Wednesday, September 22, 2010

Looking for Ways to Save on Health Insurance Premiums

Dependent Eligibility Verification can help to reduce the cost of providing medical benefits and stem the rising tide of health are costs by identifying and removing ineligible dependents enrolled on the plan. According to Michael Smith, CEO ConSova, Inc., demand for dependent verification over the past few years has increased dramatically. "Employers have begun to realize the tremendous savings audits and verification can deliver in a relatively short time, especially just before open enrollment." Smith says there is a common misconception that identifying and validating eligibility is a long-term and cumbersome process. In a typical Dependent Eligibility Verification audit, employers can find an average of 10-13 percent of covered dependents to be ineligible, and removing these generates an almost immediate cost savings. Employees' former spouses typically represent 25-30 percent of ineligible dependents identified, and they represent roughly 52 percent of the overall savings generated by the audit. Dependent eligibility verification is one of the top three health care cost containment solutions that can help companies save real money right away. To learn more on how to conduct a dependent eligibility audit, please contact our office at 978.777.6554 or cwatkin@ipswichfinancial.com

Monday, April 26, 2010

COBRA Subsidy Extended Through May 2010

Please be advised that the COBRA subsidy program has been extended through 5/13/2010. This is the third extension through the Continuing Extension Act of 2010.

Special Election Period

A health plan must extend a special COBRA election period to an individual who experienced an involuntary termination of employment on or after April 1, 2010, and prior to April 15, 2010, and who would be an “assistance eligible individual” (AEI) but who does not have a COBRA election in effect on April 15, 2010. The special election period runs from April 15, 2010, through 60 days after the Notice of Special Election Period is provided to that individual.

Notice of Special Election Period

In the case of any individual who experienced a qualifying event related to a termination of employment between April 1, 2010 and April 15, 2010, an employer must provide the general COBRA notice, including a description of the availability of premium reduction in the case of a qualifying event that is an involuntary termination of employment, within 60 days of enactment of the Act or by June 14, 2010. If the general COBRA notice was already distributed, then employers may simply supplement it with an additional notice describing the extension of the availability of premium reduction with respect to involuntary terminations through May 31, 2010, and the special election period.

A Reminder – Expansion of Assistance Eligible Individuals

Under previous legislation, only individuals who experienced a qualifying event that was an employee’s involuntary termination of employment could become AEIs and take advantage of the COBRA premium subsidy. The Temporary Extension Act of 2010 expanded the premium subsidy to include as a qualifying event for purposes of the subsidy, a reduction of hours that occurred at any time on or after September 1, 2008, and is followed by an involun¬tary termination of employment that occurs on or after March 2, 2010 (and before June 1, 2010). Individuals who experience a qualifying event that falls under this expanded definition and are otherwise eligible AEIs will be eligible for the COBRA subsidy beginning with the first day of the first period of coverage for which the individual is affected.

Action Items

>>Notices. Employers should update their COBRA notices and other plan communications to include the extension of the eligibility period to May 31, 2010.
>>Assess Prior Terminations. Identify covered employees (and their qualified beneficiaries) who became eligible for COBRA on or after April 1, 2010, and before April 15, 2010, as well as their COBRA elections. Provide an updated COBRA notice to these individuals that includes a description of the extended eligibility period and the special election period. Identify those employees and beneficiaries in the group whose qualifying event is the employee’s involuntary termination of employment and who are eligible for the COBRA subsidy.

Tuesday, April 6, 2010

Health Care Reform Summary

Impact on Employers
April 6, 2010

With the passing of Health Care Reform legislation, the resulting overhaul of our country’s health care financing system is the single most important piece of Federal social legislation our generation has ever seen. There has been a broad consensus to expand affordable health coverage, reduce systemic waste and inefficiencies, and increase quality. With these goals we will ultimately achieve lower health care. This legislation outlines broad changes to the current system with significant enhancements to help support these goals. Most of the impact will take effect in 2014 while some changes will occur sooner.

After reading the 2,500 page legislation, attending webinars, and consulting with other colleagues, I have prepared a detailed review of the legislation that impacts employers and our nation as a whole. Outlined below is a summary that could also be used as a hand out for employees. If you would like to discuss the legislation further, or would like the more detailed review, please contact me at cwatkin@ipswichfinancial.com.

Tax Credit. Starting with 2010 taxes, small businesses with fewer than 25 employees that pay at least 50% of the health care premiums for their employees qualify for a tax credit up to 35% of your premiums (50% after 2014 if you purchase insurance through an exchange). How much of a credit you'll get depends on the number of employees you have and their average wage.

Exchanges. Starting in 2014, the biggest potential benefit may kick in with the establishment of Small Business Health Options Programs – or SHOP exchanges. These will enable small companies (up to 100 employees) to pool together to have greater buying power. Theoretically, this should result in lower premium costs.

Subsidies. Starting in 2014, many self-employed individuals will qualify for a federal subsidy to help them afford the cost of purchasing health care. Those earning up to 400% of the poverty level will get assistance, or up to $88,200 for a family of four (at today's poverty level).

Medicaid. Starting in 2014, more lower-income individuals and childless adults would be covered by Medicaid, the federal health insurance plan for the poor. This can be a big help, especially for those just starting a business, without much income.

Mandatory employer-provided coverage. Small businesses – with fewer than 50 employees – are exempt from mandatory requirements. Businesses with more than 50 employees will be required to provide coverage as of 2014 or pay a fine. This is designed to help reduce occurrences of those going to the emergency room for care with no insurance.

Mandatory personal coverage. Also as of 2014, as an individual you will be required to have health insurance or pay a fine. If you have to pay more than 8% of your income for the cheapest plan, you're not penalized.

Pre-existing conditions. Starting in June 2010, individuals who have not been able to get insurance because of pre-existing conditions can join a high risk insurance pool. As of 2014, insurance companies cannot deny insurance to adults based on pre-existing conditions.

Adult children. Starting in September 2010, dependent children up to age 26 can be covered on their parent's policy. This is the same as what we have currently in MA.

Lifetime limits. Starting in September 2010, there can be no lifetime maximum limits on policies. Also, companies cannot rescind policies except for fraud.

Preventive care. Starting in September 2010, coverage must include basic preventive care. Many of the plans currently offered include preventive care.

Taxes. Starting in January 2013, if you make over $200,000 (individual) or $250,000 (family), your Medicare tax rate will increase from 1.45% to 2.35%. A bigger potential tax bite may hit small business owners who receive capital gains, dividend, or interest income with an additional 3.8% tax on that income.

"Cadillac" plans. Starting in 2018, employers who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a 40% tax on the excess cost of the premium. This could be a big burden on small businesses, as premiums are already nearing that level.

Friday, March 19, 2010

Is your company considering hiring new employees?

If so, there is now a tax credit that companies can take advantage of through the Hiring Incentive to Restore Employment Act (HIRE). Employers are encouraged to make hiring, pay and retention decisions as soon as possible, as the HIRE Act provides greater benefits to those employers that hire early and that substantially maintain their new hires’ wages.

On March 18, 2010, President Obama signed the Hiring Incentive to Restore Employment Act. Intended to spur employment, this statute creates significant tax incentives for employers to hire and retain workers. It applies to all for-profit and non-profit employers, regardless of size, and including public institutions of higher education. The HIRE Act exempts employers from Social Security taxes in 2010 with regard to each new employee who meets the following criteria:

• Begins employment after February 3, 2010 and before January 1, 2011;
• Certifies by signed affidavit, that he or she has not been employed for more than 40 hours during the 60-day period ending on the date when he or she begins the new employment.

The HIRE Act also increases the current year business credit with respect to each new hire who is retained for a full year, provided that the employee:

• Was hired by the taxpayer on any date during the taxable year ending after March 18, 2010;
• Was employed by the taxpayer for a period of not less than 52 consecutive weeks; and
• Whose wages during the last 26 weeks of this employment equal at least 80% of the wages for the first 26 weeks of this employment.

The tax credit for each retained worker is increased by 6.2% of the wages paid to the retained worker during the consecutive 52-week period. If an employer paid an employee $53,400 from now until the end of the year, it could save a maximum of $3,310. An additional $1,000 income tax credit is available to employers for every new employee retained for 52 weeks, to be taken on the employer’s 2011 income tax. Please contact your tax advisor or Ipswich Bay Advisors (978-777-6554) with any questions.

