New Rule Aimed at Market Stabilization

The Trump administration has published a new proposed rule aimed at stabilizing the individual insurance market. This coincides with NAHU’s emphasis on the critical need to stabilize the individual insurance market.

Critics will say that the rule doesn’t do enough. However, the rule advises that this first step is one of several that will be taken.

One of the provisions calls for individuals to verify that they qualify for a Special Enrollment Period (SEP). Anyone applying for new coverage will be required to provide verification of their SEP beginning in June 2017. Coverage will be pended awaiting verification.  The administration estimates that this may impact as many as 650,000 individuals.

The proposal would also require that SEP enrollment due to marriage would require that one of the spouses had minimum essential coverage prior to filing for coverage via SEP. The proposal would also limit changes in metal levels – the richness of the plan – for SEP-related changes.

Comments are due by March 7, 2017.

The rule can be reviewed here.

Marketplace Appeals — The Results

At the risk of sounding like Nick Cannon on the television show  America’s Got Talent when they’re announcing performers advancing to the next round of competition, employers are beginning to see the results of appeals that they’ve filed when employees receive subsidies in the marketplace. Employers are finding some of these appeal decisions perplexing, especially when an appeal is denied. And, some employers fear that penalties will follow as a result of the lost appeal.

First, and of most importance, the marketplace appeal does not determine if an employer has to pay an employer shared responsibility penalty to the IRS. This point is made clear on both the appeals form and on the webpage that addresses employer appeals.

Second, an appeal that is denied may be due to the particular facts and circumstances of the employee and his/her family. In particular, even though an employer may have offered coverage that meets the minimum value and affordability safe harbors, the measure of affordability at the marketplace is based on household income. Household income may be quite different from an employee’s W-2 income. The marketplace’s decision regarding an employer’s appeal will not reveal personal and income information of the employee subject to the appeal.

The appeal decision letter explains that the marketplace will not consider whether an employee is a full-time employee or whether the employer employs 50 or more full-time employees and is subject to the employer shared responsibility payments. The reasoning cited in the letter is that “neither of these issues affect the employee’s eligibility for advance payments of the premium tax credit and cost-sharing reductions (if applicable).

Another employer found that the information which the employer sent to support their appeal did not go far enough. The employer submitted proof that the employer had offered coverage to the employee that met minimum value and was affordable. The hearing officer wanted proof of this offer in the form of the employee’s response to the offer. Employers that have been reluctant to require that employees sign waivers when they decline coverage may decide to require signed waivers or take other steps that can buttress the fact that an offer was made and rejected.

A review of several decision letters finds that decisions often cite “insufficient information” as the basis for the decision to reject the appeal. Employers may want to develop a checklist of materials that they will provide to ensure that appeals are not lost for want of more information.

Still other employers have received a letter while an appeal is under review that asks for more information to support the appeal. The types of information requested and documents that may contain the requisite information are shown below in a table copied from a letter asking for more information.

appeal-documents

While marketplace appeal decisions are not triggers for IRS penalties, a successful marketplace appeal may be helpful if the IRS does attempt to penalize an employer. The successful appeal would be another piece of information for an employer to include in the IRS appeal’s process. And, whether an appeal is successful at the marketplace level, or not, an employer will have already collected information that would be required to appeal an IRS penalty determination should one be received.

 

 

 

 

“To Fee or Not to Fee” — Considerations and Concerns

Brokers have been buffeted by the myriad changes occurring at record pace over these past few years. The Affordable Care Act (ACA) has had a dramatic impact on the types of health insurance products available, the scope of benefits offered and how brokers are compensated for the valuable services they provide.

Many brokers have transformed their practices with an emphasis on becoming a consultant to their clients – individual and group. As a consultant, brokers are expanding the scope of the traditional sales-related assistance.

Recent guidance from CMS clarified that brokers can charge fees in the Federal marketplace for the extra value that they are providing to clients. The guidance, in the form of a Q& A, establishes that brokers must clearly disclose the amount and reason for a fee while also informing consumers that they can apply for coverage on their own without a fee through Healthcare.gov. Here is the full-text of the guidance.

A broker wishing to establish a fee-based practice must consider a number of other factors before implementing this change. Chief among these is whether state law allows a broker to charge a fee, the rules surrounding the charging of fees and whether a separate consulting license is required. NAHU has compiled a chart that provides some information on a state-by-state basis regarding relevant state laws. It is recommended that a broker verify whether fees may be charged and any related requirements through their insurance commissioner before taking steps.

Why are some brokers considering fee-based practices? Some are adding valuable services that exceed the selection and placement of insurance coverage. Others see a fee-based business as a reaction to changing commission structures, providing more predictability to revenue streams.

Determining how much to charge and what the scope of services the fee will purchase isn’t easy. For many consultants, fee setting is one of the more difficult decisions to make. Then, becoming accustomed to discussing fees and services with clients is another hurdle. Some considerations for fee setting, if allowed by law, include:

  • Fees plus commission on commissionable products
  • Fees only on non-commissionable products
  • Reflection of hours worked
  • Past revenue basis
  • Increased revenue basis
  • Loss leader
    • Nominal fee
    • Profits made in follow-on sales of products or services.

“To fee or not to fee” is a decision that can’t be made lightly and it must be made after reflection and planning. For products where commissions have been the practice, one must be able to make the case to the consumer that the services provided exceed those of the other brokers who have maintained a traditional commission-based practice.

CMS Acts on Documentation for Special Enrollment Periods (SEPs)

In an effort to stabilize the individual insurance marketplaces and improve the risk pool CMS has rolled out a new Special Enrollment Verification process. Individuals who assert that they have qualified for one of five Special Enrollment Periods (SEPs) will be sent a Marketplace Eligibility Determination Notice requesting documentation to support their eligibility for the SEP.

The five SEPs that will trigger the Marketplace Eligibility Determination Notice are:

  1. Loss of minimum essential coverage
  2. Change in primary place of living
  3. Birth
  4. Adoption, placement for adoption, placement for foster care, or child support or other court order
  5. Marriage.

The Marketplace Eligibility Determination Notice will be tailored to the specific circumstances of each individual applying for coverage. The notice will provide the list of acceptable documents to prove an individual’s eligibility for the SEP.

After the person has enrolled in coverage and sent in the proof for the SEP, no further action is required. Coverage will be considered confirmed unless there is an additional contact from the exchange.

The fastest method to provide documents to prove eligibility is by uploading them. The notice includes instructions on how to upload a document. Alternatively, documents can be mailed to the processing center with a bar code page that is included with the notice.

Examples of documents that support eligibility for an SEP include:

Loss of minimum essential coverage

  • Letter from an employer stating that the employer dropped coverage for the employee, including the date coverage ended or will end
  • Letter or other document from an employer stating that the employer stopped or will stop contributing to the cost of coverage
  • Letter showing an employer’s offer of COBRA coverage

Place of Living

  • Lease or rental agreement
  • Mortgage or rental payment receipt
  • Utility bill

Marriage

  • Marriage certificate showing the date of the marriage
  • An official public record of the marriage, including a foreign record of marriage
  • A religious document that recognizes the marriage

Birth

  •  Birth certificate or application for a birth certificate for the child
  • Application for a Social Security Number (SSN) for the child
  • Medical record from a medical provider showing the date of birth

Adoption

  • Court order showing effective date of the order
  • Adoption letter or record showing the date of adoption dated and signed by a court official
  • Government-issued or legal document showing the date legal guardianship was established.

Depending on the SEP reason, the types of documents that can be used for verification purposes are more expansive than the few listed in this article.  More information is available on the CMS notices webpage. Click here to go to the notices page. Then scroll down to “Eligibility Notice” and click on the “English” link that appears below “Special Enrollment Periods (2016 coverage) (June 2016).”

Spring to Sprout Flowers and Appeals!

Flowers may be welcome signs of spring, but a sign that spring is here that may be less welcome is the implementation of the marketplace appeals process for employers. Beginning in 2016, the federally facilitated marketplace (FFM) will send notices to employers if an employee receives APTC and the employee has identified their employer in their application for coverage.

Section 1411 of the ACA requires exchanges to notify employers that an employee has qualified for a premium tax credit for individual coverage through the marketplace. The notice will allow an employer to provide information that the employer has offered coverage to an individual that meets the requirements of the ACA.

Generally, if an employee has an offer of coverage that meets the minimum value and affordability requirements, the employee is not eligible for a subsidy in the exchange. There will be instances in which an employee, nonetheless, could be determined eligible for premium tax credits generally based on household income. But, in many other cases employees could seek exchange coverage because of a misunderstanding of the employer offer of coverage or of the eligibility requirements for APTCs.

The notices will be phased in. Notices will be sent only if the employee received APTC for at least one (1) month in 2016. Each notice will identify the specific employee but will not contain an employee’s personal health information or federal tax information.

An employer will have 90 days to appeal the employer notice. An employer appeal request form can be found at https://www.healthcare.gov/marketplace-appeals/employer-appeals/ . The appeals notice is also used for these state-based marketplaces:

  • California
  • Colorado
  • District of Columbia
  • Maryland
  • Massachusetts
  • New York
  • Vermont.

The appeal will allow the employer to claim that the employer has offered the employee coverage that meets the affordability and minimum value requirements. The employer would also indicate whether the employee is already enrolled in the employer’s coverage.

Employers may designate a secondary contact to help with an appeal. The secondary contact may act on the employer’s behalf including communicating directly with the Marketplace Appeals Center.

A successful employer appeal will result in the employee receiving a notice from the FFM instructing the individual to update their marketplace application. The notice will explain the possible tax consequences that the individual may face if they fail to take action.

The FFM notice and employer appeal, in and of itself, will not be used to determine whether an employer will face a penalty for the employer shared responsibility provisions. The IRS is expected to rely on the information that is being submitted when an employer files the Form 1094-C and Form 1095-C.

Appeals will be filed to the following address or fax:

Health Insurance Marketplace

Department of Health and Human Services

465 Industrial Blvd.

London, KY  40750-0061

An appeal request may also be faxed to a secure fax line: 1-877-369-0129.

Once an appeal has been filed, a notice will be sent acknowledging receipt of the appeal. The employee will also receive a notice that an appeal has been filed. Once a decision has been determined it will be communicated to both the employer and the employee.

Employers should take immediate steps to identify which individuals in the firm will have the responsibility of responding to the marketplace notices. The intention of the marketplace is to send notices to employers using addresses provided by the marketplace applicant. As such, employers may find that the address an employee used may not be the location designated by the employer to address these notices. So, employers should communicate within the company how they will handle receipt of these notices to ensure that the employer can respond in a timely fashion.

 

Short Term Policies No ACA Panacea

An insurance product that many thought would become extinct with implementation of the ACA can’t be counted out – yet. Short term health insurance policies have been an attractive short-term option for many years. While the policies generally offer limited benefits, the ability to purchase a plan for 30 days or 6 months or even 360 days has had an appeal for people who needed to bridge an insurance gap.

While these policies are attractively priced, they may come with an unexpected cost. Short-term medical plans are limited coverage and, as such, the coverage does not count as MEC (minimum essential coverage) for ACA purposes. So, despite having health coverage, an enrollee in a short-term plan will still be subject to the individual responsibility penalty. And, with the penalty for 2016 now at $695 or 2.5% of household income above the filing threshold, the short-term plan may not be the bargain a consumer planned for.

What are some of the distinctions between short-term plans and ACA compliant plans?

Short-Term Plan                ACA Compliant Plan

No                                                Yes                          Coverage for pre-existing conditions

No                                                Yes                          Preventive care without cost sharing

Yes                                                No                           Enrollment at any time

No                                                 Yes                          Guaranteed renewable

Yes                                                 Yes                          Sold by respected health insurers

Brokers who sell this line of coverage apprise their consumers of the limitations on these policies, especially the possibility of incurring the individual tax penalty. These limited policies may be an option to consider when someone has missed the ACA open enrollment period or has some other temporary need. But, it’s important that consumers understand the limitations and the consequences of this insurance product.

Et tu, Special Enrollment?

Brokers may have to cancel a much needed spring break due to today’s CMS announcement of a new – one time – special enrollment period that will begin March 15, 2015 and end April 30, 2015. The special enrollment will give people an opportunity to enroll in coverage so they don’t face another tax penalty next year for not having coverage this year.

In order to qualify for the exemption you must:

  • Attest that you had to pay a penalty for not having coverage in 2014
  • Not currently be enrolled in an exchange plan
  • Claim that you just found out you would have to pay a penalty for not having coverage when you filed your tax return.

There are no estimates at this time of how many people will benefit from this special enrollment. One must wonder whether previous enrollment efforts that minimized the penalties that individuals could face for not having coverage contributed to the need for this “tax avoidance” special enrollment.

Some individuals were willing to risk a $95 penalty for not having coverage. Perhaps the penalty for not having coverage in 2015 which jumps to the greater of 2% of household income or $325 per adult will stimulate action.