Healthcare Reform

To download this entire document as a PDF, click here: Open Enrollment Checklist 2018

To prepare for open enrollment, group health plan sponsors should be aware of the legal changes affecting the design and administration of their plans for plan years beginning on or after Jan. 1, 2018. Employers should review their plan documents to confirm that they include these required changes.

Health plan sponsors should also confirm that their open enrollment materials contain certain required participant notices, when applicable—for example, the summary of benefits and coverage (SBC). There are also some participant notices that must be provided annually or upon initial enrollment. To minimize costs and streamline administration, employers should consider including these notices in their open enrollment materials.

Below is a compliance checklist for employers for the 2018 open enrollment, including some administrative items to prepare for in 2018.

PLAN DESIGN CHANGES

-Grandfathered Plan Status

A grandfathered plan is one that was in existence when the Affordable Care Act (ACA) was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered.

  • If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2018 plan year. Grandfathered plans are exempt from some of the ACA’s requirements. A grandfathered plan’s status will affect its compliance obligations from year to year.
  • If your plan will maintain its grandfathered status, make sure you provide the notice of grandfathered status in your open enrollment materials. See the “ACA Disclosure Requirements” section below for more information on this notice.
  • If your plan will lose its grandfathered status for 2018, confirm that the plan has all of the additional patient rights and benefits required by the ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.

-Out-of-pocket Maximum

Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost sharing for essential health benefits (EHB). The ACA’s out-of-pocket maximum applies to all non-grandfathered group health plans, including self-insured health plans and insured plans.

The annual limit on total enrollee cost sharing for EHB for plan years beginning on or after Jan. 1, 2018, is $7,350 for self-only coverage and $14,700 for family coverage.

Also, the ACA’s self-only out-of-pocket maximum applies to all individuals, regardless of whether they have self-only or family coverage under a non-grandfathered plan.  This means that non-grandfathered health plans are required to embed an individual out-of-pocket maximum in the plan’s family coverage when the family out-of-pocket maximum exceeds the ACA’s out-of-pocket maximum for self-only coverage.

  • Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2018 plan year ($7,350 for self-only coverage and $14,700 for family coverage).
  • If you have a high deductible health plan (HDHP) that is compatible with a health savings account (HSA), keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2018 plan years, the out-of-pocket maximum limit for HDHPs is $6,650 for self-only coverage and $13,300 for family coverage.
  • If your plan uses multiple service providers to administer benefits, confirm that the plan coordinates all claims for EHB across the plan’s service providers or divides the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2018.
  • Group health plans with a family out-of-pocket maximum that is higher than the ACA’s self-only out-of-pocket maximum limit must embed an individual out-of-pocket maximum in family coverage so that no individual’s out-of-pocket expenses exceed $7,350 for the 2018 plan year.

-Preventive Care Benefits

The ACA requires non-grandfathered health plans to cover certain preventive health services without imposing cost-sharing requirements (that is, deductibles, copayments or coinsurance) for the services. Health plans are required to adjust their first-dollar coverage of preventive care services based on the latest preventive care recommendations. If you have a non-grandfathered plan, you should confirm that your plan covers the latest recommended preventive care services without imposing any cost sharing.

More information on the recommended preventive care services is available through the U.S. Preventive Services Task Force and www.HealthCare.gov.

-Health FSA Contributions

The ACA imposes a dollar limit on employees’ salary reduction contributions to a health FSA offered under a cafeteria plan. An employer may impose its own dollar limit on employees’ salary reduction contributions to a health FSA, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year.

The ACA’s limit on employees’ pre-tax health FSA contributions first became effective for plan years beginning on or after Jan. 1, 2013. The ACA set the health FSA contribution limit at $2,500. For years after 2013, the dollar limit is indexed for cost-of-living adjustments. For 2017 plan years, the health FSA limit is $2,600. The Internal Revenue Service (IRS) has not yet announced the health FSA limit for 2018 plan years. In the past, the IRS has released this limit in October of the preceding year (for example, October 2016 for 2017 plan years).

  • Monitor IRS guidance for the health FSA limit for 2018 plan years.
  • Once the 2018 health FSA limit is announced, confirm that your health FSA will not allow employees to make pre-tax contributions in excess of that limit.
  • Communicate the health FSA limit to employees as part of the open enrollment process.

-HDHP and HSA Limits for 2018

If you offer an HDHP to your employees that is compatible with an HSA, you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2018 limits. The IRS limits for HSA contributions and HDHP cost sharing will all increase for 2018. The HSA contribution limits will increase effective Jan. 1, 2018, while the HDHP limits will increase effective for plan years beginning on or after Jan. 1, 2018.

The following table contains the HDHP and HSA limits for 2018:

-Mental Health Parity

The Mental Health Parity and Addiction Equity Act (MHPAEA) is a federal law that generally prevents group health plans and health insurance issuers that provide mental health and substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical and surgical coverage. MHPAEA’s parity requirements apply to group health plans sponsored by employers with more than 50 employees. However, due to an ACA reform, insured health plans in the small group market must also comply with federal parity requirements for MH/SUD benefits.

The 21st Century Cures Act, which was signed into law on Dec. 13, 2016, clarifies that if a group health plan or issuer provides coverage for eating disorder benefits, including residential treatment, the coverage must comply with the federal parity requirements for MH/SUD benefits. A set of frequently asked questions (FAQs) issued by the Departments of Labor, Health and Human Services, and the Treasury (Departments) confirm that MHPAEA’s parity requirements apply to any benefits a plan or issuer may offer for treatment of an eating disorder.

  • If your health plan covers treatment for eating disorders, confirm that any financial requirements or treatment limitations that apply to the coverage comply with MHPAEA’s parity mandate.

-Wellness Program Design

If your wellness program includes a health risk assessment (HRA) or medical examinations or covers spouses, you should consider your compliance requirements under rules issued by the Equal Employment Opportunity Commission (EEOC) under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). These new rules were effective for plan years beginning on or after Jan. 1, 2017. For example, under these rules:

  • Incentive Limits – Incentives that are tied to the wellness program cannot exceed 30 percent of the total cost for self-only coverage. If spouses participate in the wellness program, their maximum incentive also cannot exceed 30 percent of the total cost of self-only coverage.

 

  • Confidentiality – Information from the wellness program may be disclosed to employers only in aggregate terms.
  • Employee Notice – Employers must give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared and for what purpose, the limits on disclosure and the way information will be kept confidential. The EEOC has provided a sample notice to help employers comply with this ADA requirement.

 

ACA employer mandate and other requirements

-Applicable Large Employer Status (ALE)

Under the ACA’s employer penalty rules, applicable large employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange.

 

To qualify as an ALE, an employer must employ, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), on business days during the preceding calendar year. All employers that employ at least 50 full-time employees, including FTEs, are subject to the ACA’s pay or play rules.

 

  • Determine your ALE status for 2018
  • Calculate the number of full-time employees for all 12 calendar months of 2017. A full-time employee is an employee who is employed on average for at least 30 hours of service per week.
  • Calculate the number of FTEs for all 12 calendar months of 2017 by calculating the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not full-time employees for that month and dividing the total hours of service by 120.
  • Add the number of full-time employees and FTEs (including fractions) calculated above for all 12 calendar months of 2017.
  • Add up the monthly numbers from the preceding step and divide the sum by 12. Disregard fractions.
  • If your result is 50 or more, you are likely an ALE for 2018.

-Identify Full-time Employees

All full-time employees must be offered affordable minimum value coverage.  A full-time employee is an employee who was employed on average at least 30 hours of service per week. The final regulations generally treat 130 hours of service in a calendar month as the monthly equivalent of 30 hours of service per week. The IRS has provided two methods for determining full-time employee status—the monthly measurement method and the look-back measurement method.

 

  • Determine which method you are going to use to determine full-time status
  • Monthly measurement method involves a month-to-month analysis where full-time employees are identified based on their hours of service for each month. This method is not based on averaging hours of service over a prior measurement method. Month-to-month measuring may cause practical difficulties for employers, particularly if there are employees with varying hours or employment schedules, and could result in employees moving in and out of employer coverage on a monthly
  • Look-back measurement method allows an employer to determine full-time status based on average hours worked by an employee in a prior period. This method involves a measurement period for counting/averaging hours of service, an administrative period that allows time for enrollment and disenrollment, and a stability period when coverage may need to be provided, depending on an employee’s average hours of service during the measurement

-Offer of Coverage

An ALE may be liable for a penalty under the pay or play rules if it does not offer coverage to “substantially all” full-time employees (and dependents) and any one of its full-time employees receives a premium tax credit or cost-sharing reduction for coverage purchased through an Exchange. Employees who are offered health coverage that is affordable and provides minimum value are generally not eligible for these Exchange subsidies.

  • Offer minimum essential coverage to all full-time employees
  • Ensure that at least one of those plans provides minimum value (60% actuarial value)
  • Ensure that the plan offered is affordable to all full-time employees by ensuring that the employee contribution for the lowest cost single minimum value plan does not exceed 56% of an employee’s earnings based on the employee’s W-2 wages, the employee’s rate of pay, or the federal poverty level for a single individual.

-Reporting of Coverage

The ACA requires ALEs to report information to the IRS and to employees regarding the employer- sponsored health coverage on Form 1095-C. The IRS will use the information that ALEs report to verify employer-sponsored coverage and to administer the employer shared responsibility provisions (Code Section 6056).

In addition, the ACA requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to file an annual return with the IRS and individuals reporting information for each individual who is provided with this coverage (Code Section 6055).

