As probably every reader of this blog knows by now, the Department of Health and Human Services released preliminary totals for plan selection for the 2015 open enrollment period on February 18, 2015. Over 1 million individuals enrolled through the federally facilitated marketplace in the final week, bringing the total enrolled in the FFM to 8.8 million, and the total enrolled through all marketplaces, federally facilitated and state-operated, to 11.4 million. Florida had by far the most enrollees in the FFM with 1.6 million, although Texas also had over a million enrollees.
The 11.4 million number includes up to 200,000 individuals who are being dropped from the rolls because they have not provided adequate documentation of immigration or citizenship status, but does not include up to 150,000 individuals who were “in line” when enrollment closed and who have up to February 22 to enroll. Although there will be some attrition over the next weeks of individuals who do not pay their premiums or find other coverage, HHS seems to have met its goal of 9.1 to 9.9 million effectuated enrollments.
Premium payment arrangements. The Internal Revenue Service continues to struggle with the question of how the Affordable Care Act affects various arrangements through which employers attempt to pay premiums for employees to purchase health insurance coverage in the individual market. The federal agencies have already issued four guidances on this issue over the past two years in January of 2013, September of 2013, November of 2014, and December of 2014. On February 18, 2015, it released yet another guidance on this issue, this one focused on small employers.
The question addressed by these guidances is whether an employer, instead of offering its employees a traditional group health plan, can use a health reimbursement arrangement (HRA) or some other form of employer premium payment plan to pay employee premiums for individual market coverage. The February 18 guidance covers premium payments for Medicare and Tricare as well.
The agencies have taken the position that employer payment plans are group health plans, and thus must comply with the ACA’s market reforms. A group health plan must under these reforms cover at least preventive care and may not have annual dollar limits. A premium payment-only HRA or other payment arrangement that simply pays employee premiums does not comply with these requirements. An employer that offers such an arrangement, therefore, is subject to a fine of $100 per employee per day. (An HRA integrated into a group health plan that, for example, helps with covering cost-sharing is not a problem).
The guidance first provides transition relief for small employers that use premium payment arrangements. Employers that had 50 or fewer employees or full-time employees in 2014 (and thus would not have been subject to the employer mandate were it in effect) will not be penalized for premium payment arrangements for 2014, while employers that fit this description for 2015 will not be subject to penalties for January 1 through June 30 of 2015.
Second, the guidance provides that Subchapter S closely held corporations may pay for or reimburse premiums for employees who are 2-percent shareholders (who own at least 2 percent of the corporation) in the individual market. In this situation, the payment is included in income, but the 2-percent shareholder can deduct the premiums for tax purposes. The 2-percent shareholder may also be eligible for premium tax credits through the marketplace if he or she meets other eligibility requirements. An S corporation cannot use a premium payment arrangement for employees who are not 2-percent shareholders.
Third the guidance addresses the question of whether employers can reimburse Medicare Part B or D premiums for active employees or medical expenses of Tricare enrollees through an HRA or other premium payment arrangement. Employers can pay Medicare Part B or D premiums for retired employees in retiree-only plans, as retiree-only plans are not subject to the ACA market reforms. Employers can only pay Medicare premiums for active employees, however, if the employer payment plan is integrated with a group health plan, that is:
- if the employer offers a plan to the employee that offers minimum value (a plan with at least 60 percent actuarial value that covers physician and hospital care);
- the employee who receives premium payments is actually enrolled in Medicare Parts A and B;
- the payment plan is only available to employees enrolled in Medicare Part A and Part B or D; and
- the payment plan is limited to Medicare Part B or D premiums and excepted benefits, including Medigap premiums.
Employers offering such an arrangement remain subject to other legal requirements, such as the Medicare as secondary payment requirements. Employers can also pay for some or all of the expenses of employees covered by Tricare if the payment plan is integrated with a group health plan applying similar requirements.
The guidance next clarifies that an employer may simply increase an employee’s taxable wages in lieu of offering health insurance. As long as the money is not specifically designated for premiums, this would not be a premium payment plan. The employer could even give the employee general information about the marketplace and the availability of premium tax credits as long as it does not direct the employee to a specific plan. If, on the other hand, the employer pays or reimburses premiums specifically, even if the payments are made on an after-tax basis, the arrangement is a noncompliant group health plan and the employer that offers it is subject to the $100 per day per employee penalty.
The relationship between consumer assisters and agents and brokers. On February 10, 2015, CMS issued a guidance advising navigators and other assisters on how to relate to agents and brokers. Although the guidance itself is rather long, its basics are clear. Assisters may not refer consumers to or endorse specific agents and brokers, or accept direct or indirect compensation from agents and brokers that could be tied to compensation the agent or broker received from an insurer for enrolling a consumer in a qualified health plan. Assisters may not rely on agents and brokers to perform duties that assisters are required to perform by federal law.
On the other hand, assisters may refer a consumer to an agent or broker if the consumer asks to be referred, or if a consumer asks for a specific recommendation as to in which plan or type of plan the consumer should enroll in. There are also special rules for navigators in states where the state runs only the SHOP exchange.
If the consumer asks for help in locating an agent or broker, the assister should refer the consumer to a general list, such as the find local help feature on Healthcare.gov. The assister should also explain to the consumer the difference between assisters and agents and brokers, including the fact that agents and brokers are not generally bound by the same requirements of impartiality as assisters and may be compensated by an insurer for enrolling a consumer in a qualified health plan. If the consumer consents, the assister may contact a consumer referred to an agent or broker at a later time, for example to ensure the consumer was able to enroll in a plan.
Assisters may not try to persuade a consumer to use a specific broker, including web brokers. Assisters should not use a web broker site when assisting a consumer except as a reference tool to supplement information on Healthcare.gov, which the assister must use as the primary enrollment tool. An assister may not advertise or link to a specific agent or broker at its service location or website and may not host or reserve space for an agent or broker at its service location, regardless of whether the broker or agent compensates the assister.
The guidance concludes by discussing specific topics, such as when assisters may appear at events sponsored by agents and brokers or visa versa. This is permitted if the assisters can maintain impartiality. Assisters and agents and brokers may also share knowledge and information within the general guidelines discussed above.
Editor’s Note: An earlier version of this post incorrectly linked information to the Internal Revenue Service’s information on the exempt status of qualified nonprofit health insurance issuers instead of the guidance on the application of code 4980D to certain types of health coverage reimbursement arrangements (HRAs). The link has been updated.