COBRA and the ACA: Compatible or Irreconcilable?

Several key provisions of the Affordable Care Act (ACA) have now been delayed. When the ACA has fully achieved lift off, what will become of COBRA?

 

The simple answer is that COBRA will continue to fly, until and unless another law permanently grounds it. Here are some observations around the interplay between the ACA and COBRA:

• The ACA likes COBRA. Parts of the ACA looked to COBRA concepts as the gold standard for calculations. Case in point is W-2 reporting of health care coverage in IRS Notice 2012-09. More recently, the DOL thought COBRA was important enough to update the Model Election Notice when it released the Exchange Notice. Click here for our article.
• The DOL likes COBRA. Look at this DOL FAQ, which states that the ACA “did not eliminate COBRA or change the COBRA rules.” making it clear that COBRA is not going away. And take a gander at this lengthy 25-year proclamation by the DOL from 2011.
• COBRA fills some ACA gaps. Granted, the Health Insurance Marketplace will provide COBRA qualified beneficiaries with some alternatives for medical coverage. In some cases, the alternatives may be cheaper, but that is not certain. Also, understand that stand-alone dental, vision, prescription drugs are not required to be offered in the marketplace. Neither are flexible benefits like HRAs and Health FSAs. COBRA offers these benefits to the extent that they are employer-sponsored coverage.
• To some extent, the marketplace likes COBRA. To some extent, the Marketplace coordinates with COBRA. For example, take your most common reason for termination of COBRA: premium non-payment. If a qualified beneficiary loses coverage because of non-payment, this person is not entitled to a special enrollment period for Marketplace coverage and must wait until the annual enrollment period. Another thing to consider is when the Marketplace opens in 2014, small employers can obtain Marketplace coverage through the Small Business Health Options Program (SHOP). This coverage would be subject to COBRA because it is employer-sponsored coverage.

 

This is COBRA’s current status: a valid law. The ACA did not change COBRA, as the DOL has pointed out.

 

COBRA and the ACA: Compatible or Irreconcilable? | Infinisource Newsroom

Health Care Reform & Group Imposed Waiting Periods for group insurance coverage

The Patient Protection and Affordable Care Act (PPACA) provides that for plan years beginning on or after Jan. 1, 2014, a group health plan or health insurance issuer offering group health insurance coverage shall not apply any waiting period that exceeds 90 days. A waiting period is defined by the Public Health Service Act as a “period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective.”

An employer whose waiting period exceeds 90 days may be subject to penalties under Code 4980H, beginning in 2014, for every month the employer does not offer coverage if any employee obtains coverage through an exchange and is eligible for a premium tax subsidy.

Some employer plans provide that employees will become eligible for insurance coverage on the first of the month after 90 days (or longer). IRS guidance indicates that this plan design is not acceptable as it would typically exceed the 90-day limit. In these circumstances, employers would need to change their eligibility to the first of the month after 60 days or any other shorter waiting period that does not exceed 90 days to avoid penalties.

Employer mandate delay, minimum value, out-of-pocket maximum cost sharing: Is there a connection?

Recent headlines from certain news outlets are leading some to think that the out-of-pocket maximum and minimum value plan certification parts of the Affordable Care Act (ACA, or health care reform law) have been delayed until 2015. This is not true. The delay is for combining a shared out-of-pocket maximum for plans that have “multiple service providers” (like a separate pharmacy benefits manager). Medical plans, new and renewing January 1, 2014, and later do need to have out-of-pocket maximums that are not more than $6,350 for single coverage and $12,700 for coverage of spouse or family. Our plans and systems are being updated so that cost shares do not go over the out-of-pocket maximum.

To help sort out the facts from fiction, read this fact sheet that tells what the link is among the employer mandate, the parts that were delayed, the minimum value plan certification requirement and the out-of-pocket maximum cost sharing rule.

Article Courtesy:  Anthem BCBS

A Limit on Consumer Costs is Delayed in Health Care Law

New York Times
WASHINGTON - In another setback for President Obama's health care initiative, the administration has delayed until 2015 a significant consumer protection in the law that limits how much people may have to spend on their own health care.

The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014.

The grace period has been outlined on the Labor Department's Web site since February, but was obscured in a maze of legal and bureaucratic language that went largely unnoticed. When asked in recent days about the language - which appeared as an answer to one of 137 "frequently asked questions about Affordable Care Act implementation" - department officials confirmed the policy.

PCORI Fees & HRA's

Plan sponsors with calendar-year HRA plans must remit PCORI fees applicable for the 2012 plan year by July 31, 2013. 

For the July 1, 2013 payment deadline the fee is $1.00 per HRA-covered employee (dependents excluded).  Fees for plan years ending before 1/1/2013 are due by 7/31/2013.  If a plan ends after 1/1/2013 and before 10/1/2013, the fee is still $1.00, but not payable until 7/31/2014.

The Regulations indicate that the reporting and payment of PCORI fees cannot be delegated to your HRA TPA. The fees should be reported on Form 720 (Quarterly Federal Exercise Tax Return Form).

Please review the attached Health Care Reform Hot Topic for more information.

U.S. relaxes health law income - Health markets to employ honor system

As reported by the Washington Post:

The Obama administration announced Friday that it would significantly scale back the health law's requirements that new insurance marketplaces verify consumers' income and health insurance status.
Instead, the federal government will rely more heavily on consumers' self-reported information until 2015, when it plans to have stronger verification systems in place.

The delay comes after a Tuesday announcement that the federal government would postpone for one year a requirement that employers with 50 or more full-time workers provide health coverage.

"I think that Health and Human Services is doing the best that it can under the circumstances," said Sara Rosenbaum, a health policy professor at George Washington University.

The verification systems are meant to determine who qualifies for new benefits under the Affordable Care Act. The law includes tax subsidies to purchase health insurance for Americans who earn less than 400 percent of the poverty line, about $45,000 for an individual.

Those earning less than 133 percent of the poverty line - about $15,000 - will qualify for Medicaid coverage in the District and 23 states that have decided to expand the program.

The federal government also needs to know who receives health insurance coverage from an employer. Consumers who receive affordable health insurance from their company under a policy that costs less than 9.5 percent of their income do not qualify for tax credits under the Affordable Care Act.

Employer Mandate Delayed Until 2015

Bloomberg: Health-Law Employer Mandate Said to Be Delayed to 2015
Businesses won't be penalized next year if they don't provide workers health insurance after the Obama administration decided to delay a key requirement under its health-care law, two administration officials said. The decision will come in regulatory guidance to be issued later this week. It addresses vehement complaints from employer groups about the administrative burden of reporting requirements, though it may also affect coverage provided to some workers (Dorning and Wayne, 7/2).

The Washington Post: White House Delays Employer Mandate Requirement Until 2015  The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced Tuesday. Instead, it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015 (Kliff, 7/2).

What’s not changing as a result of these delays:

• The Exchanges/Marketplaces
• The individual mandate
• Individuals’ access to premium tax credits
• Any other PPACA provision

Here is the announcement by the Treasury Department made on 7/2/2013: http://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACA-in-a-Careful-Thoughtful-Manner-.aspx.

Please review the attached Health Care Reform Hot Topic for more information.