  • Determine which reporting requirements apply to you and your health plans
  • Determine the information you will need for reporting and coordinate internal and external resources to help compile the required data for the 1094-C and 1095-C
  • Complete the appropriate forms for the 2017 reporting year. Furnish statements to individuals on or before January 31, 2018, and file returns with the IRS on or before February 28, 2018 (March 31, 2018, if filing electronically).

-Comparative Effectiveness Research Fee (PCORI)

Sponsors of self-funded plans and health insurance issuers of fully insured plans are required to pay a fee each year, by July 31st, to fund comparative effectiveness research. Fees will increase to $2.26 per covered life in 2018 and are next due July 31, 2018

 

-W-2 Reporting

Healthcare Reform requires employers to report the aggregate cost of employer-sponsored group health plan coverage on their employees’ Forms W-2. This reporting requirement was originally effective for the 2011 tax year. However, the IRS later made reporting optional for 2011 for all employers.

 

The IRS further delayed the reporting requirement for small employers (those that file fewer than 250 Forms W-2) by making it optional for these employers until further guidance is issued. For the larger employers, the reporting requirement was mandatory for the 2012 Forms W-2 and continues.

 

ACA Disclosure Requirements

-Summary of Benefits and Coverage

The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including those who are newly eligible for coverage and special enrollees).

  • In connection with a plan’s 2018 open enrollment period, the SBC should be included with the plan’s application materials. If coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.
  • The new SBC template should be used for health plans with open enrollment periods or plan years beginning on or after April 1, 2017.
  • For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should confirm that your health insurance issuer will assume responsibility for providing the SBCs. Please contact your representative at Lawley for assistance.

-Grandfathered Plan Notice

If you have a grandfathered plan, make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as SPDs and open enrollment materials. Model language is available from the Department of Labor (DOL).

-Notice of Patient Protections

Under the ACA, non-grandfathered group health plans and issuers that require designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Also, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for obstetrical/gynecological care.

If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant. If your plan is subject to this notice requirement, you should confirm that it is included in the plan’s open enrollment materials. Model language is available from the DOL.

Other Notices

Group health plan sponsors should consider including the following enrollment and annual notices with the plan’s open enrollment materials.

  • Initial COBRA Notice

The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers with 20 or more employees that sponsor group health plans.  Plan administrators must provide an initial COBRA notice to new participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD. A model initial COBRA Notice is available from the DOL.

 

  • Notice of HIPAA Special Enrollment Rights

At or prior to the time of enrollment, a group health plan must provide each eligible employee with a notice of his or her special enrollment rights under HIPAA.  This notice may be included in the plan’s SPD.   Model language is available at https://www.dol.gov/ebsa/pdf/cagappc.pdf (Appendix C: Model Notices).

 

  • Annual CHIPRA Notice

Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual  notice about the available assistance to all employees residing in that state. The DOL has provided a model notice.

 

  • WHCRA Notice

Plans and issuers must provide notice of participants’ rights to mastectomy-related benefits under the Women’s Health and Cancer Rights Act (WHCRA) at the time of enrollment and on an annual basis.  Model language is available at https://www.dol.gov/ebsa/pdf/cagappc.pdf (Appendix C: Model Notices).

 

  • NMHPA Notice

Plan administrators must include a statement within the Summary Plan Description (SPD) timeframe describing requirements relating to any hospital length of stay in connection with childbirth for a mother or newborn child under the Newborns’ and Mothers’ Health Protections Act. Model language is available at https://www.dol.gov/ebsa/pdf/cagappc.pdf (Appendix C: Model Notices).

 

  • Medicare Part D Notices

Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals as to whether or not their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the

 

plan and each year before Oct. 15 (when the Medicare annual open enrollment period begins). Model notices are available at www.cms.gov/creditablecoverage.

 

  • HIPAA Privacy Notice

The plan administrator or issuer must provide the Notice of Privacy Practices to new health plan enrollees at the time of enrollment. Also, at least once every three years, participants must be notified about the availability of the Notice of Privacy Practices. Model Privacy Notices are available through the Department of Health and Human Services (HHS).

 

  • Self-insured plans must maintain and provide their own Privacy Notice
  • Fully insured plans – health insurance issuers have primary responsibility for Privacy Notices
  • Summary Plan Description (SPD)

Plan administrators must provide an SPD to new participants within 90 days after plan coverage begins. Any changes that are made to the plan should be reflected in an updated SPD booklet or described to participants through a summary of material modifications (SMM).

Also, an updated SPD must be furnished every five years if changes are made to SPD information or the plan is amended. Otherwise, a new SPD must be provided every 10 years.

□    Summary Annual Report

Plan administrators that are required to file a Form 5500 must provide participants with a narrative summary of the information in the Form 5500, called a summary annual report (SAR). The plan administrator generally must provide the SAR within nine months of the close of the plan year. If an extension of time to file the Form 5500 is obtained, the plan administrator must furnish the SAR within two months after the close of the extension period.