On May 18, 2015 the Internal Revenue Service (IRS) released their inflation-adjusted Health Savings Account (HSA) contribution maximum limits alongside High Deductible Health Plans (HDHP) minimum deductible and out-of-pocket limits for 2016.

IRS Revenue Procedure 2015-30 (http://www.irs.gov/irb/2015-20_IRB/ar07.html) shows that 2016 individual HSA contribution maximum is the same as  the 2015 individual HSA contribution maximum, but the 2016 family HSA contribution maximum has increased by $100.  As usual, there was no change in the $1,000 amount for catch-up contributions for those 55 and older. 

If you have strategy or compliance questions on HSAs or FSAs, This email address is being protected from spambots. You need JavaScript enabled to view it. or call us at (303) 369-3200!  We’d love to help you take advantage of these great tools.

Since the implementation of the Affordable Care Act, experts have attempted to analyze the cost effects on American employers.  While broad generalizations cannot be made since results can vary by state and industry type, the largest differentiator seems to be group size.   Larger employers may tell you that the cost impacts have not hurt their businesses, however small employers report a drastically different perspective.  In summary:

• Small employers (50 employees or less) are already feeling the cost impact of the ACA
• Mid-size employers (50-99 employees) will most likely not see the impact until 2016, when the mandate begins requiring employers to provide coverage or pay a tax penalty for each uninsured employee beyond the first 30.   Many of these employers are already complying with many provisions of the mandate and may not see much of a cost impact.
• Large employers (99 employees or more) have seen very little effects since most are already in compliance.  The cost impact associated with the ACA is a small fraction of what they pay overall for employer-sponsored health insurance.

Although those large groups may not have yet seen a large cost impact, provisions such as the Cadillac tax in 2018 on the most generous health plans may cause some employers to re-evaluate their plans. If they haven’t felt the cost impact like smaller groups have, they most likely did experience some transitional headaches accompanying the need to change their benefit structure to be in compliance with the ACA.

To read more about why large groups are not feeling the pain associated with the costs of the Affordable Care Act, click on the following link: 

http://www.insurancejournal.com/news/national/2015/02/19/358049.htm

Small employers are exempt from the mandate, and could potentially drop group coverage without a financial penalty.  However, they also know that having a benefit package helps to attract and retain good employees.  They may find themselves weighing the need to attract a good workforce with the increasing costs of health insurance and the impact on their budget.

According to a 2014 survey conducted by Morgan Stanley, small groups in many states reported that their premiums increased substantially.  In Colorado, renewal premiums spiked by an average of 29% and many employers opted to “grandmother” their plans in order to delay the financial impact of the transition to ACA-compliant plans.

What makes this transition especially difficult for small employers that already have a tighter budget than larger companies, is that they could be faced with the difficult choice of dropping group coverage altogether or passing some of the cost increases to employees in the form of higher out-of-pocket costs or higher employee premium responsibility.   A subset of small employers, particularly in certain industries, is going as far as  reducing employee hours to limit their eligibility on the group plans.  A survey by the Society of Human Resources Management found that 1 in 5 small businesses are reducing workers’ hours to less than 30 hours per week, making them ineligible to participate in the group plan, but possibly eligible for subsidized coverage through the individual Exchanges. 

To read more about the effects of the ACA on small businesses, click on the following link:

www.ncpa.org/pub/st356

As the effects of the ACA continue to evolve in the coming years, Fall River is positioned to help our clients navigate each step of the way.  If you have any questions about the impact of the ACA on your business, This email address is being protected from spambots. You need JavaScript enabled to view it.!

The IRS recently releasedIRS Notice 2015-17 to give more guidance to small employers (less than 50 full time equivalents) who do not offer healthcare coverage, but do reimburse employees for the cost of their premiums when those employees purchase health care coverage on their own.

The IRS gave previous guidance that defined Employer Payment Plans in IRS Notice 2013-54, and indicated that a stand-alone plan that directly paid for or reimbursed employees for health insurance obtained elsewhere (including Medicare), would not be compliant with the Affordable Care Act, and would be subject to an excise tax (Section 4980D) of up to $100 per employee per day.  