Friday, March 12, 2010

Additional COBRA Subsidy Extension - 2010

On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (H.R. 4691), which extends the eligibility period for the COBRA premium subsidy through March 31, 2010. The eligibility period, as previously extended by the Department of Defense Appropriations Act, 2010 (P.L. 111-118), had expired on February 28, 2010.

The law also expands the definition of "assistance eligible individual" to include as a qualifying event the loss of health care coverage because of a reduction in hours followed by involuntary termination of employment. The Act provides that individuals who had a reduction of hours between September 1, 2008 and March 31, 2010, followed by an involuntary termination of employment on or after March 2, 2010, shall be treated as incurring a qualifying event on the date of termination of employment. As a result, these individuals will be eligible for the COBRA subsidy. The period of COBRA continuation coverage, however, is determined as though the qualifying event was the reduction of hours. Group health plans must notify affected individuals within sixty (60) days following their termination of employment of their right to the COBRA subsidy.

The Temporary Extension Act also provides short-term extensions of several authorities, including those related to unemployment compensation, Medicare physician payments, Medicare therapy caps, surface transportation programs, flood insurance programs, retransmission of television broadcasts, Federal poverty guidelines, and Small Business Administration loan guarantees.

Friday, January 22, 2010

Benefits and HR Law Update

Federal Laws pertaining to employers

Mental Health Parity Act

For plan years beginning after October 3, 2009, a group health plan that provides mental health and substance abuse benefits cannot impose special caps or limits on benefits related to mental health treatment or substance use disorders. Treatment limits and cost sharing, including deductibles, co-pays, co-insurance and out-of-pocket expenses, cannot be more restrictive than other medical and surgical benefits provided under the plan. If a plan offers out of network benefits for medical and surgical coverage, out of network benefits must also be offered for mental health and substance disorders. All fully insured plans adhere to this requirement in the plan designs offered to employers.
Michelle’s Law

In plan years beginning after October 9, 2009 (January 1, 2010 for calendar year plans), a group health plan cannot terminate coverage for a dependent college student on account of loss of full-time student status due to a medically necessary leave of absence for up to one year. The plan must furnish information about Michelle’s Law in any notice regarding certification of student status required for continued coverage under the plan. This requirement is taken care of by the health plans.
CHIP Reauthorization Act

Employees and dependents who become eligible or cease to be eligible for premium assistance for Medicaid or a state’s Children’s Health Insurance Program (“CHIP”) have special enrollment rights under group health plans subject to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), effective April 1, 2009. Employees must request coverage within 60 days of becoming eligible for the premium assistance. The plan document, summary plan description (“SPD”) and enrollment materials should be amended to reflect these rules. Employers are required to provide annual notice to employees regarding the assistance available and how to apply for it.
GINA

The Genetic Information Nondiscrimination Act of 2008 (“GINA”) prohibits employee group health plans and insurance companies in the group market from discriminating on the basis of genetic information. Genetic information includes information about manifestation of a disease or disorder in a family in addition to information about genetic tests. For plan years beginning after May 21, 2009, genetic information cannot be requested, required or purchased for underwriting purposes or before enrollment, participants and covered dependents cannot be required to undergo a genetic test, and genetic information cannot be used to adjust premiums or contributions for the group.
HEART Act

Pursuant to the Heroes Earnings Assistance and Relief Tax Act of 2008 (“HEART”), a cafeteria plan or health flexible spending arrangement may now permit a reservist called to active military duty for at least 180 days or an indefinite term to receive distribution of the balance to the credit of the reservist’s account.
HITECH Act

The Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) contains new rules for protection of personal health information held by providers, plans and other covered entities. These changes include requirements when protected health information is disclosed, procedures for transferring data electronically, and enforcement by the Department of Health & Human Services. As a service provider, Ipswich Bay Advisors is required to have a Business Associates Agreement in place with all of our clients. We had sent these out in the fall of 2009 to all of our clients.
COBRA Subsidy / American Recovery and Reinvestment Act of 2009

