Two Areas Impacting Benefits When the COVID-19 Emergencies End

Two Areas Impacting Benefits When the COVID-19 Emergencies End

When the COVID-19 public health emergency and national emergency were declared in 2020, no one anticipated they would still be in place in 2023.

On January 30, 2023, the President announced the intent to end the emergencies on May 11, 2023. The impact of the emergencies on employer-sponsored benefits affected certain coverages, reimbursements, and timelines. Multiple laws and regulations passed after 2020 created temporary rules tied to the end of the emergencies. As a result, employers will face significant tasks and obligations to unwind the changes from the last three years.

There are two areas of significance for employers: free coverages that will end, and required deadlines that will begin. Here’s what you need to keep in mind for each:

1. Free coverages that will end

The Families First Coronavirus Response Act (FFCRA) required health plans to cover the cost of COVID-19 testing and related services with no cost-sharing. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) expanded the FFCRA by adding over-the-counter tests and vaccinations by out-of-network providers.

When the emergency ends, this required no-cost coverage of testing and related services will sunset. Employers with fully insured plans should speak with their carrier to discuss whether there will be any option to continue the coverage with no cost-sharing. Each state’s Department of Insurance should provide guidance to carriers on when cost-sharing will resume. Self-funded groups may have more flexibility to continue to offer testing and related services with no-cost sharing. Due to the Affordable Care Act’s preventative services requirement, fully approved COVID-19 vaccines will remain covered, without cost, by in-network providers. A reduction in coverage will require a 60-day advance notice to affected employees.

Another specific impact is stand-alone telehealth benefits. Employees who were ineligible for their employer’s health plan were permitted to enroll in stand-alone telehealth benefits. The relief applies for the plan year that begins on or before the end of the emergency. An employer providing stand-alone telehealth will not be able to continue the coverage past the end of the current plan year and should review their policy to modify the language for stand-alone coverage. A reduction in coverage requires sending a notice to affected employees 60 days prior to the plan year end date.

2. Required deadlines that will begin

Many provisions of the last three years are tied to outbreak period rules issued in May 2020. The outbreak period lasts until 60 days after the end of the national emergency. These rules extended several key deadlines related to COBRA, special enrollment periods, claim submission, and appeal processes.

The Employee Benefits Services Administration issued a notice in 2021 providing guidance and clarity for employers, stating that the maximum period a deadline may extend is the earlier of one year from the date an original deadline would begin, or 60 days after the end of the outbreak period. This one-year period is known as tolling.

The challenge for employers will be tracking each individual’s tolling period as the end of the outbreak period nears. For example, an employee traditionally has 60 days to elect COBRA continuation coverage. The 60-day deadline would not begin until one year and 60 days later or 60 days after the outbreak period.

To illustrate this, imagine this scenario:

  • Employee A’s benefits were terminated on December 31, 2022.
  • Traditionally, they would have until March 2023 to elect COBRA.
  • The relief states the 60-day countdown would not begin until the earlier of one year (December 2023) or July 10, 2023 (60 days after the end of the outbreak period).
  • Since the outbreak period end date is planned for May 11, 2023, which is earlier than the one-year tolling, Employee A must make their COBRA election by September 20, 2023.

The tolling period has been a point of confusion for employers and may be more confusing as the outbreak period now has a planned end date of May 11, 2023.

The Department of Health and Human Services (HHS) provided a roadmap on February 9, 2022, outlining what may and may not be affected by the end of the emergencies. HHS also indicated it will continue “to review the flexibilities and policies implemented during the COVID-19 PHE to determine whether others can and should remain in place, even for a temporary duration, to facilitate jurisdictions’ ability to provide care and resources to Americans.”

Employers and plan sponsors should continue monitoring federal and state government resources. Employers may need to revise plan documents and provide new notifications to employees when coverage is changed or eliminated.

By Angela Surra

Originally posted on Mineral

5 Tips to Save Money on Health Care: Part 1

5 Tips to Save Money on Health Care: Part 1

Health insurance is essential to protecting your health but the high cost of coverage may leave you feeling sick.  Even after employers pick up a substantial amount of the cost, every year Americans spend thousands of dollars on healthcare while costs are continuing to rise. By taking certain steps, you can stretch your healthcare dollars and still receive the care you need to stay healthy.

  1. Understand How Your Health Plan Works

Review your plan to learn how to maximize your benefits.  You need to know what is covered (and what is not!) and what procedures you need to follow to ensure your claims will get paid.  Know what your copayment, coinsurance and deductible costs are before your visit.

Most health insurance plans cover more of your costs if you use their preferred or in-network doctors.  If you visit an out-of-network doctor or medical facility, you’ll pay more and may end up being responsible for 100% of the bill.  Use your insurer’s online tools to search for in-network providers.

  1. Choose the Right Places to Get Care

Running to the emergency room when you get sick after hours could drain your wallet. All too often, those suffering from minor illnesses or injuries visit the ER when they don’t need to.  The ER should be your last resort – consider using more affordable options like telemedicine or an urgent care center instead.  You can still get the care you require in off-hours without having to schedule an appointment.

If you need surgery, you may save money by having it done at an ambulatory surgical center (ASC) which is a modern healthcare facility focused on same-day surgical care, including diagnostic and preventive procedures.  Typically, these centers charge less than a hospital.

  1. Use a Health Savings Account (HSA) or Flexible Spending Account (FSA)

Opening a HSA  or an FSA is a handy way to save for medical expenses and reduce your taxable income. They are like personal savings accounts but the money in them is used to pay for health care expenses. HSAs are owned by you, earn interest, and can be transferred to a new employer.  FSAs are owned by your employer, do not earn interest, and must be used within the calendar year.

  1. Ask Your Doctor About Remote Patient Monitoring (RPM)

RPM is the use of digital technologies to monitor and analyze medical and other health data from patients and electronically transmit this information to healthcare providers for assessment and, when necessary, recommendations and instructions. This type of monitoring is often used to manage high-risk patients, such as those with acute or chronic health conditions such as those with diabetes, hypertension and heart conditions.

  1. Use Your Preventive Care Benefits

Many health plans pay the full cost for important preventive care.  These regular screenings, exams, and immunizations help detect or prevent diseases and medical problems early when they are easier to treat.  Annual check-ups, mammograms (usually after the age of 40), flu shots and colonoscopies (usually 1 every 10 years after the age of 50) are examples of preventive care.  These checks can save you a lot of money because they catch problems early.

Health insurance isn’t mandatory – there’s no law requiring you to buy it – but, health insurance is an important part of staying healthy, financially and physically.  Since most people who don’t have insurance made that decision based on money instead of what is best for their health, they usually don’t have doctor appointments for the same reason – it’s too expensive.  But skipping routine care can end up being more expensive than your premiums, especially if you have serious health issues that aren’t caught early.  Think of it like care maintenance: regularly changing your oil might be a hassle but it is essential to prevent a major breakdown down the road.

 

Cash in Lieu of Benefits Program

Cash in Lieu of Benefits Program

Many employees have the option to choose between their employer’s plan and another program where they meet the eligibility requirements (i.e., spouse’s, domestic partner’s, or parent’s plan). A Cash in Lieu of Benefits program, or cash-out option, offers an incentive for those employees to waive the employer coverage and instead enroll in the other plan. The incentive is in the form of a cash payment added to their paycheck. Properly implementing a Cash in Lieu of Benefits program is crucial, as unexpected tax consequences could occur otherwise.

Overview

The Internal Revenue Service (IRS) requires a Section 125 plan be in place to be a qualified cash-out option. If the plan is not set up under an IRC Section 125 plan, the plan will be disqualified and employees who elect coverage under the health plan will be taxed on an amount equal to the amount of cash they could have received for waiving coverage.

The IRS has ruled that when an option is available to either elect the health plan, or to receive a cash-out incentive, then the premium payment to the insurance company becomes wages. The reasoning is that when an employer makes payments to the insurance company where the employee has the option of receiving those amounts as wages, the employee is merely assigning future income (cash compensation) for consideration (health insurance coverage). Therefore, the payment is treated as a substitute for the health insurance coverage. By setting up an IRC Section 125 plan, the employer is offering a choice between cash and certain excludable employer-provided benefits, without adverse tax implications.

Plan Set-up

There must be a Plan Document in place and nondiscrimination requirements must be followed, including annual nondiscrimination testing, in order to be a qualified Section 125 plan. To meet nondiscrimination rules, Cash in Lieu of Benefits must be offered to all employees equitably. To be sure an employer is not over incentivizing employees to drop the plan, which could impact the nondiscrimination participation requirements, the monthly cash benefit should not exceed $200-$300.

When a Section 125 plan already exists (Premium Payment Plan, Health Care Spending Account, Dependent Care Spending Account), the plan can be amended to add the cash out feature. Where no Section 125 plan is in place, it is standard to have an attorney provide this service. It is important to note that, although the Section 125 plan protects the employees electing coverage from taxation, the cash-out incentive is an after-tax benefit.

As always with any IRS-qualified plan, proper documentation is essential. An employee should only be allowed to waive coverage when there is another plan available, and proof of enrollment is provided. If there is a subsequent loss of that coverage, HIPAA Special Enrollment Rights will allow entry onto the plan, and the cash-out incentive will cease.

Considerations

Cash in Lieu of Benefits funds cannot be used to purchase individual health coverage. For companies over 20 lives and Medicare is secondary coverage, the plan should not be structured to incentivize employees over 65 to opt out of the employer plan to enroll in Medicare.

Another factor to consider is the impact to employers considered Applicable Large Employers (ALE) and subject to the affordability determination and reporting under the Affordable Care Act (ACA). An ALE is an employer averaging 50 or more full-time plus full-time equivalent employees for the preceding 12 months. If a cash out option is offered without an IRS qualified Cash in Lieu of Benefits plan, the payment must be included in the affordability calculation.

There are also Fair Labor Standards Act (FLSA) implications. Any opt-out payments made by an employer to an employee must be included in an employee’s regular rate of pay and therefore is used in calculating overtime compensation for non-exempt employees.

These considerations should be reviewed with a tax expert and/or ERISA attorney to determine if a Cash in Lieu of Benefits program is the right option for your organization. These professionals, along with a Section 125 Plan Administrator, can provide the necessary guidance to ensure the program will satisfy compliance requirements. For further information on this topic, please contact your Johnson & Dugan team.

By Jody Lee, Johnson & Dugan

Ask the Experts: Executive-Only Medical Plans

Ask the Experts: Executive-Only Medical Plans

Question: Our company offers group medical and dental plans for all employees. We also have an executive-only medical plan that covers out-of-pocket expenses that the regular group plan does not pay. Does COBRA apply to the executive-only plan? Do we have to include it in our summary plan description (SPD)?
Answer: The coverage continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) pertain to group health plans sponsored by employers with 20 or more workers (except certain church plans). This is referred to as federal COBRA, which is enforced and regulated by the Internal Revenue Service (IRS) and the Department of Labor (DOL).
Any employer-sponsored plan or program providing health benefits (medical, dental, vision, etc.) is a group health plan under COBRA. Briefly, if the employee’s access to the program or benefits is based on the person’s current or past relationship with an employer, it is a group plan. An executive-only medical plan is a group health plan – and subject to COBRA – since eligibility for the plan is connected to employment. (Reference: 26 CFR § 54.4980B-2 )
Next, the Employee Retirement Income Security Act (ERISA) imposes numerous reporting and disclosure requirements on employee benefits plans, including rules for plan documents and summary plan descriptions (SPDs). Plans sponsored by governmental employers and certain church plans are exempt from ERISA, but plans sponsored by private-sector employers must comply with ERISA’s plan document and SPD rules. There is an exception, however, for an executive plan that meets the following conditions:

  • The plan primarily provides welfare (e.g., health) benefits for a select group of management or highly-compensated employees; and
  • No part of the plan is funded through employee contributions or a trust.