What does Notice 2015-17 accomplish and whom does it affect?

1. Small Employers with an Employer Payment Plan will receive transition relief until July 1, 2015 from the Code 4980D Excise Tax, and from the responsibility to file Form 8928 (utilized to self-report violations and compute the penalty tax)
2. Transitional relief will ONLY apply to small employers who are defined as an employer who is NOT considered Applicable Large Employers (ALEs) and does NOT average more than 50 full-time employee (including full-time equivalent employees)
3. Transition relief will be extended to June 30, 2015. Beginning July 1, 2015, an employer who does not comply may be subject to the penalties

According to the Notice, “This relief does not extend to stand-alone HRAs or other arrangements to reimburse employees for medical expenses other than insurance premiums.” So, if your company has an arrangement where no group insurance is provided but actual out-of-pocket medical expenses are reimbursed, this plan should be discontinued immediately, and if needed, any violation after 1/1/2014 should be self reported.

Employers with Employer Payment Plans not currently in compliance with the market reforms should take the necessary steps now to bring their plans into compliance. 

In the past, many were under the belief that it was OK to reimburse for individual or Medicare Premiums as long as it was post tax.  Now, it’s clear this has changed, if the employer requires proof of purchase of coverage.  The IRS’s treatment of increases in employee compensation to assist with insurance cost is spelled out as follows:

• Employers who increase an employee’s taxable compensation and do not require that the additional compensation be used to purchase health insurance coverage do NOT create an Employer Payment Plan and are NOT considered to have a group health plan

• If an employer requires that an employee uses the increased compensation to purchase health coverage, this does create an Employer Payment Plan and is subject to the excise tax (Section 4980D), EVEN if the payment is taxable

Medicare premium reimbursement arrangements (for Medicare Part B or D) for active employees are considered an Employer Payment Plan, and they are subject to the ACA market reforms if they cover two or more active employees. Thus, such reimbursement arrangements are not allowed.  Employers wishing to encourage employees over 65 to move over to Medicare may wish to consider a taxable and unconditional increase in compensation for those who opt off of the group medical plan, especially if more than one employee is affected.

The Notice also provided guidance for the tax treatment of the health insurance premiums of S-Corporation owners as well as certain Medicare and TRICARE-related reimbursements.  See the Notice itself for more details. 

Here are our recommendations:

• Employers who have not been offering premium reimbursement plans need not take any action

• Small employers who have been paying directly or reimbursing premiums for individual insurance contracts must stop doing so no later than June 30, 2015, to avoid the possibility of an excise tax (Section 4980D)

• Employers who are paying Medicare premiums or reimbursement for more than one active employee should also cease this practice

• If the employer wishes to continue helping employees with the cost of coverage, payments conditioned on proof of coverage should be converted to unconditional and taxable compensation increases

• Employers with 50 or more Full Time Equivalent employees should immediately review any Employer Payment Plans to ensure they do not contain reimbursement for premiums and cease any pre- OR post-tax reimbursement practices they have in place

Disclaimer.  Please remember that the information we provide is not to be construed as legal advice. For further interpretation of how this topic specifically affects your group health plan, we always suggest checking with an ERISA attorney. 

Administering COBRA seems like it should be an easy, clear cut process and not terribly time consuming. However, there are several common mistakes that are made when administering COBRA that can cost an employer a substantial amount of money. If specific guidelines are not followed, the penalties and taxes for non-compliance exceed $100 per day per beneficiary! You could also become eligible for past and future medical claims for failure to properly provide coverage, so be sure you know the rules!

Are you making any of these five common COBRA mistakes? 

1.  Failing to include the right benefits under COBRA? 

Medical, prescription, dental, vision, hearing plans, Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and even some EAP plans are all eligible benefits under COBRA. 

2.  Not offering COBRA at all?  

Under ERISA, COBRA must be offered by ALL employers with 20 or more employees, with the exception only of churches and the federal government.  When a qualifying event causes a covered employee to lose coverage due to a reduction in the number of hours worked or the termination of employment for ANY reason other than gross misconduct, COBRA must be offered. 

