Learn About Health Care in California

While health care reform has been a focus of political discussion, the State of California is moving forward to create a health care insurance exchange set to begin operations in October 2013.

Covered California launched a new consumer website to help answer questions on what this all means for individuals and businesses.

Visit coveredca.com for more information.

ObamaCare 2013-2014: Fees and more Fees

The first quarter of 2013 will soon be over and 2014 will arrive shortly when ObamaCare will require employers to pay fees either directly or indirectly.

The first of such fees will be due by July 31, 2013! This is the Patient-Centered Outcomes Research Institute Fee or PCORI fee. This fee will have to be paid for by most plans including insured and self-insured regardless of whether the plan is grandfathered or not. Non-profits, retiree only, and governmental entities are subject to the fee as well. The fee is for "comparative effectiveness research" as required under ObamaCare.

The PCORI fee starts at $1 per "covered life" (employee, spouse and dependents) and goes to $2 in 2014 and then is indexed for the remaining five years. It is important to note that it is assessed on covered lives not just covered employees; however the fee only applies to those individuals living in the U.S. The regulations outline several ways to count covered lives depending on whether the plan is insured or self-insured.

Fee requirements

For self-insured plans, a fee is imposed on plans for each plan year ending on or after October 1, 2012 and before October 1, 2019. For calendar year plans, the first plan year ending on or after October 1, 2012, will be the 2012 plan year, which ends on December 31, 2012. For insured plans the same applies, only with respect to policy years rather than plan years. For calendar year plans the first PCORI fee will be due July 31, 2013, and is reported on IRS Form 720, the Quarterly Federal Excise Tax Return. The fee applies to group health plans, regardless of grandfathered status. Who pays the fee? For insured plans the fee is paid by the insurer (this may translate to higher rate hikes). For self-insured plans the fee is paid by the plan sponsor. In the case of a single-employer plan, the plan sponsor is the employer.

What about Flex Plans?

Most Cafeteria Plan Health FSAs are exempt. The one exception is for plans where there is an employer contribution of more that $500 per year. If the fee does apply to a Health FSA, the final regulations provide for a special rule limiting the covered lives to just the participant, ignoring spouse and dependents whose expenses may be eligible for reimbursement under the FSA.

HRAs are more complex: A stand-alone HRA (an HRA that is not linked to group health coverage) is subject to the PCORI fee. For example, a premium only HRA, such as some HRAs offered to Medicare-eligible retirees, would be subject to the PCORI fee. An HRA linked to a self-insured health plan that provides major medical coverage (PPO, HMO) is not subject to a separate fee. Multiple self-insured arrangements maintained by the same plan sponsor and with the same plan year are subject to a single PCORI fee. However, if an employer provides a self-insured HRA in conjunction with an insured group health plan (as many do), then the self-insured employer plan sponsor will be subject to the fee with respect to covered lives under the self-insured HRA. The insurer of the group insurance policy will be subject to the fee in connection with covered lines under the group health policy, even though the HRA and the insured group health plan are maintained by the same plan sponsor.

In addition to the PCORI fee, employers will soon be faced with the Temporary Reinsurance Program fee beginning in 2014.

This fee is paid by group health plans during 2014, 2015 and 2016. The expressed purpose of this fee is to establish a reinsurance pool for insurers in the individual health insurance market. The goal is to lessen the risk for insurers due to guaranteed insurability of insurance in this market beginning in 2014. IRS proposed regulations issued in December 2012 estimate the fee for 2014 will be $63 for each person covered by a group health plan-again this includes spouses and dependents who participate in the plan. The exact amount will be determined by HHS (Health and Human Services) later in 2014 when they can better determine covered lives for that year.

Who pays the fee?

Again, for insured plans the insurer will pay the fee; however, I feel that it is unrealistic to think that this will not be passed on to the employer/employees. For self-insured plans the fee is owed by the plan sponsor, which is the employer except for collective bargained plans. The fee will be collected on a calendar year basis, regardless of the plan year for the group health plan. The covered entity must provide information to HHS by November 15th on the number of covered lives during the plan year; HHS will then send an invoice within 15 days of submission or by December 15th, whichever date is later. The fee is payable within 30 days after receipt of the invoice. A small consolation is that the fee is tax deductible.

What about Flex Plans?

