Here’s something to talk about when discussing plan design options and employer contribution strategy with group clients in the New Year.
Proposals to lower the age of Medicare, either to 60 or younger, may be considered by Congress over the next few years. A recent analysis shows that lowering the age of Medicare eligibility to 60 could reduce costs for employer health plans by as much as 15 percent, provided all eligible employees shifted from employer plans to Medicare. Another study demonstrates that 60- to 64-year-olds who move from employer plans to Medicare could be covered more cheaply because Medicare payments to hospitals, physicians, and other healthcare providers are generally lower than employer plan reimbursement rates. But, of course, these analyses don’t take into consideration the Medicare secondary payer nondiscrimination requirements! Source:
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!
PAHU Testifies Before House Insurance Committee In Support of Claims Data Bill
On June 9, 2021, Pennsylvania Association of Health Underwriter’s member and Central Pennsylvania Association of Health Underwriters Legislative Chair Thomas Purcell testified before the House Insurance Committee supporting H.B. 947. This measure, introduced earlier this year by State Representative David Zimmerman (R-99), would give businesses with 51-99 employees and fully insured coverage the ability to obtain aggregated and deidentified claims data for their group coverage plan.
The information that would be required to be made available includes:
- Earned premiums separated by policy year for at least the last two policy years, if applicable;
- Total paid claims and total incurred claims, inclusive of any high amount or pooled claims, including both capitated and non-capitated expenses specified in the same manner as premiums; and
- Any amounts above the individual pooling or stop-loss point applicable to the group.
If the measure passes, it will require health insurance carriers to provide the claims experience data to group policyholders with 51 or more covered employees within 30 days of the request for a reasonable fee. However, groups will only be able to request the data every six months, and the Pennsylvania Insurance Department has worked with the Committee to develop an amendment to enforce privacy protections.
Don’t Forget PCORI Fees and 5500 Filings
Two compliance deadlines are coming up at the end of July for many group health plans, so make sure that any applicable clients are on track. The Patient-Centered Outcomes Research Institute (PCORI) fee is due on July 31, so remind any clients that have to pay the tax directly. Businesses that offer self-funded health coverage to their employees (including level-funded group plans, health reimbursement arrangements, and certain flexible spending accounts) must calculate and pay the PCORI fee annually, using Form 720. For groups with plan years that end between January 2020 and September 31, 2020, the fee is $2.54 per covered life. For plan years ending between October 1, 2020, through December 31, 2021, the PCORI fee is $2.66 per covered life. The IRS prepared a chart to help you keep track of which amount various employer groups might need to make their total PCORI fee calculation. The IRS also has FAQs available to guide plan sponsors through the PCORI fee payment process.
Employee benefit plans subject to the Employee Retirement Income Security Act (ERISA) with more than 100 participants and begins their annual plan year on January 1 must file Form 5500 by July 31. Applicable plans with later official plan year start dates have more time to file their 5500 reporting forms since they are due on the last day of the seventh month after the plan year ends. Keep in mind, the federal government goes by the plan year anniversary listed in the group plan’s official ERISA plan documents, not the medical plan renewal date, if the two differ. If an employer hasn’t created official ERISA plan documents yet, the default date is January 1, even if the plan renewal is a different time of year.
For example, suppose an employer plan has wrapped its various employee benefit offerings into one comprehensive plan document. In that case, only one Form 5500 must be filed, but if different benefit components have separate plan documents, then multiple forms may need to be completed.
Almost all employer group health plans with fewer than 100 participants qualify for a reporting exemption. Still, larger fully insured and self-funded plans must file this report annually or face significant IRS and DOL penalties. If a business needs more time to finish their submission, they may file Form 5888 before the original due date of their Form 5500 and get an automatic 2½-month extension.
Federal Government Issues COBRA Subsidy FAQs
The Internal Revenue Service released Notice 2021-31, which provides much-needed guidance on the COBRA subsidy created by the American Rescue Plan Act of 2021 (ARPA). The notice is in frequently asked question (FAQ) format and answers 86 specific questions about the COBRA subsidy. Some of the key points include
- Detailed information about the types of applicable coverage.
- Specifics on claiming the tax credits for employers that “front” subsidy funds.
- Information about what constitutes involuntary termination, including detailed examples.
- Clarification that any reduction in hours qualifies for premium assistance and does not have to be involuntary on the part of an employee.
- If someone is already eligible for COBRA when they experience a reduction in hours or involuntary termination of employment, they do not qualify.
- Employers have to notify individuals who they think might be eligible for the subsidies. Then, the employer may rely on a person’s attestation of their eligibility unless the employer has actual knowledge an individual’s attestation is incorrect.
- Sometimes people have access to extended continuation coverage, including a disability extension, a second qualifying event, or an extended state continuation of coverage requirement. Eligible individuals still qualify for the subsidy during an extension.
- Eligible individuals can access premium subsidies for state-level continuation coverage (aka mini-COBRA coverage). In these cases, the insurer, not the employer, is responsible for paying for the premiums and seeking reimbursement from the Federal government, so the employer cannot claim a tax credit.
- If the state continuation eligibility period is different than Federal COBRA, then the state-level coverage window applies, even if it is a narrower eligibility window. The extended election period for those not currently enrolled in coverage does not apply to state continuation coverage unless the state specifically allows it.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
Gallup, Healthways, and Boston University’s School of Public Health have partnered together to build interactive maps and reports on the well-being of each of the 50 U.S. states, their respective communities, and each of the 435 U.S. congressional districts. The website includes information and maps on topics like life evaluation, physical and emotional health, health behaviors, work environment, and basic access to health care. So check out how your community and the Greater Philadelphia area stacks up!