The most common example is an executive-only medical insurance plan for which the employer pays 100 percent of premiums. In that case, an SPD is not required and Form 5500 reporting does not apply. A plan document is required but it does not have to be made available to employees. The plan document does have to be provided to the Department of Labor (DOL) if requested. (Reference: 29 CFR § 2520.104-24)
By Kathleen A. Berger
Originally posted on thinkhr.com

Look Backward to Plan Forward

Look Backward to Plan Forward

We have entered Open Enrollment season and that means you and everyone in your office are probably reading through enrollment guides and trying to decipher it all. As you begin your research into which plan to choose or even how much to contribute to your Health Savings Account (HSA), consider evaluating how you used your health plan last year. Looking backward can actually help you plan forward and make the most of your health care dollars for the coming year.
Forbes magazine gives the advice, “Think of Open Enrollment as your time to revisit your benefits to make sure you are taking full advantage of them.” First, look at how often you used health care services this year. Did you go to the doctor a lot? Did you begin a new prescription drug regimen? What procedures did you have done and what are their likelihood of needing to be done again this year? As you evaluate how you used your dollars last year, you can predict how your dollars may be spent next year and choose a plan that accommodates your spending.
Second, don’t assume your insurance coverage will be the same year after year. Your company may change providers or even what services they will cover with the same provider. You may also have better coverage on services and procedures that were previously not eligible for you. If you have choices on which plan to enroll in, make sure you are comparing each plan’s costs for premiums, deductibles, copays, and coinsurance for next year. Don’t make the mistake of choosing a plan based on how it was written in years prior.
Third, make sure you are taking full advantage of your company’s services. For instance, their preventative health benefits. Do they offer discounted gym memberships? What about weight-loss counseling services or surgery? How frequently can you visit the dentist for cleanings or the optometrist? Make sure you know what is covered and that you are using the services provided for you. Check to see if your company gives discounts on health insurance premiums for completing health surveys or wellness programs—even for wearing fitness trackers! Don’t leave money on the table by not being educated on what is offered.
Finally, look at your company’s policy choices for life insurance. Taking out a personal life insurance policy can be very costly but ones offered through your office are much more reasonable. Why? You reap the cost benefit of being a part of a group life policy. Again, look at how your family is expected to change this year—are you getting married or having a baby, or even going through a divorce? Consider changing your life insurance coverage to account for these life changes. Forbes says that “people entering or exiting your life is typically a good indicator that you may want to revisit your existing benefits.”
As you make choices for yourself and/or your family this Open Enrollment season, be sure to look at ALL the options available to you. Do your research. Take the time to understand your options—your HR department may even have a tool available to help you estimate the best health care plan for you and your dependents. And remember, looking backward on your past habits and expenses can be an important tool to help you plan forward for next year.

Notifying Participants of a Plan Change

Notifying Participants of a Plan Change

Curious about when you should notify a participant about a change to their health care plan?
The answer is that it depends!
Notification must happen within one of three time frames: 60 days prior to the change, no later than 60 days after the change, or within 210 days after the end of the plan year.
For modifications to the summary plan description (SPD) that constitute a material reduction in covered services or benefits, notice is required within 60 days prior to or after the adoption of the material reduction in group health plan services or benefits. (For example, a decrease in employer contribution is a material reduction in covered services or benefits. So is a material modification in any plan terms affecting the content of the most recent summary of benefits and coverage (SBC).) While the rule here is flexible, the definite best practice is to give advance notice. For collective practical purposes, employees should be told prior to the first increased withholding.
However, if the change is part of open enrollment, and communicated during open enrollment, this is considered acceptable notice regardless of whether the SBC, SPD, or both are changing. Essentially, open enrollment is a safe harbor for all 60-day prior/60-day post notice requirements.
Finally, changes that do not affect the SBC and are not a material reduction in benefits must be communicated and summarized within 210 days after the end of the plan year.

By Danielle Capilla
Originally Published By United Benefit Advisors