Tag Archives: Health insurance Johns Creek

Heatth Care Reform 2012, 2013. The Individual Mandate, The Missing Severability Clause, and The Supreme Court

Changes brought about by Heath Care Reform look like a lop-sided barbell. There was an immediate bubble with several smaller items, then a few years with very little happening, followed by the Big Tamale that is scheduled to happen in 2014. The Big Tamale being the Individual Mandate.

There is not a whole lot going on in HCR that will affect your business over the coming months, but I wanted to give you an update on what is upcoming, the status on a few other provisions, and to make you aware on a likely Supreme Court Decision, which could come as early as next summer.

Let’s look at some recent and upcoming items:

1. CLASS Act – it has been all but officially killed. This is the Federal Government Long Term Care insurance plan that your employees were going to be able to buy using their own money but it would be billed through your business.

The LTC plan did not have stated benefits or certain premium costs, which would have kept almost everyone from enrolling, and was to have started in 2011, but it did not come to pass. The Government had not allocated sufficient resources to its development and has, or shortly will have, reassigned the staff to other positions. I do not expect this provision to be resurrected any time soon, or at all, for that matter.

2. Employer Reporting of Medical Insurance Premiums on Employee W-2’s – This is moving forward but on a delayed basis.
• For employers who issue 250 or morer W-2’s, they will have to report the premiums (Employer + Employee cost) on the W-2’s for their tax years that begin in 2012.
• For employers who issue fewer than 250 W-2’s, they will have to report the premiums (Employer + Employee cost) on the W-2’s for their tax years that begin in 2013.
3. Uniform Benefit Summaries – These will begin with plan years starting after March 2012. Insurance companies will not only be allowed to, but will be required to, provide Benefit Summaries that follow a standard form. There is nothing you will need to do as the insurance companies will change their Benefit Summaries to an industry-wide standardized format. (The quirky thing is that prior to HCR, insurance companies were prohibited from collaborating with each other to make their documents similar).
4. 60 Day Notice on Benefit Changes – this requirement begins with plan years that begin after March 2012 and does not apply to renewal changes. For those very, very few businesses that make benefits changes mid-year (many carriers do not permit this), you will have to give your employee’s 60 days of advance notice.
5. FSA Limit on Contributions to $2,500 – this begins with plan years beginning on or after January 1, 2013. Believe it or not, there is not currently a legislated cap on the maximum FSA contribution allowed to employees. That cap is determined by the Employer. This will all change in 2013. No FSA will be permitted to allow contributions in excess of $2,500 per employee. (I have never worked with a client that permitted a higher maximum and so this should go in relatively unnoticed).
6. Health Benefit/Insurance Exchanges – these will likely start rolling out in 2013. In certain circumstances some employees may opt to enroll in them if the employer’s premium is considered unaffordable. I do not foresee this impacting many, if any clients. (I will keep you up to date on this).
7. Mandatory Purchase of Health Insurance By All People in the US aka the Individual Mandate – this is of course the Big Tamale. In 2014, with the exact date yet to be announced, all people in the US will have to own a health insurance policy. Many will continue to get their insurance through good businesses like yours, but if people are not employed, or self-employed, or do not get benefits at work, they will have to buy health insurance or will pay a Federal Penalty.
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The Individual Mandate , The Missing Severability Clause, and The Supreme Court

Let me take a minute to expand on this. This provision is part of the HCR legislation (which is more than one bill), but I want you to look at it unemotionally, detached from its particular legislation. (Let’s me get out front and get this aspect behind us before we start: Every single reasonable minded person I’ve spoken to, or even heard of, in the last 5 years believes that the US Health Care system needs serious help in several key areas – I fully support fixing those areas. I just don’t care for the solution Congress came up with. If I am wrong, I apologize in advance).
The Meat of It
Many states are suing the Federal Government over the Individual Mandate provision because it is a provision never before put into law by the US Congress. It dictates that every single person must purchase a specific type of product regardless of any activity. Remember, people who are required to purchase car insurance are only required to if they own and drive a car. If the car is sitting in their garage, they are not required to have insurance. This is a big difference.

The concern that most everyone I’ve spoken to about this is that such a law is unconstitutional. I read the Constitution several times a year (yes, I am that kind of history nerd), and I agree the provision is unconstitutional. But the issue is much bigger than simply buying health insurance. If the Supreme Court upholds the Mandate, will the Government then use it as a precedent to impel people to purchase other products? That is a very valid concern.

However you feel, this is a Constitutional Challenge as big as Roe v. Wade or Brown v. Board of Education and these were decisions with enormous impacts.

The Severability Clause
Severability Clause. Most Federal and state, but particularly Federal, legislation covers much, much more than the title of the bill may imply. For example there may be a bill that is mostly about interstate water regulation but it may have an amendment that deals with wiretapping (this is a fictitious example). Because of this, in most Federal and State Legislation, the last clause in the bill is called a Severability Clause. These clauses say that if any one part of the bill is found to be illegal or unconstitutional, then the rest of the bill is okay and can stand.

But guess what? The HCR legislation did not contain such a clause. So the big fear is that if the Individual Mandate is struck down, will the rest of the bill fall as well? The 6th Circuit Court says “yes, the Individual Mandate clause is illegal and the rest of the bill must fall” but the 11th Circuit Court of Appeals says not. It said, just this August in Atlanta, “yes, the Individual Mandate clause is illegal, but in spite of the absence of a Severability Clause, the rest of the bill can stand.”

Why did Congress not include the Severability Clause? I am not certain but it is for sure not a mistake. I believe the reason is one of two things:

1. They wanted to add pressure to any judge who might strike down the Individual Mandate clause not to do so because he or she would have to throw away the entire bill; or
2. The insurance companies insisted upon it in exchange for their support. Without the Individual Mandate in the bill, as the bill stands now, most all health insurance companies would be insolvent within 2-3 years. (So if the insurance companies did support the missing clause, it was a good thing for all of us).

What The Supreme Court May Do
Many legal experts believe the Individual Mandate suit could be argued in front of the Supreme Court as early as March 2012 with a decision as early as June 2012, just 8 months away. And for those a little rusty on our Constitutional Law processes, consider this:

• The Supreme Court can decide not to hear the case. There are no laws or rules which state which cases the Supreme Court hears. Generally though, they tend to hear issues on which there are inconsistent lower court decisions and/or would have great impact on the country;

• The Supreme Court could hear the case, and rule that the Individual Mandate is unconstitutional and that the rest of the law is therefore thrown out;

• The Supreme Court could hear the case, and rule that the Individual Mandate is unconstitutional and that the rest of the law is not thrown out even though there is no Severability clause;

• The Supreme Court could rule that the Individual Mandate is Constitutional and leave the balance of the law intact as well; and

• The Supreme Court could hear the case and remand it back to a lower court to make the decision.

Very few people believe the Supreme Court will not hear the bill and very few believe that if they do they will send it back to a lower court. Many believe the court is evenly divided, 4 yes, 4 no, and one undecided. Whatever plays out, please keep a watch and encourage your schools civic teachers to discuss the issue. Whatever the decision will be, it is history in the making.

Thank you for listening.

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Health Care Reform Update – Good News – Delay of 2011 Premium Reporting To 2012

This is from a Section 125 TPA we work with (FlexPlan Services, Inc.) and it is well stated. In short, the info you will be interested in is:

1. Beginning with your 2011 Tax Years, employers were going to have to report the full cost of medical insurance premiums to the IRS for each of its employees. THIS HAS BEEN DELAYED UNTIL 2012 TAX YEARS.

By the way, many employers have been misunderstanding this reporting. The reporting of the premiums does not mean they are taxable compensation; the IRS is gathering the info for analytical reasons, we assume, but also as a means to determine who does or does not have health insurance, which will be required in 2014.

2. FSA, HSA, HRAs, beginning 2011, cannot reimburse over the counter medicines, such as aspirin, cold formulas, and sleep aids, etc., without a doctor’s prescriptions. This has not changed and is being restated for convenience.

(By the way, please do not encourage your employees to go to their doctor to get such prescriptions–there needs to be a level of personal financial responsibility of assuming the cost of each person’s health care by that person. In addition, going to the doctor to get such a prescription does what? You guessed it. It increases the benefit plan’s cost because it created a doctor’s visit that otherwise would not have been there.)
Here is FlexPlan’s announcement:
IRS Announces Delay of Health Care Reporting on W-2s
Link to IRS Notice 2010-69 here
Link to draft form W-2 (for informational purposes only—subject to change) here

Link to IRS New Release here

Today The IRS announced that it will delay the requirement for employers to report the cost of health care on employees’ W-2s.

As background Section 9002 of Patient Protection and Affordable Care (“PPACA”) amended section 6051(a) of the Internal Revenue Code to include a new W-2 reporting requirement. That reporting requirement was set to be effective for the 2011 taxable year, meaning that W-2s issued in January of 2012 would need to include the aggregate cost of employer sponsored coverage. This reporting is now optional for 2011 W-2s.

Employer sponsored coverage includes your fully insured group health plan; however, it is unclear what other benefits must be reported. The law appears to exclude FSAs and the reconciliation bill excluded dental and vision plans from the “Cadillac” excise tax—therefore dental and vision benefits may also be excluded. Additional guidance is welcomed as the amount to report is also ambiguous for certain benefits like HRAs. The IRS continues to stress that the amounts reportable are not taxable.

IRS Announces Guidance on Over-the-Counter Medicines and Drugs

For a link to Notice 2010-59 click here http://www.irs.gov/pub/irs-drop/n-10-59.pdf

For a link to the IRS youtube video click here http://www.youtube.com/watch?v=wWN4XF5NuVg

IRS Notice 2010-59 provides guidance on § 9003 of the PPACA, which revises the definition of medical expenses as it relates to over-the-counter (“OTC”) medicines and drugs. As background Section 9003 of PPACA adds new § 106(f) of the Internal Revenue Code, which revised the definition of medical expense for employer-provided accident and health plans, including health flexible spending arrangements (“FSAs”), health reimbursement arrangements (“HRAs”), and health savings accounts (“HSAs”).

OTC Medicines and Drugs Require a Prescription after December 31, 2010

The guidance provides that OTC medicines or drugs purchased after December 31, 2010, may be reimbursed through an FSA only if such OTC medicine or drug is prescribed. This new rule excludes insulin. OTC medicines or drugs purchased without a prescription before January 1, 2011, may be reimbursed pursuant to the terms of the employer’s plan.

The guidance also provides that a “prescription“ is a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.

Consequently, participants must submit a copy of the prescription (or other document certifying that a prescription was issued) along with their claim information to receive reimbursement for OTC medicines and drugs purchased after December 31, 2010. Flex-Plan will honor the prescription for one year from the date the prescription was issued. If no date is provided we will honor the prescription for one year beginning on the date received by Flex-Plan.

To assist participants, we have updated our Letter-of-Medical Necessity (“LMN”) to include options for health care providers to certify that a prescription has been issued. The updated LMN is now available on our Participant Form Page. