Good Neighbor Insurance (www.gninsurance.com and www.gninsurance.com) is continuing to update our clients on the new health insurance laws. There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work. Many critical details of this new insurance law will be clarified in the months and years to come.
These six major coverage options are:
(1) Individual or family coverage (private health care plans)
(2) Employee/employer group option for small businesses (typically under 50 employees)
(3) Employee/employer group option for large businesses (typically larger than 50 employees)
(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)
(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards
(6) Full government health plans like Medicaid, CHIP, TRICARE, VA and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service.
Q – With a large group, who should have Grandfathered status, and no changes since March of 2010; Can they change carriers from Fully Insured (one carrier) to Fully Insured (different carrier) without loosing their Grandfathered status? It is assumed the benefits will be the same or better, and the pricing 10% less.
A – If the benefits truly are as good or better….be careful with this. And, the employer has not changed his contribution by more than 5%, should be ok. Just use caution regarding the “same benefits”.
Q – In Southern California the new group sales plans are all Non-grandfathered. Meaning, I guess, more benefits per the Feds. Can a 100+ Group, go from a Grandfathered plan to a Non-grandfathered plan (Non-grandfathered benefits). Assuming the new plans benefits are not less and the payroll deductions are the same?
A – We are working on getting clarification right now as to who decides if a plan is grandfathered. Logic seems to dictate that it’s the employer not the carrier, because of the contribution component. In addition, the law allows you to incorporate certain legislative changes (i.e. covering preventative) and not lose your grandfathered status.
Q – My interpretation of the Health Care Reform language is that a change in employer contribution (either flat amount or percentage) would result in the removal of grandfather status. Is this correct?
A – Any change that results in an employer contribution being decreased by more than 5% (so you would convert the defined contribution amount to a percentage) causes the group to no longer be grandfathered.
Q – If a company eliminates one of their current plan offerings (ex: has HMO, PPO & HSA) with no other changes, does this make them lose grandfathered status?
A – Depends, the elimination of a plan doesn’t automatically cause loss of grandfathered status, but if the result is the employees in that plan are forced to move into a plan with lower benefits, then yes, they will loose their grandfathered status.
Q – If a company has a non-grandfathered plan, can they have different waiting periods for employees? Is there a point where there will be no classes permitted for things such as waiting periods, contribution levels, etc.?
A – A plan can continue to discriminate; they just have to pass the non-discrimination test. The third eligibility test allows for classes, but the result is still 50% of the control group must be eligible; and then there’s the benefits test, still to pass. Really, the goal is to force plans to not discriminate, but since we’re waiting on new guidelines, it’s not clear how liberal or strict the test may eventually become. I would look at the control group and see how many can be eliminated for age, service or status and then run the test to project possible penalties.
Model Disclosure Notices
Q – Do any of the Model Notices that our groups are distributing to their employees have to be on company letterhead?
A – To the best of my knowledge this is not a requirement.
Non Discrimination Compliance Delay
Q – Will there be no penalties for discrimination in favor of highly compensated individuals until after regulations or guidance have been issued?
A – Correct; the bulletin issued on the 22nd says there will be no penalties until guidelines have been issued. Is it “expected” compliance will be required and penalties will be implemented for plan years after regulations or guidance are issued?
A – This is correct.
Non Discrimination Testing
Q – Does non-discrimination testing and delaying the penalties for this year, mean that we do not have to perform the test this year? Or, do we have to perform them and any subsequent failures will not be penalized, therefore allowing the discriminating plan to continue for another plan year if the employer chooses to do so?
A – You are not required to test. However, it would be a good idea to test, so some strategic planning can begin for years that the penalties are in place.
Q – If the testing does need to be performed in 2011, is there a formal IRS form that will need to be filed?
A – There is no form to submit to the IRS. Documentation on the information utilized as well as the results should be kept on file with the plan documents.
Section 125 Pre-tax Premium Only Plan
Q – Have you heard of any changes for an employee that is pre-taxing their medical and dental premiums for 2011?
A – I am not aware of anything new.
This information is not intended to be, nor should it be construed as legal or tax advice. We are not authorized nor do we purport to provide tax or legal advice and this should not be viewed as a substitute thereof.
Doug Gulleson loves to scuba dive overseas and makes sure he has his US health care and overseas health care, www.gninsurance.com , information with him at all times when he travels Keep our blog close by you, www.gntravelinsurance.com, for continual updates on the changes with the US health care system.