2016 Annual Conference. Presented by Gallagher VEBA VEBA Plan Consultant

Transcription

1 Presented by Gallagher VEBA VEBA Plan Consultant

2 General Information What is an HRA? Benefits Common funding sources What s new? Become a VEBA Champion Administration Compliance Employees / Participants

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4 HRA Health Reimbursement Arrangement Account-based group health plan Funded by employer Tax-free money for healthcare costs Often called a VEBA Assets held in a voluntary employees beneficiary association (VEBA) trust

5 You pay no tax can use your account anytime (when claims eligible) do not have to be covered under a high-deductible health plan (HDHP) choose your investments

6 Your unused balance carries over (no annual use-it-or-lose-it ) legal spouse and qualified dependents are covered (even if you pass away)

7 Sick leave cash outs (retirement/separation, annual) Vacation, personal, or other leave cash outs Mandatory employee contributions (group wage exchange ) Employer Contributions Future COLAs; pay increases No individual choice; all employee group members defined as eligible must participate per IRS rules.

8 Online Claims My Care Card SM HRAgo Online Enrollment Heir Death Benefit Fix

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10 Common groups include: Administrators Non-represented Classified Certificated Group structures for other benefits may differ IRS recommends groups of five or more employees Depending on the funding source, group voters may include those 55 and older, or only those eligible to participate

11 State law requires annual renewal of school district benefit contracts (agreements) Voting not required, but most groups do Common with unions No contract with VEBA like with other insurance carriers Annual written agreements (MOUs/policies) serve as your renewal Send us your MOUs/Policies each year

12 Typically administrative groups cannot contribute more than what other groups are contributing Self-insured medical reimbursement plan subject to nondiscrimination requirements under IRC 105(h) Highly compensated individual (HCI): generally, an employee among the top 25% highest paid

13 This can be seen as favoring HCIs New percent-of-pay funding not accepted Additional guidance from IRS may require percent-of-pay funding to change to flat-dollar amount

14 IRS Notice Individual choice not permitted; all employees defined as eligible must participate If choice were allowed: The Plan would lose its tax exemption All contributions would be taxable to the employer and participants Constructive receipt occurs when an employee has a choice between a non-taxable benefit (VEBA contribution) and a taxable benefit (cash)

15 Use Standard HRA Plan 001 for employees who are Eligible to enroll in your qualified group health plan (QGHP); and Enrolled in your QGHP or have attested to you that they are enrolled in or covered by another QGHP Use Post-separation HRA Plan 002 for employees who are Not eligible for 001 (001) Standard (002) Postseparation

16 Use this handy tool to determine which division code (plan number) you should apply to an employee s HRA contribution. #1 Is the employee ELIGIBLE for your major medical plan? NO YES Use Post-separation HRA Plan (002) #2 Is the employee ENROLLED in your major medical plan? YES NO Use Standard HRA Plan (001) #3 Has the employee certified to you that he or she is enrolled in or covered by another Qualified Group Health Plan? See What is a Qualified Group Health Plan for more information. NOTE: Medicare and TRICARE are not considered Qualified Group Health Plans. YES NO Use Standard HRA Plan (001) Use Post-separation HRA Plan (002)

17 Submit a participant status change (online or via paper form) Event type is Retire / Rehire Claims eligibility will be suspended for expenses incurred during re-employment Can still file claims for expenses incurred prior to re-employment Submit another participant status change to report end of re-employment Claims eligibility will be reinstated after re-employment ends If Standard HRA Plan 001, no action required

18 Best to not send funds until employee has enrolled Funds are returned to you after 90 days of no enrollment Up to you to determine policy for handling returned no-enrollment contributions IRS rules prohibit you from providing these funds to the employee as wages, cash, or any other form of benefit Funds can be re-contributed if/when employee enrolls

19 Look at the group s annual written agreement (MOU, policy, etc.) Two IRS private letter rulings (PLRs) to consider All-or-none (recommended) Must sign hold harmless (on Enrollment Form) or forfeit all sick leave days available for cash out More conservative and in-line with IRS guidance Excess sick leave forfeiture Forfeits number of sick leave days earned during term of annual written agreement (typically 12 days) Remaining eligible days cashed out and paid as regular taxable wages