I am happy to say here our voices have been heard. Health

FSAs are exempt (even those that are not an excepted benefit-employer funded); HSAs are exempt; HRAs that are integrated with a group health plan (no exclusion so far for fully insured) are exempt; in addition other benefit plans such as: stand alone vision and dental plans, stand-alone prescription drug plans, most employee assistance programs, hospital indemnity coverage, and stop loss insurance are also exempt. 

The above information is submitted as a short introduction to these fees (a heads up) only and Pacific Benefits accepts no responsibility for the accuracy of the information and does not give legal advice. All clients are advised to pursue this with their insurance advisors and legal counsel.

MySource Debit Card Emails - Technical Difficulties

Many participants with the MySource debit card are receiving emails from our automated system stating that a recent card transaction hasn't been resolved or receipts are needed for further substantiation. Please note, these emails are being sent in error. We are actively working to resolve this issue as soon as possible and deeply apologize for any inconvenience this has caused you. Stay tuned for updates. We'll have more information for you as it becomes available.

UPDATE: This issue has been resolved. Emails should be going out to affected participants informing them of transaction resolutions within the next 24 hours. We apologize again for any inconvenience this has caused.

MySource Debit Card - Technical Difficulty

Our card processing gateway vendor is currently experiencing a technical issue, which is resulting in card transactions being declined at the point of sale. The information that is being sent for these declines is incorrectly displaying as a pending authorization and reducing the card holder's purse value.

Our card processing gateway vendor is working diligently to resolve the issue, and the card accounts online will be corrected. We will notify you as soon as it has been resolved. 


UPDATE:
The card vendor outage reported on Friday, Nov. 16 was resolved by the vendor at 1:50 p.m. CST Friday afternoon and transaction processing has returned to normal. The transactions that were declined, and purse values affected during this outage will be corrected by end of business Monday.

Thank you for your patience during this outage. If you have any questions or lingering issues with the card transaction process during this time, please contact Pacific Benefits iFlex.

Pacific Benefits iFlex, Inc., Introducing Customer Support Via Twitter

Pacific Benefits iFlex, Inc., is proud to be the first benefits administrator to offer customer support via Twitter through our Twitter account at twitter.com/pacificbenefits.

In its continuing effort to lead the industry in innovative technological solutions to customer support offerings, Pacific Benefits iFlex, Inc., will now offer FSA plan participants the ability to ask basic plan questions via Twitter, the revolutionary new communications portal that has taken the world by storm. (Due to HIPPA regulations, individual participant plan information such as account balances and claim submission follow-up inquiries will still need to be addressed by calling either Flex Voice at 916-361-6955 or 800-838-4511 or our offices at 916-363-2101 or 800-800-2090).

General questions regarding the rules of the plan, claims submission, qualifying services and products, etc., can be posted to our Twitter account. This is a beta test of the service. Please allow for 24-48 business hours (Monday-Friday 8AM-4PM) for a response to your question. Also, make sure to follow us as we'll be posting new information regarding FSA plans everyday. We look forward to tweeting with you.

Good News From The IRS Regarding FSA Medical Limit

Most recently the news from Washington has dampened the outlook for employers offering fringe benefits. The new SBC requirements and new PCOR fees due to start this fall (barring a complete rejection of the Health Reform Law by the Supreme Court in June) have created a haze over benefit plans.

However, a bright spot has emerged. On May 30th the IRS issued Notice 2012-40 (PDF) which simplified some requirements for the $2,500 FSA Medical Limit.  

The IRS clarified that the limit does not affect non-calendar year plans with a plan year beginning before January 1, 2013. Thus, a non-calendar year plan with the plan year beginning in 2012 is not subject to the limit until the plan renews in 2013. This requirement would have had an unfair impact on those enrolled in non-calendar year plans that began in 2012.

In addition to the start date clarification, the Notice addresses the following:

• Relief is provided for salary reduction contributions exceeding the $2,500 limit that are due to a reasonable mistake and not willful neglect and that are corrected by the employer.
• The limit does not apply to Flex Credits/funds contributed by the employer nor does it apply to non-healthcare FSAs.
• Amendments to Plan Documents have been delayed until 2014.
• Funds rolling over into the new plan year due to the "grace period" provision will not count toward the $2,500 limit.
• If the employee and spouse are both covered under Cafeteria Plans (even if employed by the same employer) each can elect the $2,500 limit.
• The limit does not apply to HSAs, HRAs or health plan premium payments under a Section 125 Plan.
• The $2,500 limit must be pro-rated for the number of months when the plan is a short-plan year.

The Notice goes further to note that the Obama Administration is now considering a revision of the "use it or lose it" rule. The current mindset is that the limit now prevents Health FSAs from deferring excess compensation and limits the extent to which salary reduction amounts may accumulate over time. This may eventually replace or be in addition to the current 2.5 month grace period rule.

Also of note are the 2013 Health Savings Account Limits:

• Single Coverage contribution maximum is $3,250
• Family Coverage contribution maximum is $6,450
• HDHP (High Deductible Health Plan) minimum required deductible must be $1,250 for single coverage and $2,500 for family coverage
• Annual out of pocket expense must not exceed $6,250 for single coverage and $12,500 for family coverage

June will be a historic month-rest assured we will stay tuned in to keep you up to date.

Summary of Benefits and Coverage - Final Regulations Issued

Action needs to be taken now! Some of you may well remember mention of a document called a Summary of Benefits and Coverage from our seminars and bulletins on Health Care Reform in 2010. At that time it had the following requirements:


* Must be furnished to participants initially and at time of re-enrollment.
* A separate document.
* Cannot be more than 4 pages in length.
* No print smaller than 12 point font.
* Timeline-within 2 years of enactment: March 23, 2012.

On February 9, 2012, the Agencies (IRS, DOL, and HSS) issued final regulations to be effective April 12, 2012. The good news is that the original effective date of March 23, 2012 has been postponed for 6 months to September 23, 2012. There are no significant changes in the regulations but a minor disappointment in that the regulations provide no relief for large self-insured plans as some thought might happen. However, the regulations do clarify the applicability of the SBC requirement as follows.

These SBC rules apply to both insured and self-funded plans. The plan administrator (typically, the sponsoring employer) is responsible for providing the SBC. In the case of an insured plan, however, the insurer is equally responsible. Moreover, if an insurer provides a timely and accurate SBC, the plan administrator is not required to do so. This is another health care reform requirement to which even "grandfathered" plans are subject. The same is true for even stand-alone health reimbursement arrangements (HRAs), as well as "mini-med" plans that have received a waiver from the prohibition on annual benefit limitations. Most "linked" HRAs will also need to comply.

Certain employer plans are exempt from this SBC requirement. These include HIPAA "excepted benefits", such as stand-alone dental and vision plans and most flexible spending arrangements. Health savings accounts are also exempt. However, the agencies mention that even plans that are exempt may need to be referenced in the SBC for a comprehensive medical plan, as a way of explaining all of the plan benefits and features.

Some Changes:

These changes will make it easier to comply with the SBC requirement.

* An SBC now does not have to disclose information concerning premiums.
* An SBC need not be a stand-alone document but can be combined with a summary plan description.
* There are published templates to be used on the DOL website at:
http://www.dol.gov/ebsa/healthreform/index.html; although the agencies emphasize the use of the templates, they also now allow for certain modifications that are permissible.
* The electronic distribution of the SBC has been made somewhat easier.

Effective Dates:

Group Health Plan Participants during Open Enrollment: have to be offered to participants on the first day of open enrollment if the first day is on or after September 23, 2012. For most calendar year plans open enrollment starts November 1st.

Group Health Plan Participants other than Open Enrollment: for group health plan participants that do not enroll in the open enrollment SBCs will have to be provided the first day of the plan year after September 23, 2012. This effectively means that plans with an early open enrollment period will still have to have SBCs available by January 1, 2013.

Mid-Year Plan Changes: This one is the most problematic; gone are the days when changes can be made in insured and self-insured plans (Medical FSAs, HRAs and MERPSs) and notification be given to the participants after the fact. Now, the plan or issuer must provide notice of the modification to enrollees no later than 60 days prior to the date on which the modification will become effective.

Finally, the regulations create an exception from the requirement that an SBC be provided no later than 30 days prior to the first day of a new plan or policy year upon automatic renewal if the SBC cannot be provided in such a time frame. This may happen, if for example, the issuer and purchaser have not finalized the terms of coverage for the new policy year. In such a situation, the SBC would have to be provided within 7 days of issuance of the policy. While current regulations already provide for a $100 per day penalty; new regulations stiffen this by adding an additional $1,000 per day for each affected individual for willful violations. Needless to say this is something where steps should be taken early and decisions made as to formatting and who will provide this document.

In closing, it is amusing to note that while the initial regulations require a limit of 4 pages for the SBC, the template on the DOL website is 6 pages. The agencies have been somewhat embarrassed by this and now will allow 4 pages double sided.

If you have any questions, please feel free to contact us at any time at (916) 363-2101.