the various costs associated with offering the plan. Meanwhile, employee satisfaction is heightened because participating employees experience a “raise” at no additional cost to the employer.  Increase participation equals greater tax savings to the employer.

 

Benefits to the Employee:

An employee who participates in the FSA must place a certain dollar amount into the FSA each year they wish to participate. This election amount is deducted from the employee’s paycheck (for that amount divided by the number of payroll periods). For example, an employee is paid 24 times a year, and elects $1200 to contribute towards his/her medical FSA. The $50 is deducted pre-tax from each paycheck and it’s held in an account by the plan administrator to be reimbursed upon qualifying claims submissions.

 

The Use-It-Or-Lose-It Rule and Carryover:

This rule states that any funds remaining in the participating employee’s FSA account at the end of the plan year will be forfeited to the employer.

In addition, there is a new carryover provision that was implemented on October 31, 2013, where employees carryover up to $500 of unused medical FSA funds from one plan year to the next with no fees or penalties. Carryover ensures the participating employee a safety net when determining how much money to set aside in a medical FSA each year. Employees can contribute funds with more confidence, knowing they will not lose funds (maximum carryover is $500) at the end of the plan year. NOTE: This must be included in the Section 125 the plan document to allow such carryover.

Cafeteria plans are qualified, non-discriminatory benefit plans, meaning a discrimination test must be met based on the elections of participants.

 

Qualifying Events that will Allow a Participant to Adjust or Revoke a Plan Election:

  • A marriage or divorce
  • Death of spouse or dependent
  • Birth or adoption of a child
  • Termination or commencement of a spouse’s employment
  • Change in employment status from full-time to part-time, or part-time to full-time for you or your spouse

Please refer to your summary plan description “SPD” for more information about changing your elections. Changes must be made within 30 days of the qualifying event.

 

Nondiscrimination testing:

Section 125 of the Internal Revenue Code requires that cafeteria plan to be offered on a non-discriminatory basis. To ensure compliance, the Internal Revenue Code sets forth testing requirements that must be satisfied on an annual basis. These testing requirements are in place to make certain that cafeteria plan benefits are available to all eligible employees under the same terms, and that the plan does not favor highly-compensated employees, officers, and owners.

 

Exceptions in Participation in the Section 125 Cafeteria Plan:

The following individuals are not eligible to participate in a section 125 cafeteria plan, including a premium only plan “POP.”

More than 2% shareholder of an S-Corporation, nor any family members, Sole Proprietor, Partner in a partnership, or Nonemployee director, so we serving on the corporation’s board of directors (and not otherwise providing services to the corporation as an employee).

Special rules apply to more than 2% shareholder of the organization. These individuals may not participate in the plan, nor made their employee spouse, children, parents, and grandparents. In determining the status of an individual that becomes or ceases to be more than a 2% shareholder during the course of the S-corporation’s taxable year, the individual is treated as a more than 2% shareholder for the entire year.

 

If you would like more information and find out if a Section 125 Premium Only Plan and/or Flexible Spending Account is right for your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

For more details, please refer to:

http://www.irs.gov/pub/irs-drop/n-05-42.pdf

FAQs about Affordable Care Act Implementation (Part XXII)

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

CA Waiting Period Update & Federal Changes on the Horizon: August 20, 2014

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August 15, 2014 California Governor Jerry Brown signed into law legislation SB 1034 to better align California’s health coverage waiting period requirements with federal law. The intent of the bill is to resolve confusion between California and Federal law and to better conform to the waiting period provisions of the Affordable Care Act. While the ACA had established a 90-day waiting period for employers, California originally established a 60-day waiting period in 2014.

 

Therefore, as new plans begin or plans renew on or after January 1, 2015, employers will have the following options for waiting periods (depending on the medical carrier):

  1. First of the month following date of hire,
  2. First of the month following 30 days, or
  3. First of the month following 60 days.

 

Please check with your medical carrier for details or we can assist you to ensure you have the best option for your group.  If your group would like to change your waiting period for first of the month following 60 days, as your plan’s current waiting period was changed upon your renewal in 2014 to a lesser waiting period, this MAY be an option in 2015 (depending on carrier), or you can change upon your next renewal.

 

Federal action on waiting periods-in this case orientation periods – is also occurring at the federal level. In a final rule released in June 25, 2014 the Internal Revenue Service, the Employee Benefits Security Administration, and the Health and Human Services Department are authorizing an employer (who is offering ACA defined credible coverage) to have a “bona fide orientation period that occurs before the 90 waiting period begins. That means an employer that offers health coverage to employees could have an additional month of time before adding a new hire onto their health policy if there is a bona fide reason for an orientation period.

 

Under the final regulations, a group health plan and a health insurance issuer offering group health insurance coverage may not apply any waiting period that exceeds 90 days. The regulations define “waiting period” as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. Being otherwise eligible to enroll in a plan means having met the plan’s substantive eligibility conditions (such as, for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period.

 

The proposed regulations provided that one month would be the maximum allowed length of any reasonable and bona fide employment-based orientation period. During an orientation period, the regulators envisioned that an employer and employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin. Under the proposed regulations, if a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

 

The federal orientation period rule becomes effective on all group policies issued or renewed after January 1, 2015.

 

Click here for the Federal Register Notice.

 

Reference:  CAHU News Agents Can Use (August 20, 2014)

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

COBRA Notices Updated by DOL: May 2, 2014

Did you know that on May 2, 2014, the Department of Labor (DOL) issued updates to the Model General Notice and COBRA Election Notice?  Are you confident that you are providing the correct notices in a timely manner to your eligible employees and qualified beneficiaries? The Obama administration announced updates to model notices that employers must provide to employees, informing workers of their eligibility to continue health care coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA).  The Department of Labor (DOL) on May 2, 2014, released a new model general notice form and model election notice form for providing COBRA notices to employees, and a related notice of proposed rulemaking on the COBRA notice requirements, published in the May 7 edition of the Federal Register.​ Federal agencies also released an updated model notice regarding premium assistance under Medicaid and the Children’s Health Insurance Program (CHIP).

The updated notices let employees and qualified beneficiaries know that if they are eligible for COBRA continuation coverage, they also have an option to purchase coverage through the Affordable Care Act’s (ACA) Health Insurance Marketplace, as the government-run exchange is formally known.  Employees directed to Covered California/public exchange, may qualify for federal subsidies depending on income, and are less likely to opt to pay the full premium to continue with their former employer’s health coverage through COBRA. Regardless of the availability of Covered California/public exchange, employers with 20 or more are still required to comply with COBRA.  Ultimately, the decision of continuation of medical coverage will depend on what is best for the individual/family. For more information on COBRA Continuation Coverage, see the resources below.

or Employees

For Employers

Posters and Flyers

Video

Reference:  As seen at http://www.dol.gov/ebsa/COBRA.html dated August 1, 2015.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

Small Group Rating on New ACA Plans Beginning in 2014

The Affordable Care Act (“ACA”) and new state laws great new rules for how small group health plan rates will be calculated in 2014 and beyond for small groups. These changes are different than how small group has been rated prior to ACA. For non-grandfathered small group plans, insurance must maintain a single risk pool for coverage in the small group market, and there will be no medical underwriting.

For grandfathered plans, rates in 2014 will be calculated using the same methodology used in 2013 (i.e. age bands, dependent coverage, etc.). For non-grandfathered plans, including “metal tier” plans available on and off-exchange, rates can vary based only on the following factors:

  • Standard age curve: this age curve expands the number of age bands from 7 to 40 5H bands, requires all ensures to use the same age curve, and limits the oldest adult rate to no more than three times the youngest adult rate (defining adults as 21 and older).
  • Family coverage: the cost of family coverage will be calculated by adding together the premium rate for each family member using the standard age curve. Insurance can charge no more than three oldest children under the age 21 per family. This approach to establishing family coverage is called the “member level rating,” as opposed to family to your rating, which is based on the employees age and family coverage category.
  • Geographic area: rates can be higher for people who live in areas with high medical costs. The number of geographic right areas in California will jump from 9 to 19 into thousand 14, and they must be standardized across the insurers. In 2015, small group plans in California will be rated based on employer ZIP Code, whereas in the past, rates for most curious were based on employee home ZIP Code.

Example: Family with six children

 Dad, age 55  Mom, age 52  Child, age 24  Child, age 20  Child, age 17  Child, age 14  Child, age 10  Child, age 5

Based on the medical plan selected, the new member level family rating would be calculated as follows:

Premium for dad, age 55, plus

Premium for mom, age 52, plus

Premium for child, age 24 (as family member’s age 21 and older are eight rated separately),

plus Premium for child, age 20,

plus Premium for child, age 17,

plus Premium for child, age 14 (as previously mentioned, insurance can charge for no more than the three oldest children under age 21 per family)

The additional children, age 10 and age 5, are not rated for this family’s premium.

Add each premium together and that is the new family rate under ACA for small groups.

 

NOTE: Birthday billing rates will adjust for age at contract renewal, along with the carriers trend increase for the small risk pool.

NOTE:  As of January 1, 2016, small group rating will be for group sizes of 1-100, which will significantly change the 51-100 mid-sized employer’s rating and benefit offerings.

For more information, download Final Rule on Rate Review

 

MNJ Insurance Solutions can offer you affordable healthcare coverage for California employer groups of any size.  Please contact us for a complementary quote from various insurance carriers at 714-716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.