Policies Renewed Under Extended Transitional Policy Must End by December 31, 2019
A previously extended transitional policy which allows health insurance issuers, at their option, to continue group coverage that would otherwise be terminated or cancelled has been further extended to policy years beginning on or before October 1, 2019, provided that all policies end by December 31, 2019. Health insurance issuers that renew coverage under the extended policy are required to provide standard notices to affected small businesses for each policy year.
Policies subject to the transitional relief will not be considered to be out of compliance with key Affordable Care Act provisions, including:
The requirement to cover a core package of items and services known as essential health benefits;
The requirement that any variations in premiums be limited with regard to a particular plan or coverage to age, tobacco use, family size, and geography;
The requirements regarding guaranteed availability and renewability of coverage; and
The requirements relating to coverage for individuals participating in approved clinical trials.
Click here to review the extended transitional policy.
A new rule from the U.S. Department of Health and Human Services (HHS) addresses, among other things, the requirement under the Affordable Care Act that non-grandfathered group health plans limit annual out-of-pocket cost-sharing for coverage of essential health benefits under the plan. Under the rule, these out-of-pocket expenses may not exceed $7,900 for self-only coverage or $15,800 for family coverage in 2019.
Affordability, Tax Filing Threshold, and Other Exemptions Available
Under the Affordable Care Act’s (ACA) ”individual mandate” (also called individual shared responsibility) provision, every individual must have minimum essential health coverage for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return for tax year 2017.
Among other exemptions, individuals may claim the following exemptions from the individual mandate by filing Form 8965, Health Coverage Exemptions, along with his or her 2017 tax return:
Affordability Exemption: The lowest-priced coverage available to the individual, through either a Health Insurance Marketplace or employer-based group health plan, would have cost the individual more than 8.16% of his or her household income for plan years beginning in 2017, as computed on the tax return.
Tax Filing Threshold Exemption: The individual’s gross income or household income was less than the applicable minimum threshold for filing a tax return (see ”2017 Federal Tax Filing Requirement Thresholds”).
Short Coverage Gap Exemption: The individual went without coverage for less than three consecutive months during the year.
Medicaid Expansion Exemption: The individual’s household income is below 138% of the federal poverty line for his or her family size, and at any time during the year, the individual resided in a state that did not participate in the Medicaid expansion under the ACA. States that did not expand Medicaid for all of 2017 include: Alabama, Florida, Georgia, Idaho, Kansas, Maine, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.
Click here to learn more about individual mandate exemptions.
Employers are reminded that it is important to know how many full-time employees they have in order to ensure compliance with the employer shared responsibility provisions (“pay or play”) of the Affordable Care Act, which apply only to applicable large employers (ALEs).
Determining ALE Status
Whether an employer is considered an ALE for a particular calendar year depends on the size of its workforce during the preceding calendar year. For example, employers will use information about the size of their workforce during 2017 to determine if their company is an ALE for 2018. Employers with an average of at least 50 full-time employees in the preceding calendar year-including full-time equivalent employees (FTEs)-are generally deemed ALEs for the current calendar year.
Identifying Full-Time Employees
In general, for purposes of pay or play:
A full-time employee is, for a calendar month, an employee who is employed on average at least 30 hours of service per week(130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week).
A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
For additional rules on determining who is a full-time employee, including what counts as an hour of service, click here.
Certain Events Trigger 30 or 60-Day Special Enrollment Periods
Under HIPAA, certain events that happen to employees or their dependents trigger a right to “special enroll” in a group health plan. Special enrollment allows individuals who previously declined health coverage to enroll in coverage outside of a plan’s open enrollment period.
An employee and his or her dependents must be provided at least 30 days to request special enrollment in a group health plan because of:
Loss of eligibility for other coverage, such as coverage from a spouse’s employer;
Termination of employer contributions toward other health coverage; or
Certain life events, including marriage, birth, adoption, or placement for adoption.
An employee and his or her dependents must be provided at least 60 days to request special enrollment in a group health plan because of:
Loss of coverage under a state Children’s Health Insurance Program (CHIP) or Medicaid; or
Determination of eligibility for premium assistance under CHIP or Medicaid.
Group health plans must make all employees eligible to enroll in the employer’s group health plan aware of their special enrollment rights at or before the time an employee is initially offered the opportunity to enroll in the plan by distributing a Notice of Special Enrollment Rights. A downloadable model notice from the U.S. Department of Labor (DOL) is available here (scroll to page 2 of the PDF-marked as page 138). Please note that the DOL’s model notice does not discuss the 60-day special enrollment period requirement mentioned above.
Please Note: The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose.