ERISA Compliance: It s not an option, it s the law.

Transcription

1 COMPLIANCE CORNER Q ERISA Compliance: It s not an option, it s the law. Preparing for Medical Loss Ratio (MLR) and Summary of Benefits and Coverage (SBC) requirements? Medical Loss Ratio (MLR)...Is it the carrier or employer s responsibility? Carrier Responsibility: On November 22, 2010, the Obama Administration issued a regulation implementing the policy, known as the medical loss ratio provision of the Affordable Care Act. Insurance companies will be required to spend 80 to 85 percent of premium dollars on medical care and health care quality improvement, rather than on administrative costs. If they don t, the insurance companies will be required to provide a rebate. Insurers will be required to make the first round of rebates to consumers by August 2012 based on their 2011 medical loss ratio. Under the regulation, expatriate and mini-med plans that report separately will be required to report data to the Secretary on an accelerated basis. Estimates indicate that up to 9 million Americans could be eligible for rebates starting in 2012 worth up to $1.4 billion. Average rebates per person could total $164 in the individual market. How These New Rules Will Work Ensuring Value for Consumers The new medical loss ratio rules will hold insurance companies accountable and increase value for consumers by: Establishing Greater Transparency and Accountability: Beginning in 2011, the The Employee Retirement Income Security Act (ERISA) of 1974 establishes minimum standards for retirement, health, and other welfare benefits plans, including life insurance, disability insurance, and apprenticeship plans. law requires that insurance companies publicly report how they spend premium dollars. This information will provide consumers with meaningful information on how their premium dollars are spent, clearly accounting for how much money goes toward actual medical care and activities to improve health care quality versus how much money is spent on administrative expenses like marketing, advertising, underwriting, executive salaries and bonuses. Ensuring Americans Receive Value for their Premium Dollar: Beginning in 2011, the law requires insurance companies in the individual and small group markets to spend at least 80 percent of the premium dollars they collect on medical care and quality improvement activities. Insurance companies in the large group market must spend at least 85 percent of premium dollars on medical care and quality improvement activities. Providing Rebates to Consumers: Insurance companies that are not meeting the medical loss ratio standard will be required to provide rebates to their consumers. Insurers will be required to make the first round of rebates to con-

2 sumers in Rebates must be paid by August 1st each year. Enrollees owed a rebate will see a reduction in their premiums, receive a rebate check, or, if the enrollee paid by credit card or debit card, a lump-sum reimbursement to the same account that the enrollee used to pay the premium. In some cases, the rebate may go to the employer that paid the premium on the enrollee s behalf. Regardless of whether the rebate is provided to enrollees directly or indirectly through their employer, each enrollee must receive a rebate that is proportional to the premium amount paid by that enrollee. The ERISAEdge Solution ERISAEdge provides a solution to employers by performing all key areas of ERISA administration requirements and ensuring complete compliance with the law. ERISAEdge Administration means TASC does the following: Provides Hold Harmless for all ERISA services provided. Ensures ERISA Plan is current with all regulations. Monitors the associated employee benefits to ensure timely disclosure of plan change to employees. Provides resolution assistance in the event that your employee benefit plans are reviewed by the DOL. Provides technical and customer service assistance. Provides access to experienced employee benefits professionals. Provides instruction regarding required on-site record keeping. Maintains all required records for the mandated amount of time. Provides online storage of Plan document(s)/spd. Completes the required forms accurately and in a timely manner. Prepares the Wrap Plan Document/Summary Plan Description. Prepares the Summary Material Modification (if necessary). Prepares IRS Form 5500 and associated Schedule A or C (if required). Prepares the SAR (if required). Creates and distributes a bi-annual Client newsletter. Don t fail a DOL audit! Don t owe monetary penalties to an Employee! Don t fail to provide the required legal documentation! Insurer Reporting Requirements: Beginning in 2011, insurance companies that issue policies to individuals, small employers, and large employers will have to report the following information in each State it does business: Total earned premiums; Total reimbursement for clinical services; Total spending on activities to improve quality; and Total spending on all other non-claims costs excluding federal and State taxes and fees. These reports will be posted publicly by HHS so residents of every State will have information on the value of health plans offered by different insurance companies in their State. An insurer will report aggregate premium and expenditure data for each market, except for so-called expatriate and mini-med plans. For these plans, insurers will be allowed to report their experience separately. The regulation accelerates data collection and creates a special methodology that follows this recommendation to the extent permitted by the Affordable Care Act. HHS is allowing the same treatment for mini-med plans insurance products with very low annual dollar limits and low premiums to allow this type of coverage to continue until 2014 when better, more affordable options will be available to consumers. Enforcement: The Affordable Care Act gives the Secretary direct enforcement authority for the medical loss ratio requirements. However, HHS recognizes States capacity to assist in enforcement and will accept the findings of a State audit of MLR compliance if they are based on the medical loss ratio requirements set forth in federal law and regulations. The regulation also requires insurers to retain documentation that relates to the data they reported and to provide access to those data and their facilities to HHS, so compliance with reporting and rebate requirements can be verified.

3 Failure to comply with ERISA s requirements can be quite costly, with possible DOL enforcement actions and penalty assessments and/or employee lawsuits resulting. Finally, the regulation imposes civil monetary penalties if an insurer fails to comply with the reporting and rebate requirements set forth in the regulation, and it details the criteria and process for determining whether and in what amount such penalties should be imposed. Although the law allows HHS to develop separate monetary penalties for medical loss ratio non-compliance, HHS has adopted the HIPAA penalties in this regulation. The regulation s penalty for each violation is $100 per entity, per day, per individual affected by the violation. These penalties do not include penalties that can be assessed by the DOL and IRS for failure to comply with the MLR rebates. Employer/Plan Sponsor MLR Responsibility: The Department of Labor (DOL) has determined the MLR rebates are plan assets. If the Plan Document/SPD is silent, 100% of the rebate falls under plan assets. By adding the terms via the Plan Document Amendment/ Summary of Material Modification (SMM), the employer can retain a prorated portion of the rebate equal to the percent of premium paid by the employer. Only the percent of the rebate equal to the percent of premium the participant paid will be considered plan assets and must be used exclusively for the benefit of the plan. This document allows the plan to retain its fair share of any premium rebate that may become due under the terms of Health Care Reform. The first rebates are due to be paid August 1, PLEASE NOTE: Effect of lack of policy for refund of premiums on small employers: Failure to provide refund policy could result in small employers 5500 filing requirement. As part of the small group exception (under 100) employer s that receive refunds from an insurance company for distribution to participants must have an allocation policy and let the participant know of such allocation policy or they must file a 5500 return for the plan. In the past few carriers refunded premiums. Employers should review carrier certificates for broad language of Employer refund policy intent or must have the policy written in the ERISA wrap SPD or SMM. ERISAEdge Working for the Client ERISAEdge Issues MLR SMM for Clients: In April 2012, TASC prepared and issued Summary Material Modifications (SMM) to all existing ERISAEdge clients to meet this requirement of notification to participants of intent to retain employer portion of rebate. Going forward all new ERISAEdge clients Plan document/spd will have the MLR rebate language incorporated. Summary of Benefits and Coverage FAQS ABOUT AFFORDABLE CARE ACT IMPLEMENTATION (PART VIII) issued March 19, Following are HIGHLIGHTS of the key Q&A s regarding implementation of the summary of benefits and coverage (SBC) provisions of the Affordable Care Act. The entire posting of these FAQs can be viewed at gov/ebsa/faqs/faq-aca.html. These FAQs have been prepared jointly by the Departments of Labor, Health and Human Services (HHS), and the Treasury (the Departments). They answer questions from stakeholders to help people understand the new law and benefit from it, as intended. Summary of Benefits and Coverage (SBC): On February 14, 2012, the Departments published the final rules regarding the SBC.1 These FAQs aim to answer some of the questions that have been raised to date. The Administration is committed to promoting operational efficiencies and clarifying the final regulations to ensure successful implementation. 1 See 26 CFR , 29 CFR , and 45 CFR , published February 14, 2012 at 77 FR Q1: When must plans and issuers begin providing the SBC? For group health plan coverage, the regulations provide that, for disclosures with respect to participants and beneficiaries who enroll or re-enroll through an open enrollment period (including late enrollees and re-enrollees), the SBC must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, For disclosures with respect to participants and beneficiaries who enroll in coverage other

4 than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the SBC must be provided beginning on the first day of the first plan year that begins on or after September 23, For disclosures from issuers to group health plans, and with respect to individual market coverage, the SBC must be provided beginning September 23, Q3: Are plans and issuers required to provide a separate SBC for each coverage tier (e.g., self-only coverage, employee-plus-one coverage, family coverage) within a benefit package? No, plans and issuers may combine information for different coverage tiers in one SBC, provided the appearance is understandable. In such circumstances, the coverage examples should be completed using the cost sharing (e.g., deductible and out-of-pocket limits) for the self-only coverage tier (also sometimes referred to as the individual coverage tier). In addition, the coverage examples should note this assumption. Q4: If the participant is able to select the levels of deductible, co-payments, and coinsurance for a particular benefit package, are plans and issuers required to provide a separate SBC for every possible combination that a participant may select under that benefit package? No, as with the response to Q3, plans and issuers may combine information for different cost-sharing selections (such as levels of deductibles, co-payments, and co-insurance) in one SBC, provided the appearance is understandable. This information can be presented in the form of options, such as deductible options and out-of-pocket maximum options. In these circumstances, the coverage examples should note the assumptions used in creating them. Special enrollees. The SBC must be provided to special enrollees no later than the date on which a summary plan description is required to be provided (90 days from enrollment). Upon renewal. If a plan or issuer requires participants and beneficiaries to actively elect to maintain coverage during an open season, or provides them with the opportunity to change coverage options in an open season, the plan or issuer must provide the SBC at the same time it distributes open season materials. If there is no requirement to renew (sometimes referred to as an evergreen election), and no opportunity to change coverage options, renewal is considered to be automatic and the SBC must be provided no later than 30 days prior to the first day of the new plan or policy year. The final regulations provide an accommodation for insured coverage if the policy, certificate, or contract of insurance has not been renewed or reissued prior to the date that is 30 days prior to the first day of the new plan or policy year. In such cases, the SBC must be provided as soon as practicable but in no event later than seven business days after issuance of the new policy, certificate, or contract of insurance, or the receipt of written confirmation of intent to renew, whichever is earlier. Upon request. The SBC must be provided upon request for an SBC or summary information about the health coverage as soon as practicable but in no event later than seven business days following receipt of the request. Q10: What are the circumstances in which an SBC may be provided electronically? With respect to group health plan coverage, an SBC may be provided electronically: (1) by an issuer to a plan, and (2) by a plan or issuer to participants and beneficiaries who are eligible but not enrolled for coverage, if: The format is readily accessible (such as html, MS Word, or PDF format); The SBC is provided in paper form free of charge upon request; and If the SBC is provided via an Internet posting (including on the HHS web portal), the issuer timely advises the plan (or the plan or issuer timely advises the participants and beneficiaries) that the SBC is available on the Internet and provides the Internet address. Plans and issuers may make this disclosure (sometimes referred to as the e-card

5 or postcard requirement) by . An SBC may also be provided electronically by a plan or issuer to a participant or beneficiary who is covered under a plan in accordance with the Department of Labor s disclosure regulations at 29 CFR b-1. Those regulations include a safe harbor for disclosure through electronic media to participants who have the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform duties as an employee and with respect to whom access to the employer s or plan sponsor s electronic information system is an integral part of those duties. Under the safe harbor, other individuals may also opt into electronic delivery. With respect to individual market coverage, a health insurance issuer must provide the SBC, in either paper or electronic form, in a manner that can reasonably be expected to provide actual notice. The SBC may not be provided in electronic form unless: The format is readily accessible; If the SBC is provided via an Internet posting, it is placed in a location that is prominent and readily accessible; The SBC is provided in an electronic form which can be retained and printed; and, The issuer notifies the individual that the SBC is available free of charge in paper form upon request. Q11: Can the Departments provide model language to meet the requirement to provide an e-card or postcard in connection with evergreen website postings? Yes. Plans and issuers have flexibility with respect to the postcard and may choose to tailor it in many ways. One example is: Availability of Summary Health Information. As an employee, the health benefits available to you represent a significant component of your compensation package. They also provide important protection for you and your family in the case of illness or injury. Your plan offers a series of health coverage options. Choosing a health coverage option is an important decision. To help you make an informed choice, your plan makes available a Summary of Benefits and Coverage (SBC), which summarizes important information about any health coverage option in a standard format, to help you compare across options. The SBC is available on the web at: www. website.com/sbc. Q12: The regulations state that in order to satisfy the requirement to provide the SBC in a culturally and linguistically appropriate manner, a plan or issuer follows the rules in the claims and appeals regulations under PHS Act section Does this mean that the SBC must include a sentence on the availability of language assistance services? Yes, if the notice is sent to an address in a county in which ten percent or more of the population is literate only in a non-english language. The final SBC regulations provide that a plan or issuer is considered to provide the SBC in a culturally and linguistically appropriate manner if the thresholds and standards of the claims and appeals regulations are met. The claims and appeals regulations outline three requirements that must be satisfied for notices sent to an address in a county in which ten percent or more of the population is literate only in a non-english language. In such cases, the plan or issuer is generally required to provide oral language services in the non-english language, provide notices upon request in the non-english language, and include in all English versions of the notices a statement in the non-english language clearly indicating how to access the language services provided by the plan or issuer. Accordingly, plans and issuers must include, in the English versions of SBCs sent to an address in a county in which ten percent or more of the population is literate only in a non-english language, a statement prominently displayed in the applicable non-english language clearly indicating how to access the language services provided by the plan or issuer. In this circumstance, the plan or issuer should include this statement on the page of the SBC with the Your Rights to Continue Coverage and Your Grievance and Appeals Rights sections.

