Expanding HRA Options Effective 2020

On June 13, 2019, The Departments of Health and Human Services, Labor, and Treasury issued the final rule expanding health reimbursement accounts (HRAs) which allows employers greater flexibility in the breadth and scope of HRAs available for their employees.

Background:

Since 2013, regulations have prohibited employers from paying for an employee’s individual health insurance policy and required that HRAs offered to employees be integrated with a group health plan. In 2016, Qualified Small Employer HRAs (QSEHRA) were developed to allow small employers (under 50 lives) to offer an HRA with IRS defined annual limits (in 2019 $5,150/individual and $10,450/family) to be used to pay for individual health premiums of minimum essential coverage when the employer does not offer a group health plan. In October of 2017, President Trump issued an Executive Order that in part directed the agencies to end rules that prohibited employers from paying for individual health insurance premiums through an HRA.

Two New HRA Options arising out of the Executive Order effective January 1, 2020 are:

1. Individual Coverage HRA
2. Excepted Benefit HRA

Individual Coverage HRA:

This HRA would allow employers to provide tax-free funding to an employee’s HRA account that could be used to purchase individual health insurance policies. This differs from the QSEHRA in that there is no requirement around the size of the employer.

• Employers cannot offer both a traditional group health plan and an Individual Coverage HRA to similarly situated employees. However, they can choose a group of employees to offer either the group health plan or the HRA based on a specific class:
  • • • Full-Time Employees*
      • Part-Time Employees*
      • Seasonal Employees
      • Employees covered by a collective bargaining agreement
      • Employees who have not satisfied a waiting period for coverage
      • Non-Resident aliens with no US-based income
      • Employees whose primary site of employment is in the same rating area*
      • Salaried Employees*
      • Non-Salaried Employees*
      • Temporary Employees of staffing firms
      • Combination of 2 or more of the above*
        *Minimum class size requirements will apply depending upon the classes defined (those with asterisk), whether some classes have a group health plan offered, and the size of the employer. (For example, the minimum class size is 10 for employers with 100 or less employees and 20 employees for an employer with 200 or more employees. The minimum class size for mid-sized employers (between 100 to 200) is 10 percent of the total number of employees.)

• The HRA must be offered on the same terms and conditions to all similarly situated employees. Dollar amounts, however, can vary based on age and number of dependents;
• Employees must have the ability to opt out of the HRA and waive future HRA reimbursements at least annually;
• HRA sponsors must be able to vary their HRA terms to account for different effective dates for individual coverage which can vary based on enrollment;
• If an employee stops being enrolled in an individual policy, they forfeit the HRA prospectively;
• Loss of the HRA for reasons other than failing to maintain individual coverage may qualify the HRA for COBRA;
• Individuals covered by the HRA must attest to being enrolled in an individual policy providing minimum essential coverage. Employers can rely on their employees attestation statement as accurate. No further verification is required;
• Individual coverage can be purchased on or off the exchange. It also includes student health coverage;
• Employers can specify reimbursements – premiums only, non-premium cost shares, or particular medical expenses per existing HRA rules. An Individual Coverage HRA that reimburses solely for premiums would not disqualify contributions to an HSA if the individual otherwise meets the requirements (enrollment in a HDHP);
• Under some circumstances, an Individual Coverage HRA may reimburse for Medicare premiums;
• Employers must provide a notice to participants which outlines the terms and conditions of the HRA at least 90 days before the start of the plan year;
• Individual Coverage HRAs are not considered ERISA plans;
• Individual Coverage HRAs are considered an offer of minimum essential coverage for 4980H(a) employer shared responsibility provision. If the Individual Coverage HRA is also deemed affordable, the offer would also satisfy the 4980H(b) employer shared responsibility provision;
• Employees being offered an affordable Individual Coverage HRA will not be eligible for a premium tax credit from the exchange (also must be stated clearly in the employee notice);
• Affordability means that health insurance for the employee should cost no more than 9.86% (indexed annually) of the employee’s household income, using the lowest cost silver plan for self only coverage on the local exchange and incorporating the employer’s contributions. Because this would be a logistical impossibility for most employers, the final notice includes 3 safe harbors to determine affordability:
  • • • Location: This safe harbor allows employers to use the lowest cost silver plan where the employer’s primary site of employment is located as the standard for affordability calculations;
      • Calendar Year: Employers who implement an individual coverage HRA for the following calendar year could use the existing year’s estimates as a baseline for affordability;
      •  Affordability: Since it is unlikely that employers know their employee’s household income, they can use the already established affordability safe harbors of W-2, rate of pay or federal poverty line.

Excepted Benefits HRA:

Currently, only HRAs classified as an excepted benefit HRA (reimburses only limited expenses, such as vision or dental) can be stand-alone/not integrated with the medical plan. The new Excepted Benefit HRA would allow a stand-alone HRA to also reimburse cost sharing expenses and still qualify as an excepted benefit if it meets certain requirements:

• The maximum benefit cannot exceed $1,800 for the plan year (indexed annually);
• Must be offered alongside a traditional group health plan although employees do not have to be enrolled in the traditional plan;
• The HRA must be available on the same terms for all similarly situated individuals regardless of health factor. Similarly situated means job classification, such as full-time, part-time, different geographic locations, union, non-union, and different occupations or even dates of hire or length of service ;
• Reimburses cost sharing expenses as well as premiums for excepted benefits (such as vision, dental, std), short-term medical plans, and COBRA premiums (individual or group premiums, Medicare premiums are not eligible);
• No employer size requirement;
• Can permit rollover of unused amounts;
• Subject to Section 105(h) nondiscrimination rules.

IRS Publishes PCOR Fees through September 2019

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making informed health decisions by advancing the quality and relevance of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending January through September 2019 and the applicable dollar amount is $2.45, which is multiplied by the number of covered lives determined for the appropriate period.

The PCOR program will sunset in 2019. The last payment will apply to plan years that end by September 30, 2019 and that payment will be due in July 2020. There will not be any PCOR fee for plan years that end on October 1, 2019 or later.

The PCOR fee is paid by the health insurer for fully insured plans. All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted benefit:

• • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
  • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCOR fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. Depending on when the plan starts and ends also can determine the fee per form. Participating employees and dependents are counted as covered lives. For HRA and health FSA plans, just count each participating employee as a covered life.

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019 which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. For the current year, clients will need to file the Form 720 by July 31, 2019.

Despite Recent Court Ruling – ACA Enforcement Is Still the Law of the Land… For Now

On December 14^th, the U.S. District Court for the Fifth Circuit in Texas ruled the Affordable Care Act (ACA) unconstitutional in light of the Tax Cuts and Jobs Act of 2017 which eliminated the tax penalty under the individual mandate. The district court sided with 20 Republican state attorneys general that argued since the individual mandate was eliminated, the entire law was invalidated. The ruling went further and also ruled that all of the consumer protections under the ACA were tied to the individual mandate and they were also unconstitutional. These include the prohibition against insurers charging patients more for pre-existing conditions, allowing children to stay on their parent’s plans until age 26, and removal of caps on coverage.

What’s Next?

The judge in the case did not rule the law has to be enjoined immediately, however, it is unclear when the ruling would take effect. Sixteen Democratic state attorneys general and the District of Columbia filed a motion asking the court to clarify the impact of the ruling and confirm that the ACA “is still the law of the land.” Additionally, a series of appeals will most likely keep the ruling from being enacted anytime in the near future… thus:

• People can still enroll in ACA health plans in states with extended deadlines (without an extension, exchange enrollment ended on December 14^th.);
• There is no impact on 2019 plans that people may have recently enrolled in. Immediately following the ruling, Seema Verma, Administrator of the Centers for Medicare & Medicaid Services, stated the ruling “has no impact on current coverage or coverage in a 2019 plan;”
• Employers still face IRS deadlines to file forms 1095-B and 1095-C. (1095-B and 1095-C forms must be delivered to individuals by March 4, 2019. The 1094 and 1095 B & C forms must be filed with the IRS by February 28^th if filing paper and April 1^st if filing electronically);
• The Employer Mandate is still in force, penalties have been and will continue to be assessed for failure to file these returns;
• With the Employer Mandate still in force, Applicable Large Employers (ALEs) should continue to follow the Employer Shared Responsibility Rules (ESR) to avoid a penalty. This means offering a plan that meets minimum value and affordability to at least 95% of your full time employees (defined as those working at least 30 or more hours per week).

The case will most likely make its way to the U.S. Fifth Circuit Court of Appeals and then to the U.S. Supreme Court before any definitive action can be considered.

IRS Releases Adjusted PCOR Fee

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making health decisions by advancing the quality of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending:  January through September 2018 the applicable dollar amount is $2.39, which is multiplied by the number of covered lives determined for the appropriate period. For policy and plan years ending October through December 2018, the applicable dollar amount is $2.45.

All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted-benefit:

• A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
• An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCORI fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. For HRA and health FSA plans, just count each participating employee as a covered life.

Payment of the PCOR fee for the calendar 2018 plan year — the last year the fee applies — will be due by July 31, 2019 (payments may extend into 2020 for non-calendar-year plans).

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019, which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. Clients will need to file the Form 720 by July 31, 2019.

MassHealth Reinstates HIRD Reporting for Employer Sponsored Health Plans

The Health Insurance Responsibility Disclosure (HIRD) form is a new state reporting requirement in Massachusetts beginning in 2018. This form differs from the original HIRD form that was passed into law in 2006 and repealed in 2014. The 2018 form is administered by MassHealth and the Department of Revenue (DOR) through the MassTaxConnect (MTC) web portal. The HIRD form is intended to assist MassHealth in identifying its members with access to employer sponsored health insurance who may be eligible for the MassHealth Premium Assistance Program. The HIRD form is required annually beginning in 2018. The reporting period opens on November 1 and must be completed by November 30 of the filing year. 

Any employers with six or more employees in Massachusetts in any month during the past 12 months preceding the due date of the form (November 30^th of the reporting year) are required to annually submit a HIRD form. An individual is considered to be an employee if they were included on the employer’s quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. This includes all employment categories, full-time and part-time.

The HIRD form is reported through MassTaxConnect (MTC) web portal (https://mtc.dor.state.ma.us/mtc/_/#1). The MTC is where employer-taxpayers register to file returns, forms and make tax payments. To file your HIRD form, login to your MTC withholding account and select the “file health insurance responsibility disclosure” hyperlink. If you do not have a MTC account or you forgot your password or username, follow the prompts on the site or call the DOR at 614-466-3940.

INFORMATION REQUIRED FOR HIRD REPORTING

The HIRD Form will collect information about the employer’s insurance offerings, including:

• Plan Information – plan year, renewal date.
• Summary of benefits for all available health plans – information regarding in and out of network deductibles and out-of-pocket maximums can be found on the plan’s summary of benefits and coverage.
• Eligibility criteria for insurance offerings – minimum probationary periods and hours worked per week to be eligible for coverage.  Employment based categories, such as full-time, part-time, hourly, salaried.
• Total monthly premiums of all available health plans
• Employer and employee shares of monthly premiums – information on employer and employee monthly contributions toward the cost of medical. Employer cost of coverage is your COBRA rate less 2% and less the employee contribution.

Due to the nature of the filing online, employers with employees in Massachusetts will need to complete this reporting themselves. However, Diversified Group may be able to assist you in the gathering of the required information. Please contact us by November 15^th  if you need assistance with accumulating data.

Mass.gov has compiled a list of frequently asked questions regarding the HIRD form here.

Maine is Reinstituting the Per Member Per Month Assessment to Fund the Maine Guaranteed Access Reinsurance Program

Section 1332 of the Affordable Care Act (ACA) permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA. Recently several states have applied for waivers and have been approved. Among these is the State of Maine, which sought to reestablish the Maine Guaranteed Access Reinsurance Association – MGARA (originally established in 2012 but later suspended in light of the ACA’s transitional reinsurance program which expired in 2016). Maine’s Section 1332 waiver to reestablish MGARA was approved by the Department of Health and Human Services earlier this year. MGARA is a state instituted reinsurance program that automatically cedes high-risk enrollees with one of eight conditions (including various types of cancer, congestive heart failure, HIV and rheumatoid arthritis) and voluntary cedes other high-risk enrollees to the pool in an attempt to help stabilize individual medical premiums by about 9 percent each year beginning in 2019. The program is slated to initially run from January, 2019 through December, 2023. The Governor’s Office pushed to get the program up and running by January, 2019 in an attempt to substantially lower premiums in the individual market.

One of the funding sources supporting MGARA’s operations is a quarterly assessment due from each insured and self-insured plan that writes or otherwise provides medical insurance in Maine (other than federal or state government plans) beginning in 2019 at $4.00 per month for each covered person enrolled under each such policy or plan. Only federal and state employees are exempt from the assessment. The 2019 Quarterly Assessment will apply to policies and plans initiated or renewed on or after January 1, 2019, with the first assessment due on May 15, 2019, and 45 days from the end of each calendar quarter thereafter. Self-funded plans using a Third Party Administrator (TPA) will be assessed and reported through their TPA similar to other state assessments.

Diversified Group will collect and report the MGARA on behalf of our self-insured clients who have members residing in Maine.

DG Compliance Alert: 2016 ACA Employer Shared Responsibilities Tracking & Reporting Services

We have received a number of inquiries this year as to whether Diversified Group will be providing ACA reporting services for 2016. We are pleased to announce that we are partnering with MZQ Consulting again this year! MZQ Consulting did an exceptional job filing the 2015 1094-C and 1095-C for so many of our self-funded employers.

Last year, employers were granted an extension by the IRS for filing the forms. The IRS has also gone on record stating they will be forgiving if the 2015 forms weren’t necessarily completed correctly or on time. This year, however, it is unlikely the IRS will be as forgiving if forms are not accurate or file on time.

If you struggled with the 1094-C and 1095-C reporting requirement last year, you may want to consider having us help this year.

Click to learn more about our ACA Employer Shared Responsibility Tracking and Reporting Services!

Interested? Contact Diversified Today!
If you are interested in taking advantage of this service or have any questions, please contact Carol Parda-Ziolko today at (888) 322-2524 ext. 427.

Corporate Fitness & Health Offers Summer Screening Special – Call Today!

For a limited time only, Corporate Fitness & Health (CF&H) is offering discounted onsite health screenings! Schedule your screening for anytime from now until August 31, 2016 and receive 20% off per person.

Screening Includes:

• A Non-Fasting Finger Stick Test which includes:
  • Total Cholesterol
  • HDL
  • Cholesterol Risk Ratio
  • Glucose
• Blood Pressure Check
• Height
• Weight
• BMI
• Body Fat Percentage
• Estimated Level of Hydration

Contact Corporate Fitness & Health today for more information via email at info@cfandh.com or call toll-free (800) 423-5591.

To be eligible for this discounted rate, you must be a first time Corporate Fitness & Health client and schedule your onsite health screening for the months of July or August 2016.  Travel costs may apply for locations outside of Connecticut.

Plan Members Can Now Access RealTimeChoices on the Diversified Member Portal!

As part of the continued enhancements to our member portal, we have added a section completely dedicated to RealTimeChoices! Now when members login to their Diversified account, they will see a RealTimeChoices tab that contains important program materials, contact information and a link to compare providers. We think this is a much more efficient way for members to access this program.

In order for your health plan to get all of the benefits of this program, it is important that you help promote it to your employees!

If you have any questions or would like to schedule employee meetings to promote the program, please contact your Diversified Sales Representative at (888) 322-2524 or email us today!

 

Introducing the Diversified Group ‘My Flex’ App!

Account Access As Mobile As You Are!

Have the account information you need, right when you need it most! Our new My Flex mobile app makes it easy to manage your flex spending account on the go. Our secure mobile app offers the following features:

• Free smart phone app available for any Apple or Android smartphone or tablet
• Gain instant access by entering your username and password from WealthCare portal. If you don’t have a username and password via the WealthCare portal, you can register via the app.
• View account balances and transaction history
• Attach receipts by taking a photo
• If your plan offers a Transportation and Parking benefit, you can access those accounts via the app
• Add or edit text message alerts
• Contact Diversified for assistance

Download Our My Flex App Today!

Download the Diversified Group ‘My Flex’ App from the Apple App Store or Android Marketplace today!

Contact our Flex Department with questions at (888) 322-2524 x391.