Topics of SIGNIFICAnce

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1 Topics of SIGNIFICAnce Benefit Services V O L U M E 2 6, N O. 2 S U M M E R Topics of SIGNIFICAnce is published biannually to share information with SBS s clients and independent brokers about benefit administration and SBS s products and services. It in no way should be viewed as legal advice. TREASURY DEPARTMENT DELAYS EMPLOYER MANDATE I N S I D E T H I S I S S U E : IMPORTANT REMINDERS AFFORDABLE CARE ACT SERVICES AVAILABLE FROM SBS FINAL WELLNESS PROGRAM REGULATIONS ISSUED HSA/HDHP LIMITS FOR 2014 AFFECT NON- GRANDFATHERED NON-HDHPs Page 3 SECURE FEATURE ADDED TO WEBSITE Page 3 In a surprise announcement made on its blog, the Treasury Department has delayed the start date of the employer shared responsibility provisions of the Affordable Care Act (ACA) until Under these provisions, large employers may be subject to monetary penalties (a/k/a shared responsibility payments) for not offering minimum essential health coverage that is affordable and provides minimum value to full-time employees and their dependent children. For background information about the meaning of these terms, see SBS s blast from April 22, If you need a copy, please contact SBS. Apparently, this delay was triggered by the Treasury s failure to issue proposed rules implementing the ACA-mandated informational reporting requirements of Internal Revenue Code sections 6055 and Code sections 6055 and 6056 require sponsors of self-funded health plans, health insurance issuers and large employers to provide the Internal Revenue Service (IRS) with very detailed annual reporting about minimum essential coverage, affordability and minimum value. Without this information, the IRS cannot determine which employers owe share responsibility payments. Later this summer, the Treasury expects to publish proposed rules implementing the employer shared responsibility provisions. Once these rules have been issued, the Obama administration has indicated its intent to work with employers, insurers and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014, in preparation for the full application of the provisions in Based upon currently available guidance, it does not appear that this delay will extend to any other ACA provisions (including ACA-mandated group health plan changes) scheduled to go into effect beginning January 1, ACA DEFINITION OF FULL-TIME EMPLOYEE CHALLENGED BY CONGRESS As passed into law, the Affordable Care Act (ACA) generally defines full-time employment as working an average of 30 hours per week or 130 hours per month. Starting in 2015, large employers (those employing, on average, 50 full-time and full-time equivalent employees) may be subject to monetary penalties for failing to offer qualified coverage to full-time employees and their dependent children. In a letter sent to President Obama, Senators Joe Donnelly and Susan Collins indicated that this definition is inconsistent with the traditional description of a full-time 40-hour work week and has caused significant confusion among employers who are struggling to understand and comply with the new requirements. The Senators introduced S. 1188, the Forty Hours is Full Time Act. This bill would change the ACA s definition of full-time to 40 hours per week and the number of hours counted toward a "full-time equivalent" employee to 174 hours per month. A similar bill, H.R. 2575, the Save American Workers Act, was introduced in the House. If the bills are successful and prevent the 30-hour a week definition from going into effect, large employers will need to revisit their strategies for conforming to the ACA. SBS will monitor and provide updates on the progress of this legislation.

2 EXCHANGE NOTICES IMPORTANT REMINDERS Employers must provide employees with an Exchange Notice no later than October 1, The U.S. Department of Labor s Employee Benefits Security Administration (EBSA) issued model Notices that employers can use to satisfy this requirement. There are two Notices, one for employers who offer a health plan and another for those who do not offer a health plan. Both Notices contain blank fields that employers must complete before they are distributed. For employers offering a health plan, the Notice must include very specific information about their health coverage, including whether the coverage is affordable and provides minimum value. Those employers should begin preparing this Notice as soon possible so that it is available for distribution by the October 1, 2013 deadline. For details and a copy of the DOL s model Notice for employers offering a health plan, please see the SBS e- mail blast sent May 10, If you cannot locate that e- mail, contact our Marketing Department for a copy. NEW ACA FEES AND TAXES The Affordable Care Act imposes new fees and taxes on self-funded group health plans. In an blast sent on May 30, 2013, SBS published a Checklist that identifies the fees, summarizes their requirements and provides the amounts. OTHER PREVIOUS COMPLIANCE UPDATES 7/01/ Defense of Marriage Ace (DOMA) 6/19/ Tax Deductibility of the PCORI Fee 4/22/ ACA s Play or Pay Rules for Minimum Essential Coverage, Minimum Value, & Affordability 4/08/ Glossary of Key ACA and Common Health Plan Terms 3/22/ PIN Retrieval for Debit Card Holders - Durbin Pin 3/08/ FMLA Final Rule and Health Insurance Premium Tax Credit 2/21/ ACA Updates - Individual Mandate, Guidance about the Impact of the ACA on HRAs, and Contraceptive Mandate for Religious Organizations We urge you to revisit previously provided information and contact our Marketing Department with any questions. If you cannot locate the above previous blasts, feel free to contact our Marketing Department for a copy. AFFORDABLE CARE ACT SERVICES AVAILABLE FROM SBS The Affordable Care Act (ACA) is considered the most significant law that Congress has passed in the last 50 years. As regulators devise the details needed for the law to be fully implemented, employers are facing many new administrative and compliance challenges. SBS has decades of experience guiding employers through the pitfalls of government rules and requirements. This expertise makes us invaluable to employers trying to manage the impact of health care reform. Currently, our ACA services Include: Summary of Benefits and Coverage (SBC) Patient-Centered Outcomes Research Institute (PCORI) Fee Reporting Transitional Reinsurance Program (TRP) Fee Reporting and Remittance A Play or Pay Decision Metrics Tool Eligibility Determinations ( 4980H) Plan Document and Summary Plan Description (SPD) Redrafts and Amendments Each time ACA regulations are issued, we reassess how SBS can provide clients with additional compliance tools and services. If you would like more detailed information about our ACA services, please contact the Marketing Department. FINAL WELLNESS PROGRAM REGULATIONS ISSUED Longstanding Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums or contributions or imposing different deductible, copayment or other cost sharing requirements based on a health factor (health factors are health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence) and disability). However, there is an exception that allows plans to offer certain types of wellness programs. Final wellness program regulations issued by the Departments of Health and Human Services, Labor and the Treasury on June 3, 2013 modify existing HIPAA wellness rules to incorporate changes required by the Affordable Care Act (ACA), which were first addressed in proposed regulations issued on November 26, The final regulations are applicable for plan years beginning on or after January 1, Two types of wellness programs are permitted. One is called a participatory wellness program. The other is called a health-contingent wellness program. (continued on page 4) T O P I C S O F S I G N I F I C A N C E P A G E 2

3 HSA/HDHP LIMITS FOR 2014 AFFECT NON-GRANDFATHERED NON-HDHPs In Revenue Procedure , the Internal Revenue Service announced the following Health Saving Account (HSA)/ High Deductible Health Plan (HDHP) limits for HSA-compatible HDHPs will be impacted by the new limits. HSA/HDHP Limits for 2014 HSA Contribution Limit Individual: $3,300 Family: $6,550 HSA Catch-up Contributions $1,000 (age 55 or older) HDHP Minimum Deductibles Individual: $1,250 Family: $2,500 HDHP Out-of-Pocket (OOP) Maximum Amounts Individual: $6,350 Family $12,700 For plan years beginning on or after January 1, 2014, the Affordable Care Act prohibits non-grandfathered non-hdhps from having an OOP maximum on essential health benefits that exceeds the OOP maximum that applies to HSAcompatible HDHPs. OOP maximum amounts include deductibles, coinsurance, copayments and similar charges, but exclude premiums and spending for non-covered services. For plans using provider networks, OOP expenses for out-ofnetwork services are not counted in the OOP maximum. Mental health and substance abuse parity rules prohibit separate OOP maximums on medical and mental health/substance abuse benefits. For 2014 only, transition relief is available to plans that use more than one service provider to administer benefits that are subject to the OOP maximum requirements. Such a plan will be considered to have satisfied the OOP maximum limitation if both of the following conditions are satisfied: 1. The plan complies with the OOP maximum limitation with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); and 2. To the extent the plan includes an OOP maximum on coverage that does not consist solely of major medical coverage (for example, if a separate OOP maximum applies to prescription drug coverage), such OOP maximum does not exceed $6,350 individual/$12,700 family. SBS can help design an HSA-compatible HDHP or non-grandfathered non-hdhp that complies with the 2014 maximum requirements. SECURE FEATURE ADDED TO WEBSITE SBS understands the importance of securing protected health information (PHI) while offering convenience to our customers and providers for the submission of claims, s and other documents containing PHI. That is why we added a new feature to our website Submit Secure or Attachments. Members, employers and providers can submit claims or other documents containing PHI through our secure option located on our website; Employers must register to access the self-service section which includes enrollment, claims and benefits tools. From the secure employer page, s and attachments can be sent to SBS utilizing Zixcorp encryption services. Members and providers can also submit secure and documents from their respective home pages without registering on the secure site. Secure is the preferred method for claim submission. s can be sent with a request for delivery receipt which eliminates the question as to whether the fax went through, or waiting for mail delivery before a claim or question can be timely and professionally addressed. For more information, please reference our client communication dated March 28, 2013 assistance, please contact our Marketing Department. For questions or T O P I C S O F S I G N I F I C A N C E P A G E 3

4 FINAL WELLNESS PROGRAM REGULATIONS ISSUED (CONTINUED FROM ) It should be noted that compliance with the HIPAA nondiscrimination rules (as later amended by the ACA) has no effect on determining compliance with other applicable laws. These laws include, but are not limited to, the Americans with Disabilities Act, Internal Revenue Code section 105(h) (prohibiting discrimination in favor of highly compensated individuals), the Genetic Information Nondiscrimination Act of 2008, the Family and Medical Leave Act, the fiduciary provisions of the Employee Retirement Income Security Act and State law. PARTICIPATORY WELLNESS PROGRAMS Participatory wellness programs are defined under the final regulations as programs that either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard that is related to a health factor. Examples of participatory wellness programs are: A program that reimburses employees for all or part of the cost for membership in a fitness center. A diagnostic testing program that provides a reward for participation in that program and does not base any part of the reward on outcomes. A program that encourages preventive care through the waiver of the copayment or deductible requirement under a group health plan for the costs of, for example, prenatal care or well-baby visits. (Note that, with respect to non-grandfathered plans, the ACA requires benefits for certain preventive health services without the imposition of cost sharing.) A program that provides a reward to employees for attending a monthly, no-cost health education seminar. A program that provides a reward to employees who complete a health risk assessment regarding current health status, without any further action (educational or otherwise) required by the employee with regard to the health issues identified as part of the assessment. Participatory wellness programs are not required to meet the requirements applicable to health-contingent wellness programs (see below), but they are required to be made available to all similarly situated individuals regardless of health status. HEALTH-CONTINGENT WELLNESS PROGRAMS Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward (or require an individual to undertake more than a similarly situated individual based on a health factor in order to obtain the same reward). This standard may be performing or completing an activity relating to a health factor, or it may be attaining or maintaining a specific health outcome. The category of health-contingent wellness programs is subdivided into: (1) activity-only wellness programs, and (2) outcome-based wellness programs. ACTIVITY-ONLY WELLNESS PROGRAMS Under an activity-only wellness program, an individual is required to perform or complete an activity related to a health factor in order to obtain a reward. Activity-only wellness programs do not require an individual to attain or maintain a specific health outcome. Examples of activity-only wellness programs include walking, diet or exercise programs. OUTCOME-BASED WELLNESS PROGRAMS Under an outcome-based wellness program, an individual