Column 59

Last week I discussed the "grandmothering"  law that provides employers with 50 or fewer employees the ability to renew their employer sponsored health insurance policy without requiring them to be comply with some of the new ACA provisions.  To be eligible the plan must be in effect as of December 31, 2013, and still in force as of July 7, 2014.  This is not a mandate for the carriers, but most are choosing to make the offer.

 

Anthem Blue Cross had announced modest premium increases for their plans.  Blue Shield of CA announced this week that PPO plans would likely have increases in the 9% range. For some groups this will be a relief over ACA compliant plan rates.  To be prepared to rate the alternatives, employers need to have dates of birth for every eligible dependent.  In the past we have used a four rate structure and rate bands that made it relatively easy to see the cost for dependents.  Now every individual insured is rated based on date of birth.

 

While many small employers pay the premium for the employee only, they allow the employee to purchase coverage for dependents.  Accurate rating is important as employers typically deduct the dependent premium from the employee's paycheck.  It's a good idea to start collecting birthdates from your employees if you will be offering dependent coverage.

 

It's also important that employers have a system for tracking employees' hours of service.  Although some implementation of the ACA is postponed, testing is going to be important.

 

As employers gear up to provide required notices about their health plans, it might be a good time to review the three affordability safe harbor provisions for employers. The Affordable Care Act considers a plan "affordable" if your employees' contributions are less than or equal to 9.5% of their household income. The safe harbors, which are optional, are available because employers will not always know their employees' household incomes. This presents a real challenge for employers who have to advise employees if their plan is "affordable" or not. Following is a summary of the safe harbors:.

  1. The Form W-2 Safe Harbor: This is based on the wages listed in Box 1 of an employee's W-2 form. As long as the employee's share of premium for the calendar year does not exceed 9.5% of wages, the plan is considered affordable  To be eligible, the employees' required contributions have to be consistent for the entire calendar year.
  2. The Rate of Pay Safe Harbor: This is based on hourly employees' rate of pay at the start of the health care coverage period, and it applies even if the employees' rate of pay decreased. To determine eligibility for this safe harbor, take an employee's lowest rate of pay for the month coverage began; multiply that rate by 130 (the number of hours it takes for an hourly employee to be full-time for a month's duration); and then determine affordability if the employee's contribution is equal to or lower than 9.5% of that month's wages.
  3. The Federal Poverty Line (FPL) Safe Harbor: Coverage is considered affordable under this safe harbor if an employee's contribution (for the year) doesn't exceed 9.5% of the federal poverty line for a single individual in that calendar year.  

 

Tidbits:

Covered California is gearing up for the next open enrollment period in the fall. This will be November 15, 2014 to February 15, 2014.  Enrollees are encouraged to set up online access to their accounts if they have not done so already.  I would add that it's a good idea to double check your online access to be sure it's working.

 

This will be critical for efficiently making any changes or uploading any information that may be required as part of the process.

 

In other Covered CA news, I had a reader call to say that they were unable to apply for their 2014 exemption now.  As of press time, I have not had time to verify and the reader did not leave any contact information.  I wonder if any other readers have attempted to apply for the penalty exemption.

Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies.