Originally posted by United Benefit Advisors (UBA)
December usually brings a number of releases from the regulatory agencies and 2013 has carried on that tradition.
Additional Medicare Tax
The IRS issued final regulations on the additional 0.9 percent Medicare tax owed by high earners beginning in 2013. Employers must withhold this additional 0.9 percent from the employee’s pay only (there is no employer “match”) once the employee’s pay exceeds $200,000.
Same-Sex Marriage and Section 125, FSAs and HSAs
This summer’s ruling, by the U.S. Supreme Court, that part of the Defense of Marriage Act (DOMA) is unconstitutional has raised a number of questions for employers. The IRS has now issued a notice that says that employers that allow employees to pre-tax the cost of group health coverage for same-sex partners may essentially treat the court decision or the new notice as a change in status event for a same-sex marriage that was in effect prior to the Supreme Court decision as a change in status event. The IRS has also said that a calendar year flexible spending account (FSA) or health savings account (HSA) may reimburse the expenses of an existing same-sex spouse, and the same-sex spouse’s children, incurred at any time during 2013.
The U.S. Department of Health and Human Services (HHS) formally extended open enrollment for January 1 coverage through the marketplaces to December 23, 2013, in most instances (and has since informally extended through December 24). HHS also changed the premium deadline for January 1 coverage to December 31, 2013, and asked insurers to accept premiums later than that date. Most insurers have said they will accept the first premium for January 1 coverage until January 10. Some states that are operating their own marketplace have established slightly different deadlines.
HHS will treat non-renewal of an individual policy, coupled with an inability to find reasonably priced coverage in the marketplace, as a hardship. A person with a hardship exemption is eligible to purchase a catastrophic policy, which is estimated to cost about 20 percent less than a policy that includes essential health benefits. Catastrophic plans are only available in the individual, and not the small group, market.
Projected 2015 Figures
HHS and the IRS released anticipated 2015 figures, including:
- A transitional reinsurance fee (TRF) of $44 (down from $63 for 2014)
- Maximum out-of-pocket (OOP) expenses of $6,750 for single coverage and $13,500 for family coverage (up from $6,350 and 12,700 respectively for 2014)
- A deductible maximum in the small group market of $2,150 for single coverage and $4,300 for family coverage (up from $2,000 and 4,000 respectively for 2014)
- A user fee in the federal Small Business Health Options Programs (SHOPs) of 3.5 percent of premium (the same as for 2014)
- Plans to run 2015 open enrollment for the marketplaces and exchanges from November 15, 2014 – January 15, 2015
- Requires that enrollment in the federal SHOPs for 2014 be on paper forms
“Excepted benefits” are health benefits that are limited in some way, such as stand-alone dental, long-term care, hospital indemnity, and Medicare supplement policies. Excepted benefits do not need to meet all of the PPACA requirements and they are not considered “minimum essential” benefits. The agencies have proposed three changes to the excepted benefits rules:
- The requirement that a stand-alone, self-funded dental or vision plan have a separate premium to qualify as an excepted benefit will no longer apply
- Employee assistance programs (EAPs) will be considered excepted benefits if they do not offer significant medical benefits, they are separate from the group medical plan, and they are free to the employee
- A new “limited wraparound” plan would be considered an excepted benefit for employers that provide affordable, minimum value coverage to most of their employees and want to provide coverage that wraps around marketplace coverage for employees who enroll in marketplace coverage because employer-provided coverage is unaffordable
Employers that issued 250 or more W-2s in 2012 will need to include the cost of health coverage provided to an employee during 2013 on the employee’s W-2. Unlike most PPACA requirements, the 250 W-2 threshold is based on each employer’s situation, not the entire controlled group. The rules have not changed from last year.
Question of the Month
Must employers offer COBRA once marketplace coverage is available?
Yes. PPACA has not repealed COBRA, and because some employees or dependents may wish to elect COBRA so that they can keep their current providers and benefits, COBRA still must be offered. As a practical matter, many COBRA beneficiaries may choose to obtain coverage through the marketplace instead, particularly if they qualify for premium subsidies.
The model election notice has been updated to include information about the marketplace and employers should begin using that notice by January 1. The other COBRA notices have not changed.