must attain or maintain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) in order to obtain a reward. Generally, these programs have two tiers: (a) a measurement, test or screening as part of an initial standard; and (b) a larger program that then targets individuals who do not meet the initial standard wi t h we l l n e s s activities. Examples of outcome-based wellness programs include a program that tests individuals for specified medical conditions or risk factors (such as high cholesterol, high blood pressure, abnormal BMI, or high glucose level) and provides a reward to individuals identified as within a normal or healthy range (or at low risk for certain medical conditions), while requiring individuals who are identified as outside the normal or healthy range (or at risk) to take additional steps (such as meeting with a health coach, taking a health or fitness course, adhering to a health improvement action plan or complying with a health care provider s plan of care) to obtain the same reward. REQUIREMENTS FOR HEALTH-CONTINGENT WELLNESS PROGRAMS Health-contingent wellness programs must meet the following requirements to comply with the nondiscrimination rules. Frequency of Opportunity to Qualify. For both activity-only and outcome-based wellness programs, individuals eligible for the program must be given the opportunity to qualify for the reward at least once per year. (continued on page 5) T O P I C S O F S I G N I F I C A N C E P A G E 4

5 Volume 26, NO 2 FINAL WELLNESS PROGRAM REGULATIONS ISSUED (CONTINUED FROM PAGE 4) Size of Reward. The total reward offered to an individual under all health-contingent wellness programs under a plan cannot exceed the applicable percentage (30% for non-tobacco wellness program rewards plus an additional 20% for tobacco wellness program rewards, up to a 50% total if including tobacco programs) of the total cost of employee-only coverage under the plan, taking into account both employer and employee contributions towards the cost of coverage for the benefit package under which the employee is (or the employee and any dependents are) receiving coverage. If dependents are included in the wellness program, the final regulations give employers the flexibility to determine how the reward will be allocated among family members, as long as the method is reasonable. Reasonable Design. Health-contingent wellness programs must be reasonably designed to promote health or prevent disease, whether activity-only or outcome-based. The final regulations state that a wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease. Uniform Availability and Reasonable Alternative Standards. The full reward under a health-contingent wellness program, whether activity-only or outcome-based must be available to all similarly situated individuals. For activity-only wellness programs, a reasonable alternative standard for obtaining the reward (or waiver of the applicable standard) must be provided for any individual for whom it is either unreasonably difficult due to a medical condition to meet the otherwise applicable standard, or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard. The plan may seek verification and require a doctor s note. For outcome-based wellness programs, which generally provide rewards based on whether an individual has attained a certain health outcome (such as a particular body mass index (BMI), cholesterol level or nonsmoking status, determined through a biometric screening or health risk assessment), a reasonable alternative standard (or waiver of the applicable standard) must be provided to all individuals who do not meet the initial standard, to ensure that the program is reasonably designed to improve health and is not a subterfuge for underwriting or reducing benefits based on health status. Notice of Availability of Reasonable Alternative Standard. Plans must disclose the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the otherwise applicable standard) in all plan materials describing (but not simply mentioning) the terms of a healthcontingent wellness program (both activity-only and outcome-based wellness programs). The disclosure must include contact information for obtaining the alternative and a statement that recommendations of an individual s personal physician will be accommodated. For outcome-based wellness programs, this notice must also be included in any disclosure that an individual did not satisfy an initial outcome-based standard. The final regulations provide updated sample language that can be used to satisfy the notice requirement. ACTION ITEMS The final regulations on wellness programs are lengthy and detailed. In conjunction with their wellness program vendors, employers sponsoring or considering implementing a wellness program should review the final rules (called Incentives for Nondiscriminatory Wellness Programs in Group Health Plans ) and adjust plan design as needed to assure compliance. We fit the pieces together... Local and National PPOs Employer/ Member Online Access Mail: P.O. Box 7777, Lancaster, PA Phone: Fax: marketing@significabenefits.com Web Address: Reporting Benefit Administration Compliance Regulation T O P I C S O F S I G N I F I C A N C E P A G E 5