3.  Not providing all required notices?

• Model General (or Initial) Notice – Revised in May 2014 to include coverage alternatives, in lieu of COBRA, that may be available through the ACA Marketplace 

Provides general information regarding COBRA and the plan procedures

Must be given to ALL new hires AND their qualified beneficiaries within 90 days of the benefits effective date – we recommend certified mail to the home addressed to all beneficiaries as well, rather than delivering to the employee alone

Must include plan name, address and phone number of a contact person for plan information

• COBRA Election Notice

Provides information for participants and beneficiaries about the rights and obligations under COBRA and specific qualifying events

Must contain contact information, description of the COBRA coverage, premium amount for each participant, procedure for making payment, how to elect or waive the coverage, the duration of the coverage and how coverage may be extended, etc.  

Notice must be sent to those with a qualifying event within 14 days – again, we recommend certified mail to the home addressed to all beneficiaries as well

• Notice of Unavailability of Group Health Coverage and Early Termination Notice –

Notice of unavailability must be provided within 14 days if COBRA continuation, or an extension of continuation, is denied 

An Early Termination Notice must be provided if for example the premiums are not paid on a timely basis, or if the employer drops the group health plan altogether

4.  Administering premium collection incorrectly?

• Qualified beneficiaries are allowed up to 60 days to choose to elect COBRA, and have another 45 days after the election to pay the initial premium
• The premium must not exceed 102% of regular premiums, or 150% during the additional 11 months of a disability extension
• There is a grace period of 30 days from the due date for each payment, which should be administered based on the postmark date of the premium if mailed, not the date of receipt by the employer
• If premium payment is made but is incorrect, the plan must notify the beneficiary of the deficiency and give ANOTHER 30 day grace period to pay the difference
• Premiums must be actuarially determined.  For fully insured plans, this is no problem as the actuaries at the insurance company have determined your premiums. But for self funded plans, or especially Health Reimbursement Arrangements, you may need an actuary to determine the right premium to charge your COBRA continuants. Fortunately Fall River clients have an actuary at their disposal – our CEO, Kristen Russell.
• A premium change notice must be sent within 30 days

5.  Not Maintaining Proper Documentation?

• Tracking who's eligible and who's not, who has received which notices, when the notices were sent, whether premiums are paid accurately and on time, and so on 

• Failure to prove delivery of the basic COBRA documentation by the stated deadlines could lead to taxes and penalties if audited

Stressed out yet?  Let us help.  We can review your COBRA processes with you to ensure you are in compliance, or help you outsource this cumbersome task.  Just give us a call at 303.369.3200 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Most people do not equate taxes with health insurance, but this is about to change beginning with the 2014 tax filing with the newly required Form 1095-A.

In our February 18th compliance webinar, we’ll talk about how you deal with the 1094 and 1095-B and -C requirements for employers, but in the meantime, employees are receiving 1095-A’s in their mailboxes and may be coming to you with questions.

The form is used for individuals who are enrolled in an individual health plan purchased through the Exchange Marketplace.  The main purpose of the form 1095-A is to help those individuals complete the Form 8962 (Premium Tax Credit).  This new form 8962 is required as part of your tax return if you received premium assistance through advanced tax credit, want to claim the premium tax credit when you file your taxes, or if coverage was NOT obtained to determine exemptions and any applicable penalties.  

Form 1095-A details the people in the household who were enrolled on the medical plan, the number of months covered under the plan(s) sold through the Marketplace, the amount paid in monthly premiums, and how much advance tax credit was applied toward the health plan. 

If any of your employees obtained health coverage through the Marketplace in 2014, they should receive Form 1095-A in the mail by January 31, 2015.  If they had coverage and do not receive the form, an electronic copy is available in the My Documents section of their Connect for Health Colorado online account. 

If any of your employees have lost their Form 1095, or want a new paper copy for any reason, they may call the Connect for Health Colorado Service Center at 1-855-PLANS-4-YOU (855-752-6749) to request a new copy.  Please be advised that a new copy can take up to 15 days to arrive, so any copies requested after April 1 are not guaranteed to arrive by April 15.