6 Sample language for this statement is available on the model notice of adverse benefit determination at IABDModelNotice2.doc. Current county-bycounty data can be accessed at cciio.cms.gov/resources/factsheets/clas-data. html. Even in counties where no non-english language meets the ten percent threshold, a plan or issuer can voluntarily include such a statement in the SBC in any non-english language. Moreover, nothing in the SBC regulations limits an individual s rights to meaningful access protections under other applicable Federal or State law, including Title VI of the Civil Rights Act of Q13: Where can plans and issuers find the written translations of the SBC template and the uniform glossary in the non-english languages? Written translations in Spanish, Chinese, Tagalog and Navajo will be available at cms.gov/programs/consumer/summaryandglossary/index.html. Q14: Is an SBC permitted to simply substitute a cross-reference to the summary plan description (SPD) or other documents for a content element of the SBC? No, an SBC is not permitted to substitute a reference to the SPD or other document for any content element of the SBC. However, an SBC may include a reference to the SPD in the SBC footer. In addition, wherever an SBC provides information that fully satisfies a particular content element of the SBC, it may add to that information a reference to specified pages or portions of the SPD in order to supplement or elaborate on that information. Q15: Can a plan or issuer add premium information to the SBC form voluntarily? Yes. If a plan or issuer chooses to add premium information to the SBC, the information should be added at the end of the SBC form. Q17: For group health plan coverage, may the coverage period in the SBC header reflect the coverage period for the group plan as a whole, or must the coverage period be the period applicable to each particular individual enrolled in the plan? The SBC may reflect the coverage period for the group health plan as a whole. Therefore, if a plan is a calendar year plan and an individual enrolls on January 19, the coverage period is permitted to be the calendar year. Plans and issuers are not required to individualize the coverage period for each individual s enrollment. Q18: Can issuers and plans make minor adjustments to the SBC format, such as changing row and column sizes? What about changes such as rolling over information from one page to another, which was not permitted by the instructions? Minor adjustments are permitted to the row or column size in order to accommodate the plan s information, as long as the information is understandable. The deletion of columns or rows is not permitted. Rolling over information from one page to another is permitted. Q19: Can plan names be generic, such as Standard Option or High Option? Yes, generic terms may be used. Q20: Can the issuer s name and the plan name be interchangeable in order? Yes. Q21: Can barcodes or control numbers be added to the SBC for quality control purposes? Yes, they can be added. Q22. Is the SBC required to include a statement about whether the plan is a grandfathered health plan? No, although plans may voluntarily choose to add a statement to the end of the SBC about whether the plan is a grand-fathered health plan. In the News: DOL Releases 2013 Budget Request: (a) The Employee Benefits Security Administration (EBSA) protects the integrity of pensions, health, and other employee benefits for more than 140 million people. EBSA is charged with administering and enforcing the Employee Retirement Income Security Act (ERISA) of 1974 (P.L ), 29 U.S.C et. seq. as amended and related federal civil and criminal laws.

7 (b) To protect Americans health benefits, the Department (DOL) is requesting $183 million for the Employee Benefits Security Administration for the protection of more than 140 million workers, retirees and their families which are covered by over 700,000 private retirement plans, 2.5 million health plans, and similar numbers of other welfare benefit plans which together hold estimated assets of $6 trillion. (c) EBSA is requesting additional 1003 (FTE) full- time employees to enforce ERISA rights. EBSA estimates that during FY 2013, it will: achieve $1,172,108,000 in total monetary results (including $173,000,000 for participant benefit recoveries) by conducting 3,915 civil investigations and responding to nearly 300,000 participant inquiries; obtain 105 indictments by conducting 320 criminal investigations; complete 4,330 reporting compliance reviews; conduct 600 rapid response sessions held for individuals facing job loss; conduct 200 Congressional office briefings; and complete 11 web casts and 11 compliance seminars for plan sponsors and participants. For additional information, please contact your Regional Sales Director (RSD) or International Lane Madison, WI Fax: