Hw t Cunt Emplyees Determining Grup Size Under the Medicare Secndary Payer Regulatins 1. Wh is an Emplyee? An emplyee is an individual wh wrks fr an emplyer r an individual wh, althugh nt actually wrking fr an emplyer, is receiving frm an emplyer payments that are subject t FICA taxes r wuld be subject t FICA taxes, except that the emplyer is exempt frm thse taxes under the Internal Revenue Cde (IRC). If the individual is listed n the payrll frms that the emplyer submits t the IRS, the individual is cnsidered an emplyee. (This includes bth full and part-time emplyees, nt just thse cvered under the grup health plan.) Nte: Fr purpses f determining the number f emplyees fr emplyer size, the emplyees f affiliated emplyers shuld be cunted. 2. We lease emplyees. D we include them in ur emplyee cunt? Leased emplyees (as defined in 414(n)(2) f the IRC) are treated as emplyees f the recipient. The term "leased emplyee" means any persn wh is nt an emplyee f the recipient f the services, but wh prvides services t the recipient if the: Services are prvided based n an agreement between the recipient and any ther persn (i.e., the leasing rganizatin). Persn has perfrmed such services fr the recipient n a substantially full-time basis fr at least ne year. (In general, an emplyee wh wrks 30 hurs r mre is cnsidered t be full-time.); and Services are f a type histrically perfrmed in the business field f the recipient by emplyees. An example f a leased emplyee is an emplyee f a temprary agency wh is assigned t wrk full-time fr at least ne year ding bkkeeping fr an accunting firm. 3. We have a Bard f Directrs. D we include them in ur emplyee cunt? Directrs f crpratins (i.e., persns serving n a Bard f Directrs f a crpratin wh are nt fficers f the crpratin) are cnsidered self-emplyed and nt emplyees. Officers f a crpratin wuld be cnsidered emplyees. Directrs wh receive remuneratin fr serving n a bard are cnsidered t have current emplyment status. Remuneratin may be f a mnetary r nnmnetary nature. Benefits, including health benefits that a crpratin prvides t a bard member, are cnsidered remuneratin if they are subject t FICA taxes under the IRC. 4. We belng t a multi-emplyer grup health plan (GHP). Hw d we cunt ur emplyees? The term "multi-emplyer GHP" means a plan that is spnsred jintly r cntributed t by tw r mre emplyers (smetimes called a multiple-emplyer plan) r by emplyers and unins (as under the Taft-Hartley law). Under the Medicare Secndary Payer rules, emplyers must cunt all emplyees. This includes, but is nt limited t, all full- and part-time emplyees, nt just thse cvered under the GHP.
In additin, there are additinal requirements regarding when a GHP is primary t Medicare depending n if the cvered individual is age 65 r lder (wrking aged); under age 65 and eligible fr Medicare due t a disability (Disability); r eligible fr Medicare n the basis f end stage renal disease (ESRD). Nte: An emplyer that participates in a multi-emplyer plan shuld cunt individuals in current emplyment status as defined belw. 5. Is ur GHP primary t Medicare fr ur wrking-aged emplyees? The wrking-aged Medicare Secndary Payer prvisins apply nly t GHPs f emplyers with 20 r mre emplyees and t multi-emplyer and multiple-emplyer GHPs in which at least ne emplyer emplys 20 r mre emplyees. Medicare is secndary fr Medicare beneficiaries age 65 r lder wh are cvered under the plan by virtue f their wn current emplyment status with an emplyer r the current emplyment status f a spuse f any age. This requirement is met if an emplyer has 20 r mre full- and/r part-time emplyees fr each wrking day in each f 20 r mre calendar weeks in the current r preceding year. An emplyer is cnsidered t have 20 r mre emplyees fr each wrking day f a particular week if the emplyer has at least 20 full- r part-time emplyees n its emplyment rlls each wrking day f that week. This cnditin is met as lng as the ttal number f individuals n the emplyer's rlls add up t at least 20, regardless f the number f emplyees wh wrk r wh are expected t reprt fr wrk n a particular day. Self-emplyed individuals participating in a GHP are nt cunted as emplyees fr purpses f determining if the 20-r-mre emplyee requirement is met. An individual is cnsidered t be n the emplyment rlls even if the emplyee des nt wrk n a particular day. An emplyer may nt have different emplyment rlls fr different days reflecting thse scheduled. Where an emplyer des nt have 20 r mre emplyees in the preceding year, it is required t ffer its emplyees and spuses age 65 r ver primary cverage, beginning with the pint in time at which the emplyer has had 20 r mre emplyees n each wrking day f 20 calendar weeks f the current year. The emplyer is then required t ffer primary cverage fr the remainder f that year and thrughut the fllwing year, even if the number f emplyees drps belw 20 after the emplyer has met the requirement. The 20-r-mre emplyees requirement must be met at the time the individual receives the services fr which Medicare benefits are claimed. If at that time the emplyer has met the 20-r-mre emplyees requirement in the current year r in the preceding calendar year, the GHP is primary payer. An emplyer that meets this requirement must prvide primary cverage even if fewer than 20 emplyees participate in the GHP. 2
Nte: An emplyer that participates in a multi-emplyer plan shuld cunt individuals in current emplyment status as defined belw. Als, it shuld meet the emplyer size threshld in the current and preceding years. 6. We ffer ur emplyees cverage thrugh a multi-emplyer GHP. Hwever, we have fewer than 20 emplyees. Is ur GHP primary t Medicare fr ur wrkingaged emplyees? A multi-emplyer GHP having at least ne emplyer participating that has 20 r mre emplyees, may prspectively request an exceptin fr thse emplyees (and their spuses) f identified emplyers with fewer than 20 emplyees frm the wrking-aged prvisin. Once the exceptin is apprved by Medicare (COBC), Medicare wuld then becme the primary payer fr such emplyees and their spuses, as lng as the emplyer cntinues t meet the requirements fr the exceptin. Be advised that it is the emplyer s respnsibility t prvide written updates f any infrmatin that may affect the riginal exceptin request (updates shuld include identificatin f any emplyees nt previusly identified as well as infrmatin n any terminated cverage issues, etc.) t WPS Health Insurance as sn as any changes take place. 7. We ffer ur emplyees cverage thrugh a GHP. Is ur GHP primary t Medicare fr ur emplyees eligible fr Medicare due t a disability? Under the law, a large grup health plan (LGHP) may nt "take int accunt" that such an individual is eligible fr, r receives, Medicare benefits based n disability. Medicare benefits are secndary t LGHP benefits fr individuals under age 65 entitled t Medicare n the basis f disability and whse LGHP cverage is based n the individual s current emplyment status r the current emplyment status f a family member. 8. We ffer ur emplyees cverage thrugh a multi-emplyer GHP. As an individual emplyer, we have fewer than 100 emplyees. Wuld ur GHP be cnsidered a LGHP fr purpses f determining if ur GHP is primary t Medicare fr ur emplyees eligible fr Medicare due t a disability? A LGHP means a GHP that cvers emplyees f either: A single emplyer r emplyee rganizatin that emplyed at least 100 full- r part-time emplyees n 50% r mre f its regular business days during the previus calendar year; r Tw r mre emplyers r emplyee rganizatins, at least ne f which emplyed at least 100 full- r part-time emplyees n 50% r mre f its regular business days during the previus calendar year. Medicare is secndary fr all emplyees enrlled in the plan if a plan is a multiemplyer plan, such as a unin plan that cvers emplyees f sme small emplyers, and als emplyees f at least ne emplyer that meets the 100-r-mre emplyee requirement, including thse that wrk fr small emplyers. The exceptin discussed in 3
questin six with respect t the wrking-aged prvisin des nt apply t the Medicare as secndary fr the disabled prvisin. An emplyer will be cnsidered t emply 100 r mre emplyees n a particular day if the emplyer has at least 100 full- r parttime emplyees n his/her emplyment rlls n that day. This cnditin is met as lng as the ttal number f individuals n the emplyer's rlls add up t at least 100, regardless f the number f emplyees wh wrk r wh are expected t reprt fr wrk n that day. Self-emplyed individuals wh participate in an LGHP are nt cunted as emplyees fr purpses f determining if the 100-r-mre emplyee requirement is met. If an emplyer des nt meet the 100-r-mre emplyees requirement in a particular year, the emplyer may ffer emplyees cverage that is secndary t Medicare during the fllwing year. If the emplyer meets the 100-r-mre emplyee requirement at any time during the current year, the emplyer is required t prvide emplyees with cverage that is primary t Medicare during the fllwing year. 9. We ffer ur emplyees cverage thrugh a GHP. Is ur GHP primary t Medicare fr ur emplyees eligible fr Medicare based n end-stage renewal disease (ESRD)? Medicare benefits are secndary t benefits payable under a GHP fr individuals eligible fr r entitled t benefits n the basis f ESRD during a perid f up t 30 mnths if Medicare was nt the prper primary payer fr the individual n the basis f age r disability at the time that this individual became eligible r entitled t Medicare n the basis f ESRD. The crdinatin perid begins when the individual is eligible fr Medicare based n ESRD. This prvisin applies t all Medicare cvered items and services (nt just treatment f ESRD) furnished t beneficiaries wh are in the crdinatin perid. This prvisin applies regardless f the number f emplyees emplyed by the emplyer and regardless f whether the individual r ther family member has current emplyment status. The ESRD prvisin applies t frmer as well as t current emplyees. 4