Just This email address is being protected from spambots. You need JavaScript enabled to view it. if you have any further questions about the 1095-A forms arriving now.

Many employers have calendar year Flexible Spending Account (FSA) plans even if their benefits renew in a different month.  Just a reminder this time of year – you may need to amend your FSA plan document as your plan anniversary approaches.  Here are three reasons you may need to make a change:

• You want to take advantage of the inflation indexing on the Healthcare FSA.  Beginning January 1, 2015, the annual allowable dollar limit for employee contributions for Healthcare Flexible Spending Accounts (FSAs) will increase $50 to $2,550. Plan sponsors are not required to adopt the new limit; however, for those employers-sponsored plan who will offer the increase an amendment to the Section 125 plan document will be needed. 
• You want to take advantage of the $500 Rollover Provision.  Last year the Treasury Department and the IRS modified the “use-it or lose-it” rule for the FSA. Plan participants are now allowed to carryover up to $500 of their unused balances into the next plan year. If you didn’t take advantage of this last year, you may wish to amend your plan document this year to do so. 
• You want to add a grace period.  If you are not using the $500 Rollover, you may add a Grace Period.  This allows employees to incur additional expenses during the first 2 ½ months of the next plan year to spend any unused funds from the current plan year. This is in addition to the “run out” period that all plans have to submit receipts after the expenses are incurred.

Keep in mind that plans cannot offer both a grace period and the $500 rollover at the same time. It must be one or the other. The only time that both would ever apply would be if an employer-sponsored plan had the Healthcare FSA set up as a rollover option, but with a grace period  on the Dependent Care Assistance Program (DCAP).   

Whichever option you choose, be sure to amend your Section 125/FSA plan document! 

When a group insurance policy is obtained, your insurance broker is paid a commission on each line of coverage.  But did you know that there is a law that requires a broker to disclose the total amount of compensation they receive from your insurance carriers? 

In 2009 a Colorado state law was established requiring insurance brokers to notify their clients about the standard compensation earned from the policies that make up their employee benefits package. Standard Compensation includes a flat dollar amount or percentage commission the insurance company pays the broker for selling their insurance policy.  

• This type of compensation MUST be disclosed after a new policy is selected by the client and coverage begins
• A disclosure notification must be mailed, hand delivered by the broker or emailed to the client
• The broker will keep a copy of the disclosure for the current calendar year and two years prior

Standard compensation does not include renewal commissions. Disclosures are only required at new sale or upon moving to a new carrier. Fall River sends a Commission Disclosure to all of our clients every single year, exceeding the transparency required by the law.  If your broker is not disclosing commissions at all, we encourage you to ask him or her for more information. 

There is another type of compensation that does not have to be disclosed. This is contingent compensation, which carriers pay based on the overall size or retention rate of a broker’s book of business. For many brokers, especially large firms where bonuses are a much higher portion of revenue, this type of compensation can comprise a significant portion of the broker’s income.  For some firms, this additional revenue appears to be a driving force to recommend certain carriers over others.

Fall River always puts the client’s needs first and considers the carrier that fits our client’s goals the best, regardless of any bonuses we might receive.  Our number one value is integrity, and our commission will never take priority over our client’s best interest.  Our number one value is integrity, and our commission will never take priority over our client’s best interest.

HIPAA first went into place in 1996, with the early Privacy and Security Rules going into place in 2003.  Since then, many more facets have been added, with the latest major addition going into effect September 23, 2013.  Test your knowledge on this critical employer law. 

1.What exactly does the HIPAA acronym stand for?

a. Health Identification Privacy and Affordability Act

b. Health Information Portability and Affordability Act

c. Health Insurance Portability and Accountability Act

d. Health Information Privacy and Accountability Act

2.What kind of Protected Health Information (PHI) is protected by the HIPAA privacy rule?

a. Paper 

b. Electronic 

c. The spoken word 

d. All of the above 

3.Which types of employers must have a Business Associate Agreement (BAA) in place directly with their broker in order to share PHI, based on the newest HIPAA rules that went into effect 9/23/2013?

a. All employers  must have a BAA in place with their broker.

b. Only self funded employers.

c. Only fully insured employers.

d. All employers with 100 or more employees on their health plan.