20 Eligible employees are those with 180 or more earned days as of the first day of the group s annual written agreement Most groups use a lookback date of 8/31 Administrators typically use 6/30 Some districts use earned balance as of 12/31 After you have determined eligibility: Calculate the employee s annual cash out like you would any other employee (i.e. number of days earned during the previous calendar year less days used, if any) Contribute the entire amount to the VEBA Plan

21 Based on our experience with most districts, donated days do not count as used days for annual sick leave cash out purposes Calculation # of days earned # of days used, not donated = # of days to cash out Donating does impact sick leave balance, which could affect VEBA Plan eligibility, but not the cash out

22 Adding a covered individual Online Account Change form Calling the Customer Care Center Removing a covered individual COBRA Event Notice (within 60 days) Call or the Customer Care Center (beyond 60 days)

23 Co-pays Prescriptions Deductibles Coinsurance Dental, orthodontia Vision Premiums (medical, dental, vision, Medicare, LTC) Automatic Premium Reimbursement Recurring My Care Card payment NEW!

24 Medical necessity must be documented Over-the-counter drugs and medicines Herbal supplements Massages (unless covered by insurance) Gym memberships Hot tubs Special mattresses Special chairs

25 Login at veba.org and click Claims Follow the prompts and enter required information Scan and upload documents

26 Swipe at point-of-sale All expenses paid or reimbursed from an HRA must be verified, per IRS rules Most My Care Card transactions can be verified automatically Prescriptions (purchased through pharmacy) Flat-dollar co-pays (in increments of $5) Frequent or recurring purchases (if specified by participant and verified previously) Preferred merchant Participant will be notified via or mail if transaction cannot be auto-verified and documentation is required Paper form via , fax, or mail Online participant portal HRAgo smartphone app

27 Item or service purchased frequently from the same merchant for the same amount Can be auto-verified after the first transaction is verified with supporting documentation This feature is perfect for Recurring appointments Premiums Odd copay amounts

28 New smartphone app Available for ios (Apple) and Android devices Check account information Change investments Submit claims Submit My Care Card supporting documents Must be registered for online account access Same username and password apply

29 Yes, however If participant or covered individual is actively making/receiving HSA contributions, participant must take action to elect limited-purpose VEBA Plan coverage Under limited-purpose coverage, only the following can be reimbursed Standard dental, vision, and orthodontia expenses can be reimbursed Dental and vision premiums NEW! Limited-purpose coverage Can be turned ON or OFF once per calendar year, or more frequently upon certain life events Is elected via paper Limited-purpose Election form ( , mail, fax)

30 Medicare is generally primary If participant has retired/separated Medicare is generally secondary If participant is still working, claims-eligible, and has an HRA account balance of $5,000 or more (now or in the past) HRA could be secondary if participant has elected limited-purpose VEBA Plan coverage

31 If enrolled (signed Enrollment Form on file) Check the employee group s annual written agreement language Submit the contribution, unless language prohibits Submit Participant Status Change Plan would contact spouse/dependents/estate Account still used only for qualified healthcare expenses If not enrolled (no signed Enrollment Form) Generally, contribution cannot go to the VEBA Plan

32 When New law effective December 18, 2015 How Administrative processes, including beneficiary designation, are being developed All potential death forfeitures have been put on hold More information for you and your participants will be provided when it becomes available Who Participants from all participating VEBA Plan employers. Notably, the law is narrow and applies only to HRA plans established on or before January 1, 2008 that had previously provided benefits to non-dependent heirs. What Consolidated Appropriations Act for 2016

33 Patient-Centered Outcomes Research Institute (PCORI) Added as part of the Affordable Care Act (ACA) $2.17 for the Plan Year Pro-rated and deducted quarterly

34 The VEBA Plan is a health plan COBRA applies when participants experience COBRA qualifying events and stop receiving employer contributions to which they would have otherwise been entitled (e.g. monthly contribution) Voluntary or involuntary termination Reduction of hours Death Employer provides notice when submitting a participant status change via paper form or online

35 Requirement under the ACA Prove participants had minimum essential coverage Sent to all participants who, at anytime in 2015: Had a positive account balance; Were claims-eligible; and Did not elect limited-purpose or limited-scope coverage

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