Column 20 Q and A


I heard the individual mandate was postponed? True?

Sort of.  New regulations have been announced that state that enrollment can be effective as late as May 1, 2014 and no penalty will be assessed.  This is a bit of a technicality since open enrollment ends March 31, 2014.  If you enrolled on that date and additional information was requested, you could possibly have to wait until May 1 for coverage to be effective.  This extension accounts for the administrative issues that could come into play and potentially provide a negative effect to the individual.  So, I guess you could say it was postponed.

Further we are told that Blue Shield will not be cancelling the Non-ACA compliant plans on 12/31/2013. We do            not have much detail as of my deadline.  The good news is that folks in those plans will be able to keep their provider networks.  The issue of deductibles will part of the decision process.  For example if I wait until spring to change my plan, but incur expenses in January, will I be credited with deductibles on the new plan?  If not, maybe I am better served to change for a January effective date.

Is it true that I can now carry over up to $500 from my Flexible Spending account?

Your Flexible Spending Account (FSA) is also known as a Section 125 or Cafeteria Plan.  This plan allows you to make salary deferral arrangements to pay unreimbursed medical expenses like deductibles and copays.  The new ruling allows plan sponsors to amend their section 125 cafeteria plans to permit "up to $500 of unused amounts remaining at the end of a plan year in a health FSA to be paid or reimbursed to plan participants for qualified medical expenses incurred during the following plan year, provided that the plan does not also incorporate the grace period rule." Further, the regulation states, "This carryover of up to $500 does not affect the maximum amount of salary reduction contributions that the participant is permitted to make.

The grace period rule, established in Notice 2005-42, allows a cafeteria plan to use amounts remaining from the previous year to pay qualified expenses for a period of up to two months and 15 days immediately following the end of the plan year.

Notice 2013-71 makes clear that whether to provide the carryover option is going to be at the discretion of the plan sponsor (employer). And, the Notice emphasizes that no FSA amounts may be "cashed out" or used for any other taxable or untaxable benefit, but instead maybe used only to "pay or reimburse certain section 213(d) medical expenses (excluding health insurance, long-term care services or insurance)."

I thought the President said if you liked your plan, you could keep it. But now I am reading that all these people are having their plans cancelled.  What is going on?

First, there is a status of plans called Grandfathered. These plans were issued before March 23, 2010.  Any plans issued before that date that did not experience a material benefit change are considered Grandfathered and will be available for an insured to keep regardless of whether the benefits meet the new Minimum Value Standards. 

However, if the plan was issued after that date, then it is Non-Grandfathered Plan and will likely not meet the new Minimum Value Standards or include all of the Essential Benefits.  So it must be cancelled.  However if the insurance company will continue to offer individual insurance, then they will "migrate" the individual to a new insurance plan that complies with the new rules.  Or if this plan does not suit the individual they can choose a different plan with the same carrier, enroll in a plan with a different insurer or the Exchange. 

Some insurance companies, such as Aetna have chosen to stop writing individual plans.  If the insurer has done so, then the individual has the same options previously stated. Further, if the plan does not have a contracted hospital within 15 miles of every location in the zip code, then they are not allowed to offer their restricted plan in that area at all.

*Information provided in this column is "to the best of my knowledge based on press deadline