Shirazi Notice – April 2013

 open book


Legislative Alerts

Understanding the Look-Back Period
Department of Labor Announces Availability of the Model Notice to Employees of Coverage Options

Health Care Reform

The Employer Mandate and Controlled Groups
Society of Actuaries Releases Study on Rate Impact of PPACA
Connect for Health Colorado
90-Day Limitation on Waiting Periods
State-By-State: A Progress Report on Medicaid Expansion

Carrier Updates

Humana Announces Early Renewal Option
Rocky Mountain Health Plans Offers Early Renewal Opportunity for Small Employers
Cigna No Cost Preventive Medications
Anthem Early Renewal Options for Small Group Employers

Wellness in the Workplace

Toolkit to Encourage Employers to Form Wellness Committees in the Workplace



Understanding the Look-Back Period

Beginning on January 1, 2014, employers with 50 or more full-time employees (including full-time equivalent employees) will be subject to the Patient Protection and Affordable Care Act’s (PPACA) “employer mandate.” Under the employer mandate, such “applicable large employers” must offer the vast majority of their full-time employees (and their dependents) the opportunity to enroll in coverage or face the possibility of a tax penalty.

Under PPACA, a full-time employee, with respect to any month, is an employee who provides an average of 30 hours of service per week. However, enrolling and disenrolling employees on a monthly basis would raise significant administrative issues for employers and regulators. To address these issues, the Internal Revenue Service has promulgated regulations which allow employers to use a “look-back measurement method” to determine an employee’s full-time status under the law. This Legislative Alert provides key information related to this look-back measurement method of determining full-time employees.

Learn more:

Q. What is the “look-back” period as defined by PPACA?

A. In general, the look-back measurement method allows the employer to select a look-back period of time to measure whether the employee worked an average of 30 hours per week. If the employee worked an average of 30 hours per week during the look-back period, the employer must consider the employee a full-time employee during the subsequent “stability” period, regardless of the number of hours the employee works during the stability period.


Q. How do I calculate the look-back period?

A. Calculation of the look-back period depends on whether the employee is (1) an ongoing employee, or (2) a new variable hour employee or seasonal employee.

Ongoing employees: For an ongoing employee, an employer may determine full-time status by using a look-back period of between three and 12 months. Under the rules, the employer is given discretion to choose the length of the look-back measurement period provided it conforms with the length of time rules discussed above and that the determination is made on a uniform and consistent basis for all employees in the same category.

New variable hour employees and seasonal employees:An applicable large employer may also use a look-back measurement period for new variable hour employees and for seasonal employees in certain circumstances. A new employee is a variable hour employee if, based on the circumstances at the employee’s start date, it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week. Through at least 2014, employers may use a reasonable, good faith interpretation of the term “seasonal employee.” For new variable hour and seasonal employees, an employer may use a look-back period of between three and 12 months that begins on any date between the employee’s start date and the first day of the first month following the start date.


Q. Do I have to use a consecutive period of time?

A. Yes. The look-back period must use a consecutive period of time.


Q. What is the “stability period” as defined by PPACA?

A. The stability period begins immediately after the look-back period and any administrative period. Calculation of the stability period depends on the type of employee and whether he or she is determined to be a full-time employee during the look-back period.


Q. How do I calculate the stability period?

A. Ongoing employees: If an employer determines that an ongoing employee worked full-time during the look-back period, then the stability period must be at least the greater of six consecutive calendar months or the length of the look-back period. If the employer determines that the ongoing employee was not a full-time employee during the look-back period, then the stability period must be no longer than the look-back period.

New variable hour and seasonal employees: If a new variable hour or seasonal employee is determined to be a full-time employee, then the stability period must be the same as that for ongoing employees – either six consecutive calendar months or the length of the look-back period, whichever is longer. If a new variable hour or seasonal employee is determined not to be a full-time employee during the look-back period, then the stability period may be, at a maximum, one month longer than the look-back period. However, the stability period may not exceed the remainder of the employer’s look-back period for ongoing employees (plus any associated administrative period).


Q. What is the “administrative period” as defined by PPACA?

A. Employers may impose an administrative period that begins immediately after the end of the look-back period and ends immediately before the stability period. The purpose of this administrative period, which may last up to 90 days, is to give employers time to determine employee eligibility for coverage, notify them of their eligibility, and enroll them in the plan.


Q. How do I calculate the administrative period?

A. The administrative period may last up to 90 days. However, this administrative period cannot create a gap in coverage for ongoing employees who are enrolled in coverage because of full-time employee status. For new variable hour employees and seasonal employees, the look-back period and administrative period combined may not extend past the last day of the first calendar month beginning on or after the one-year anniversary of the employee’s start date.


Q. Can I use different look-back periods, stability periods, or administrative periods for different categories of employees?

A. Yes. According to the proposed rule on the employer mandate, an employer may select different look-back periods, administrative periods, and stability periods for certain categories of employees. For example, the proposed rule states that an employer may select different periods for:

·         Each group of collectively bargained employees covered by a separate collective bargaining agreement,

·         Collectively bargained and non-collectively bargained employees,

·         Salaried employees and hourly employees, and

·         Employees whose primary places of employment are in different states.


Q. Can I select a look-back period where I have the fewest number of employees?

For example, I am a seasonal employer with 50 full-time employees for six months. For my look-back period, can I select the six months where those seasonal employees are not working for me?

A. No. For new variable hour and seasonal employees, the look-back period must begin on a date between the employee’s start date and the first day of the first calendar month following the employee’s start date. Therefore, a seasonal employer would not be able to use, as the look-back period, the six months where those seasonal employees are not working.


Department of Labor Announces Availability of the Model Notice to Employees of Coverage Options

Beginning January 1, 2014, individuals and employees of small businesses will have access to affordable coverage through a new competitive private health insurance market – the Health Insurance Marketplace. The Marketplace offers “one-stop shopping” to find and compare private health insurance options. Open enrollment for health insurance coverage through the Marketplace begins October 1, 2013. Section 1512 of the Affordable Care Act creates a new Fair Labor Standards Act (FLSA) section 18B requiring a notice to employees of coverage options available through the Marketplace.(1)

This Technical Release provides temporary guidance regarding the notice requirement under FLSA section 18B and announces the availability of the Model Notice to Employees of Coverage Options. This Technical Release also provides an updated model election notice for group health plans for purposes of the continuation coverage provisions under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) to include additional information regarding health coverage alternatives offered through the Marketplace.

Timing and Delivery of Notice

Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date.

With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.

The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.

Model Notice

Model Notice for employers who offer a health plan to some or all employees

Model Notice for employers who do not offer a health plan

COBRA Model Election Notice

Read the entire Technical Release No. 2013-02



The Employer Mandate and Controlled Groups

The Patient Protection and Affordable Care Act (PPACA) requires large employers – those with 50 or more full-time employees and full-time equivalents – to offer their employees the opportunity to enroll in coverage that is both affordable and provides minimum value. While determining whether an employer is subject to this employer mandate is complicated in its own right, this determination can get even more complex when several employers are commonly owned.

Bundling Multiple Employers

All employees of companies within the same controlled group must be aggregated to determine whether the commonly owned employers are subject to the employer mandate. For purposes of determining common ownership, PPACA adopts the controlled group rules set forth in sections 414(b) and 414(c) of the Internal Revenue Code. The controlled group rules are quite complex and fact-specific. Under those provisions, there are three types of controlled group relationships: (1) parent-subsidiary; (2) brother-sister; and (3) a combination of the two.

What is a Parent-Subsidiary Group?

A parent-subsidiary group exists when:

  • One or more chains of corporations are connected through stock ownership with a common parent corporation;
  • 80% of the stock of each corporation (except the common parent) is owned by one or more corporations in the group; and
  • The parent corporation owns 80% of at least one other corporation.

What is a Brother-Sister Group?

A brother-sister controlled group is a group of two or more corporations in which five or fewer common owners own a controlling interest of each group and have effective control. Two terms are key here – controlling interest and effective control. A controlling interest generally means 80% or more of the stock of each corporation. Effective control is defined as more than 50% of the stock of each corporation, but only to the extent that such stock ownership is identical with respect to such corporations.

What is a Combined Group?

A combined group consists of three or more organizations where (1) each organization is a member of either a parent-subsidiary or brother-sister group, and (2) at least one corporation is the common parent of a parent-subsidiary, and is also a member of a brother-sister group.

Employer Mandate Applicability

When calculating penalties under the employer mandate, the first 30 full-time employees are excluded. Therefore, if a single employer does not offer coverage or offers coverage to less than 95 percent of its full-time employees, and an employee receives a premium tax credit, the employer must pay a penalty of $2,000 for each full-time employee minus the first 30.

For employers that offer coverage for some months but not others during a calendar year, the penalty will be computed separately for each month in which the employer did not offer coverage and at least one full-time employee received a premium tax credit. In such a case, the employer would be liable for a penalty of 1/12th of $2,000 for each full-time employee employed for the month minus the first 30.

If an employer offers coverage to 95 percent or more of its full-time employees, but a full-time employee nonetheless receives a premium tax credit on the basis of the coverage not being affordable or not providing minimum value, the employer must pay a penalty equal to 1/12th of $3,000 for each full-time employee who received a premium tax credit for the month. The amount paid under this scenario cannot exceed the amount the employer would have had to pay if it did not offer coverage – that is, 1/12th of $2,000 for each full-time employee minus the first 30.

However, when multiple employers fall under the same controlled group, this 30 full-time employee exclusion must be proportionally allocated based on each employer’s number of full-time employees. Therefore, it will be important for entities to carefully analyze application of these controlled group rules, both to figure out whether they are subject to the employer mandate and if so, their potential liability.

Final Thoughts

The take away from the “Control Group” protocol is that many small employers might be bundled into a large group for purposes of PPACA’s employer mandate. Brokers are encouraged to work with their clients to make sure that they are proactively determining whether or not the obligation to offer affordable and provides minimum value coverage or pay a penalty extends to any grouping of companies with related ownership.


Society of Actuaries Releases Study on Rate Impact of PPACA

The Society of Actuaries (SOA) has conducted an extensive survey examining the cost of the newly insured under the Affordable Care Act (ACA) and has made the results available to you online.

The main objective of this research is to estimate the morbidity change due to new participants in the individual market and the impact that the ACA will have on filling the uninsured gap.

The research sponsored by the SOA predicts ACA-driven changes in individual market composition of the individual health care market could drive up underlying claims costs by an average of 32% nationally by 2017. The research also predicts high variability among states, with as many as 43 states experiencing a double digit claims cost increase.

View the Report


Connect for Health Colorado

From the Connect for Health Colorado website:

Connect for Health Colorado launched a broad public education campaign on May 6 to introduce Coloradans to the new online health insurance marketplace that will open this October.

Connect for Health Colorado is a new health insurance marketplace, scheduled to open for business in October 2013 for individuals, families and small employers across Colorado. This one-stop online marketplace will include a customer support network of Customer Service Center Representatives, Health Coverage Guides and licensed brokers to help Coloradans find the best health plan for their needs. Connect for Health Colorado will also be the only place where Coloradans can find out if they are eligible for new federal financial assistance, based on income, and use the benefits right away. Coverage begins January 1, 2014.

Connect for Health Colorado is a new non-profit entity established by a state law, Senate Bill 11-200, that was passed in 2011. The organization, legally known as the Colorado Health Benefit Exchange, is governed by a Board of Directors with additional direction from a committee of state legislators, known as the Legislative Health Benefit Exchange Implementation Review Committee.

Calculate Your Savings

Under the Affordable Care Act, beginning in 2014, many individuals and families will be eligible to receive subsidized coverage in the Exchange if they are not eligible for Medicare, Medicaid or the Children’s Health Insurance Program and are not offered affordable coverage through their employer.

  1. Enter household size and income for all individuals included on your tax return (yourself and spouse and dependents, if applicable).
  2. Enter age information only for those household members who need coverage.
  3. This interactive calculator estimates how much eligible individuals and families will spend on premiums for an Exchange health plan under the law. The calculator also indicates income-eligibility for Medicaid.

The estimated tax credit from the government shown below indicates the amount a family will save on monthly premiums, compared to what they would pay in the individual market without subsidies. Premiums are shown for a “silver plan,” but individuals can choose to purchase a more generous or less generous plan. Silver plans offer a more generous level of benefits than most plans in the current individual market.

Use the Individual calculator: How Much Will a Family Save Under the New Federal Health Law?

Are you or your children eligible for public health coverage such as Medicaid or Child Health Plan Plus?
Check to see if you qualify.

Federal tax credits are available now for small businesses and nonprofits to help cover the cost of health insurance for employees. In 2014, the tax credit will increase, paying up to 50 percent of premium costs for small businesses and 35 percent of premium costs for nonprofits. This credit is available to employers for two years.

To qualify, small employers must:

  • Provide health insurance to employees and cover at least 50 percent of the cost of single coverage.
  • Employ fewer than 25 full-time workers (employers with fewer than 50 part-time workers may be eligible).
  • Pay average annual wages below $50,000, excluding the wages of owners and their families.

Use our calculator below to find out if you might qualify for a tax credit, and if so, what amount you may expect. Keep in mind that results from the calculator are an estimate. Health plan rates for 2014 have not been finalized yet. Please consult your tax advisor for further assistance.

Note: If you are a for-profit entity, your tax credits can’t be larger than your actual income tax liability.

Use the Small Business calculator: Small Business Tax Credit Calculator

What to Expect

Starting in October, Connect for Health Colorado will offer Coloradans a new and exciting way to shop for health insurance. Here’s what you can expect when we open in October:

  • You can choose and enroll in a health plan anytime between October 2013 through March 2014 (after that, open enrollment will be yearly from October 15 to December 7)
  • Your coverage begins as early as Jan. 1, 2014
  • You cannot be turned down for coverage because of a pre-existing condition
  • You will not be asked to provide your health history, other than whether you are a smoker or if you are pregnant.
  • You can quickly browse prices and health plan benefits and get an estimate of your possible savings, based on income, before filling out an application for coverage and financial assistance.
  • You can compare health plans and prices from multiple major insurers in an easy-to-understand way, side-by-side
  • You can select medical plans that include dental benefits, or choose medical and dental plans separately
  • We can help you determine if you or your family members are eligible for Medicaid or Child Health Plan Plus
  • We are the only place where you can access new federal financial assistance, based on income, to reduce your costs
  • You can select a plan based on your preferred medical provider, deductible or premium amount
  • We can help you at any point in the process – in person, over the phone or by online chat


90-Day Limitation on Waiting Periods

Public Health Service (PHS) Act section 2708, as added by the Affordable Care Act, provides that, in plan years beginning on or after January 1, 2014, a group health plan or group health insurance issuer shall not apply any waiting period that exceeds 90 days.(4) PHS Act section 2704(b)(4), ERISA section 701(b)(4), and Code section 9801(b)(4) define a waiting period to be the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan. In previous regulations, the Departments defined a waiting period to mean the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.(5) Unlike Code section 4980H, PHS Act section 2708 does not distinguish between full-time and part-time employees.

In addition to requesting comments on the employer shared responsibility provisions, IRS Notice 2011-36 requested comments on behalf of the Departments regarding the 90-day waiting period limitation under PHS Act section 2708, including how rules relating to the potential look-back/stability period safe harbor method for determining the number of full-time employees under Code section 4980H should be coordinated with the 90-day waiting period limitation.


State-By-State: A Progress Report on Medicaid Expansion

[Michael Ollove, Stateline, State-By-State: A Progress Report on Medicaid Expansion, The Henry J. Kaiser Family Foundation, May 02 2013] Accessed: May 8, 2013

This story comes from our partner Stateline, the daily news service of the Pew Charitable Trusts.

Ever since the U.S. Supreme Court ruled last summer that expanding Medicaid to more low-income people was optional for the states, the focus has turned to what Republican governors and GOP-controlled legislatures would do.

Would they forego tens of millions of dollars in federal aid that would extend health insurance to many more people and, proponents argue, would provide a major boost to state economies? Or would these governors, many of whom vowed not to expand, stand their ground and insist the federal government will not be able to afford the expansion?

As of May 1, 16 states plus the District of Columbia have approved the expansion or are headed in that direction, 27 have rejected it or about to and seven states could still go either way.

Some Republican governors, including Arizona’s Jan Brewer and Florida’s Rick Scott, have broken ranks, which in some cases has pitted them against GOP majorities in their legislatures. The other major development has been the proposal by Arkansas Democratic Gov. Mike Beebe, who received tentative permission from the Obama Administration to use federal Medicaid dollars to buy health insurance on the private market. And Republican legislators in some states, such as Texas and Louisiana, are interested in exploring similar plans, even as their GOP governors remain fiercely opposed.

With uncertainty about those plans and legislative battles still unfolding in a number of states, it’s not yet known how many states will expand their Medicaid programs come Jan. 1, when the Affordable Care Act is set to take effect. This infographic shows an up-to-date look at where each state and the District of Columbia stand at the moment.

Stay tuned. Much can happen before January.



Humana Announces Early Renewal Option

Humana offers an Early Renewal Option to give groups with two to 50 employees the flexibility to request an early renewal date in 2013 or early renewal in 2014.

Humana anticipates a higher demand of employers wanting to renew their medical coverage early and has implemented a new process. To allow ample time for the renewal process all groups interested in renewing early will need to contact Humana no later than four months before the new requested renewal date.

Linked below is information Humana uses to support the launch of this nationwide* program.

Early Renewal Option Guide
Early Renewal Date Request Form
Employer Letter

*Early renewal option has not been approved in Kentucky. In Georgia, employers must also make a plan change if they want to renew their coverage early. Colorado and Florida (one to 50 total employees).


Rocky Mountain Health Plans Offers Early Renewal Opportunity for Small Employers

Rocky Mountain Health Plans (RMHP) will introduce new ACA-compliant small group health plans later this year so that clients can maintain their existing small group plans and/or eligibility criteria a little longer.

Other requirements may also be imposed on the anniversary date, such as the non-discrimination rule1 and the limited waiting period for new hires2.

RMHP will offer all small employers the option of renewing their existing coverage in the fourth quarter of 2013, subject to fourth quarter 2013 rates. If your clients select this option, they will extend their existing small group plans and/or existing eligibility criteria until the fourth quarter of 2014. RMHP plans to notify groups of this option.

Please note that while changing the anniversary date can provide an extension of time before Health Care Reform mandates apply, this option could impact your employer group clients in 2014 if they are determined to be an “Applicable Large Employer”.

“Applicable Large Employers” are defined as employing 50 or more full-time employees including full-time equivalents. With full-time equivalents being added, this may affect employers who have historically been considered a “Small Employer.”

Determine group size and gain more information on employer responsibilities.

If you are considered an “Applicable Large Employer”, it is important to understand the federal regulations before choosing the early renewal option.

There is transition relief available to “Applicable Large Employers” with plan years starting in months other than January that protect them from potential penalties until the first month of their plan year in 2014. This protection is available if the employer has not changed their plan year from what was in place as of December 27, 2012.

Electing an early renewal in 2013 will eliminate the Transition Relief protection for “Applicable Large Employers” and provide them with shared responsibility requirements on January 1, 2014.

1Nondiscrimination requirements of section 105(h) of the Internal Revenue Code of 1986 stating that all employees of a company must be eligible for the same benefits, regardless of position within the company.

2Effective for plan years beginning January 1, 2014, employees eligible for health coverage through an employer’s group health plan will have no longer than a 90-day waiting period. This rule will apply to both grandfathered and non-grandfathered plans.


Cigna No Cost Preventive Medications

Certain categories of drugs and other products have been included in the preventive care services coverage based on recommendations from the U.S. Preventive Services Task Force as well as the Institute of Medicine. These recommendations emphasize prevention of disease and meeting the unique health care needs of women.

The following products and prescription medications (as well as specific over-the-counter medications) may be available to you at no cost (copay, coinsurance and/or deductible) depending upon the terms of your plan. This list is provided to help you discuss with your doctor the options that may be appropriate and available to you at no cost. A prescription from your doctor is required to process any claim for preventive care drugs or products under your pharmacy plan, including over-the-counter drugs.

View the entire No Cost Preventive Medications List by Drug Category 


Anthem Early Renewal Options for Small Group Employers

Anthem is giving small groups a chance to move their health plan’s anniversary date to late 2013. This may help businesses to continue running smoothly while securing their benefits and costs during this time of change.

Clients can renew effective November 1 or December 1, 2013. Beginning late summer, our office will begin receiving early renewal request information for our clients that have effective dates from January 1, 2013 to September 1, 2013. We will also receive updated rate information at this time.



Toolkit to Encourage Employers to Form Wellness Committees in the Workplace

Kaiser Permanente has a free toolkit aimed at helping employers maintain a healthier workforce. This free, do-it-yourself resource shows employers and employees how to create a wellness committee at the workplace.

Why is this important? Employees spend more than 2,000 hours a year at work, so it makes good business sense to keep them healthy. Wellness committees play an important role in engaging and motivating employees in developing initiatives that promote health and well-being.

The toolkit includes a number of elements for an employer to develop a wellness committee, including:

  • A committee formation checklist
  • Member recruitment email
  • A guide for the first six committee meetings
  • A commitment pledge for potential committee members to sign

Download the following resources to help your committee get started (or on the right track):