Definitins Current Emplyment Status: An individual has current emplyment status if the individual is: Actively wrking as an emplyee, is the emplyer (including a self-emplyed persn), r is assciated with the emplyer in a business relatinship; r The individual is nt actively wrking and is receiving disability benefits frm an emplyer fr up t six mnths (the first six mnths f emplyer disability benefits are subject t FICA taxes); r nt actively wrking but meets all f the fllwing cnditins: Retains emplyment rights in the industry; Has nt had his/her emplyment terminated by the emplyer if the emplyer prvides the cverage r has nt had his/her membership in the emplyee rganizatin terminated if the emplyee rganizatin prvides the cverage; Is nt receiving disability benefits frm an emplyer fr mre than six mnths; Is nt receiving Scial Security disability benefits; and Has emplyment-based GHP cverage that is nt COBRA cntinuatin cverage (See 29 U.S.C. 1161-1168). A persn age 65 r lder and receiving disability payments frm an emplyer is cnsidered t have current emplyment status if such payments are subject t taxes under FICA. Emplyer disability payments are subject t FICA tax fr the first six mnths f disability after the last calendar mnth in which the emplyee wrked fr that emplyer. Emplyer: Emplyer means, in additin t individuals (including self-emplyed persns) and rganizatins engaged in a trade r business, ther entities exempt frm incme tax, such as religius, charitable, r educatinal institutins. FICA: The term "FICA" stands fr the Federal Insurance Cntributins Act, the law that impses Scial Security taxes n emplyers and emplyees under 21 f the Internal Revenue Cde. 5
Grup Health Plan (GHP): The term "GHP" means any arrangement f, r cntributed t, ne r mre emplyers r emplyee rganizatins t prvide health benefits r medical care directly r indirectly t current r frmer emplyees, the emplyer, thers assciated r frmerly assciated with the emplyer in a business relatinship, r their families. An arrangement by mre than ne emplyer is cnsidered t be a single plan if it prvides fr cmmn administratin f the health benefits (e.g., by the emplyers directly r by a benefit administratr r by a multi-emplyer trust r by an insuring rganizatin under a cntract r cntracts). A plan that des nt have any emplyees r frmer emplyees as enrllees (e.g., a plan fr self-emplyed persns nly) des nt meet the definitin f a GHP. The term "GHP" includes self-insured plans, plans f gvernmental entities (federal, state, and lcal, such as the Federal Emplyees Health Benefits Prgram), and emplyee rganizatin plans. Examples f the latter are unin plans and emplyee health and welfare funds. Large Grup Health Plan: A LGHP means a GHP that cvers emplyees f either: A single emplyer r emplyee rganizatin that emplyed at least 100 full- r part-time emplyees n 50% r mre f its regular business days during the previus calendar year; r Tw r mre emplyers r emplyee rganizatins at least ne f which emplyed at least 100 full-time r part-time emplyees n 50% r mre f its regular business days during the previus calendar year. Emplyers Respnsibility Please be advised that it is the emplyer s respnsibility t prvide written updates f any infrmatin that may affect the riginal emplyee cunt submitted t WPS Health Insurance. Updates shuld include identificatin f any emplyees nt previusly identified, as well as infrmatin n any terminated cverage issues, etc., as sn as any changes take place. The abve infrmatin was btained frm the CMS Medicare Secndary Payer Manual available at www.cms.gv/regulatins-and- Guidance/Guidance/Manuals/dwnlads/msp105c01.pdf The infrmatin prvided abve is nt intended as legal advice, readers f this dcument shuld cnsult their wn legal cunsel when apprpriate regarding questins they may have cncerning the cunting f emplyees, and the Medicare Secndary Payer Regulatins. 2016 Wiscnsin Physicians Service Insurance Crpratin. All rights reserved. 29024-021-1603 6