4.You handed a preliminary health insurance census to a prospective broker to quote options and you included a number of extra fields like social security number and basic medical diagnoses just in case those are needed.  Which of the following HIPAA guidelines could you be violating (choose all possible responses)?

a. Administrative safeguards

b. De-identified health information

c. Minimum necessary standard

d. Document retention guidelines

5.The establishment of computer passwords and firewalls would fall under which type of safeguard required by the Security Rule of HIPAA?

a. Electronic

b. Physical

c. Administrative

d. Technical

6.Which of the following is NOT a requirement for computer security?

a. Computers must be password protected.

b. Computer must be secured to desk with an anti-theft device.

c. PHI can't be sent in the body of an unencrypted email; it has to be sent as a password-protected attachment.

d. Computer monitors displaying PHI must face away from the public or have a privacy screen.

For more info on HIPAA, click here for a complimentary assessment of your current practices, or here to read another article we published on the top 5 most common HIPAA mistakes. Meanwhile, the answers to the above questions are: 1-c, 2-d, 3-a, 4- b and c, 5-d, 6-b.

During open enrollment, employees tend to ask a lot of questions about the benefits and their options. Now that the exchange plans are available in the Individual Marketplace, employees will naturally have questions about the plans available and if they can move their coverage or their dependents’ coverage to save money. 

There are a few things to be aware of when providing the employee with information about the marketplace. 

• The open enrollment period for Connect for Health Colorado is November 15, 2014 to February 15, 2015 for coverage that begins January 1, 2015. 
• Since coverage is now guaranteed issue, enrollment is ONLY allowed during this open enrollment period OR when an individual has a qualifying event (QE).
• QEs create a 60 day Special Enrollment Period (SEP) when individuals and families have the right to sign up for coverage. 

What constitutes a Qualifying Event (QE) on the exchange? 

• Birth, adoption or placement for adoption of a child
• Change in Marital Status due to marriage, death of spouse, divorce, legal separation or annulment
• Moving to Colorado
• Change in citizenship or incarceration status
• Involuntary loss of health coverage (loss of job-based coverage, COBRA expiration, aging of parent’s plan, loss of student coverage, losing eligibility for Medicaid or CHIP)
• Voluntarily ending of employer coverage if and only if that coverage qualifies as a minimum essential coverage, AND the ending of coverage is at the employer’s open enrollment effective date. Note that if the employee is opting out of “affordable” coverage, they will not be eligible for a tax credit on the exchange.

These rules can be complex and employees may have questions beyond what you can answer.  This email address is being protected from spambots. You need JavaScript enabled to view it.

Tired of wellness programs that only get the healthy employees to participate? Want to create truly motivating incentives without breaking the bank? 

We highly recommend outcome-based wellness programs that incent individuals to actually achieve health standards such as losing weight or quitting smoking. 

Many wellness programs fail because they don’t drive enough participation, usually attracting the participation only of those who are already healthy and engaged.  Real cost reductions, however, result only from behavior change. 

The HIPAA Non-Discrimination in Wellness regulations enable you to use a theoretically unlimited financial incentive to incent participation in programs such as health risk assessments, biometric screenings, and group challenges. There are some limits due to ADA – see us if you’re not sure how to implement these.  The same HIPAA regulations, recently beefed up by the Affordable Care Act, allow outcome-based incentives (ie the member has to actually achieve a health status) equal to up to 30% of premium, or up to 50% to prevent or reduce tobacco use. 

Want to know how to take advantage of these types of incentives while ensuring employee privacy and staying within the limits of the law? Want help finding the money for these types of incentives?

We offer a complimentary Fall River Wellness Best Practice Review to identify whether your current wellness program is taking advantage of industry leading practices and compliant with Federal regulations. This email address is being protected from spambots. You need JavaScript enabled to view it. or call us today to see how your wellness program stacks up!