While most employers are busy figuring out the Affordable Care Act (ACA) Employer Mandate and the 2015 ACA reporting requirements, there’s an important tax coming down the road in 2018 to plan for now.

The “Cadillac Tax” is a 40% excise tax applied to any plan whose premiums exceed certain thresholds in 2018.  (Add click here to read more link)  The intention of this section of the ACA is that extremely rich healthcare plans contribute to unnecessary utilization, and thus are being discouraged.  The premium limits are $10,200 for single coverage and $27,500 for family coverage, which sound like enormous amounts.  

But, if you take your monthly premiums this year, and project them 3 years down the road, you’d be shocked at how close you may already be to facing this huge excise tax.  If your premiums today exceed about $640 single or $1,725 family, your plan is already on pace to being a Cadillac plan (assuming 10% healthcare trend).

If you’re in the danger zone, please give us a call at (303) 369-3200 or This email address is being protected from spambots. You need JavaScript enabled to view it. to get some ideas of how to head off this damaging excise tax before it arrives!

Are your health plans compliant with the Affordable Care Act (ACA)?  If you are a small employer that has put off making the switch and have kept your non-compliant plans under “transition relief,” also known as “Grandmothering,” this grace period has come to an end and your next renewal will be onto an ACA compliant plan.

The Colorado Division of Insurance (DOI) announced on March 13th, 2015 that Individual and Small Group plans not considered to be ACA-compliant will not be allowed to continue into 2016.  Insurance companies will no longer offer non-compliant plans during your 2015 renewal, and you’ll need to choose new plans that are ACA-compliant.  The only exception is if you have grandfathered plans and are not yet subject to this provision of the Affordable Care Act.

Fall River will be reaching out to all of our small group clients with Grandmothered plans to help them convert to ACA-compliant plans by the end of 2015. 

More History.  In March 2014, President Obama announced the transition relief provision that allowed the states to choose whether to allow the continuation of non-compliant plans for two more years.  In May of 2014, Colorado chose to allow non-compliant plans in late 2014, into 2015, to allow individuals and small groups more time to prepare for the transition.  At the time the Insurance Commissioner, Marguerite Salazar, felt that employers, carriers, and consumers would benefit from having additional time to prepare for the new ACA plan requirements.  However this year she stated that in her opinion all involved have had time to get ready and that it was time to implement the ACA-compliant plans. The recent decision does impact a few hundred thousand people in Colorado that are in either insured under Individual or Small Group plans that are not yet ACA-compliant.  

What happens next?  Insurance carriers will notify the individuals and small employers covered under non-compliant plans of their discontinuation in 2015.  The notice of termination should be provided at least 90 days before the termination of the plan.  Companies will be provided with information about alternate ACA-compliant plans for consideration upon renewal.  For Individuals losing their non-compliant plan, the loss of their existing coverage is considered a qualifying event to take advantage of the special enrollment period to select new coverage on the Exchange or directly through the carrier.

Small Business Renewal Dates.  Many small companies (2-50 employees) moved their renewal date to the very end of the year to delay the impact of the ACA-compliant plans as long as possible.  However, so many renewals are now in the last quarter of the year that it’s hard to get the carriers’ attention.  If your business ideally does not want to have a renewal date in November or December, you may wish to consider moving your renewal date in 2015 or 2016, if your carrier allows it.  We can help you evaluate whether this would be the right strategy for us – just This email address is being protected from spambots. You need JavaScript enabled to view it. or give us a call!  

Are you paying more and more for worse benefits? While some aspects of rising healthcare costs are driven by factors outside our control, there are MANY factors within our control, even for smaller employers.  The problem is that the strategies used by many brokers aren’t sustainable.

Learn how employers of all sizes can manage their health care costs down, by taking an out-of the box approach in multiple areas. Register now for our webinar on Tuesday, May 19th, to start taking charge of the cost factors you CAN control.

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. 

In a much watched case, the Supreme Court heard arguments yesterday about a provision that could eliminate the Affordable Care Act (ACA) individual market premium assistance, depending on how it is interpreted by the Court.  This would affect the roughly 70% of states who have not established their own exchange; please note that Colorado is NOT one of the states affected. The provision relates to language in the ACA that indicates subsidies for low-income individuals are available on “Exchanges established by the states.”  The debate is between a literal reading of that language, or looking at the larger context of what Congress intended.

A ruling is not expected until late June, but expert opinion appears to be leaning slightly in favor of predictions that the Supreme Court will uphold the subsidies as currently implemented.  If it goes the other way, an estimated 7.5 million Americans in those states who did not choose to set up their own Exchange will lose access to subsidized coverage.  If too many of them choose to not purchase coverage as a result, it will likely raise premiums for those remaining, and may destabilize the individual insurance marketplaces in those states.

Keep in mind there is NO impact on insurance in Colorado, regardless of the outcome of the case.

An employee survey can give you some great insight into what employees think about your current benefit package, but could you also be setting yourself up for negative responses and backlash?  There are both pros and cons of asking your employees to complete a benefit survey.

One of the best reasons to do a survey is to gauge your employees’ satisfaction level with the current benefit package offered at the company.  Are there benefits that are glaringly missing in your package that would increase their satisfaction?  Are there benefits being offered that are not important to employees and possibly being underutilized?  You can even have your employees rank the separate benefits in the order of importance to them.  

If you are a smaller group or fully insured, an employee survey may be the only way to find out what your medical utilization is on your plans.  You can ask employees to answer questions about whether they met their deductible or out-of-pocket maximum that year.  You can ask how many times they go to the doctor for preventive care visits or for illness.  You can also ask how many prescriptions they fill in a month and what the average cost of those medications is.  This information can then be used to target certain plan features that may better fit the needs of your population.

If you are thinking about implementing a wellness program, you can also find out what type of services and programs your employees might value most.

One of the drawbacks of doing a survey is that if you ask what employees want, it may create an expectation that they will get what they ask for.  If the budget is tight that year and the requested benefits can’t be offered, there may be some dissatisfaction over that decision.  One way to solve this is to ask them to rank priorities or pose a tradeoff of what they would be willing to give up to get something else that is more important to them. If you ask about their personal plan utilization, you might receive a little grumbling.  We recommend three ways to cope with that:

  1.  Explain the reasons you are asking for personal info;

  2.  Stress that the survey is anonymous; and

  3.  Emphasize that you as the employer care about their benefits package and want to make sure the plans are meeting their needs.

Fall River offers employee surveys to our clients as part of our pre-renewal planning.  If a company is unsure about their next steps in the benefits arena, a survey can give valuable information about carrier or plan changes that need to be made, employer contribution changes to consider, and benefits that should be added or done away with.  We will often do a survey for our new clients, which many times reveal problems that have not been addressed in the past.  Companies can sometimes uncover areas of spending on one item that could be better spent on a benefit that employees value much more.  

In our experience, the risk of doing an employee survey is usually outweighed by the beneficial information you receive.  Feel free to This email address is being protected from spambots. You need JavaScript enabled to view it. for more ideas and suggestions on making a survey work for your group!

It's almost 2015.  Is your benefit compliance game plan ready? 

We'll help you create the plan you need to ensure you are ready for the coming year:

• What you need to do in 2015 to meet ACA requirements and deadlines;
• An overview of what all private employers MUST do to comply with ERISA; and 
• The most common mistakes employers make on Section 125 plans.

Join us on Wednesday, December 17th, from 10-11 am to learn the latest up-to-date information. Register now to get your game plan in place!

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.

Employers who have non-calendar year plans have had challenges in the past when employees wanted to enroll in the Exchange Marketplace, but have already made a pre-tax election to take the employer’s health plan which binds them for the entire plan year.  This problem has been eliminated with a recent joint guidance, Notice 2014-55, issued by the Treasury and the IRS September 18, 2014.

Employers may now allow an employee to drop coverage in the middle of the plan year if it coincides with the annual open enrollment period of the Exchange Marketplace, and if the employee replaces their employer coverage with a Marketplace policy beginning the day after the employer coverage ends.

For example, an employer with a July 1 anniversary generally requires all employees to be enrolled until June 30 under their pre-tax election, barring a qualifying event.  Because the new rule expands the list of qualifying events, employees may be permitted to drop their employer coverage enroll in the marketplace coverage anytime during the open enrollment period of November 15 to February 15.  This employee could be allowed to have an effective date anywhere from January 1 to March 1, and can drop their employer coverage effective the day before their Marketplace policy begins.

The notice indicates that “A cafeteria plan may rely on the reasonable representation of an employee who has an enrollment opportunity for a Qualified Health Plan through a Marketplace that the employee and related individuals have enrolled or intend to enroll in a Qualified Health Plan for new coverage that is effective beginning no later than the day immediately following the last day of the original coverage that is revoked.” This means you don’t have to personally verify the enrollment but can simply accept a statement (we suggest this be in writing) from your employee.

The cafeteria plan must be amended to allow for these types of election changes, no later than the last day of the plan year during which these new elections are to be allowed.  This will allow Marketplace elections retroactively back to the first day of that same plan year as long as all participants are notified of the amendment. If you plan to allow employees to move to the Marketplace during the 2015 open enrollment period, be sure to amend your Section 125 plan prior to the last day of your plan year in 2015.

If you aren’t sure whether you have a Section 125 plan document at all, please This email address is being protected from spambots. You need JavaScript enabled to view it. so we can help you get in compliance!