The American Recovery and Reinvestment Act of 2009 (“ARRA”) provided a subsidy for COBRA premiums to “assistance eligible individuals” who are involuntarily terminated and lose group health coverage. President Obama provided and extension for the subsidy which amends ARRA by extending the COBRA subsidy period from 9 to 15 months and extending the cut-off for commencement of the subsidy period from December 31, 2009 to February 28, 2010. Employers or their COBRA administrators must now update their COBRA eligibility and election notices to include the extended subsidy information. In addition, within 60 days of enactment of the Act, special notice must be given to any COBRA assistance eligible individual who was either already on COBRA on or after October 31, 2009 or was involuntarily terminated on or after October 31, 2009 who already received a COBRA rights notice that did not include the subsidy extension information.
Medicare’s Mandatory Insurer Reporting Law
The Medicare, Medicaid, and SCHIP Extension Act of 2007 added new mandatory reporting requirements (the “Mandatory Insurer Reporting Law”) for group health plans. For full insured health plans, the insurance carriers are complying with the reporting requirements.
Massachusetts laws pertaining to employers
2009 1099-HC forms
Massachusetts health care reform law requires most residents age 18 and older to have health coverage that meets minimum creditable coverage (MCC) standards set by the Commonwealth Health Insurance Connector Authority. By January 31, 2010, all insurance carriers will issue 2009 1099-HC forms to qualifying subscribers residing in Massachusetts who were enrolled in a health insurance plan at any time during the 2009 calendar year. This form provides proof that individuals were enrolled in a health plan during 2009. Individuals will need to provide the 1099-HC information to their tax preparer for filing with their tax returns.

Massachusetts Data Security Law

In August 2009, the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) revised, for the second time, the Massachusetts data security law, implementing regulations and extended the compliance deadline, for the third time, to March 1, 2010. The law requires a company that owns or licenses personal information about a Massachusetts resident to notify the attorney general, the director of consumer affairs and business regulation, and the affected resident if it knows or has reason to know of (1) a breach of security, or (2) that the personal information of a resident was acquired or used by an unauthorized person or used for an unauthorized purpose. Personal information (PI) is defined as a resident’s first name and last name or first initial and last name in combination with any one or more of the following: (1) Social Security number; (2) driver’s license number or state-issued identification card number; or (3) financial account number, or credit or debit card number, with or without any required security code, access code, personal identification number, or password, that would permit access to a resident’s financial account.
As currently written, the data security regulations require companies that own or license PI to (1) maintain a comprehensive information security program that complies with the regulations; and (2) take all reasonable steps to verify that any third-party vendors with access to such PI are capable of maintaining appropriate security measures to protect the data, consistent with the regulations and applicable federal regulations. The regulations do not require a specific certification or separate agreement to address the Massachusetts data security law, provided that the parties have an agreement prior to March 1, 2010, which addresses protective data security measures.
As a service provider, Ipswich Bay Advisors is required to have a Business Associates Agreement in place with all of our clients. We had sent these out in the fall of 2009 to all of our clients.
Health Insurance Responsibility Disclosure Amendments

The Massachusetts Executive Office of Health and Human Services (EOHHS) has made several changes to the Health Insurance Responsibility Disclosure (HIRD) form, effective April 1, 2009. The HIRD form has been updated to eliminate information that the Division of Health Care Finance and Policy deemed unnecessary and added new questions regarding employer disclosures. Below is a brief summary of the changes to the HIRD requirements:

Employer HIRD forms are now due at the same time as the Fair Share Contribution filings. For some employers this means that they are limited to submitting one employer HIRD report per year. In designating whether an employer has 11 or more full-time employees, the determination is now based on quarterly payroll hours rather than annual payroll hours. Employers are required to report new information, including details about the employer’s full-time criteria and whether the employer collects employee HIRD forms from employees who decline to participate in the group health plan or Section 125 plan. Employers are required to collect signed employee HIRD forms if they have either 5,500 payroll hours in any quarter or 22,000 payroll hours in a year. If you have any questions about administration of the HIRD forms or need a copy of the revised form, please contact our office.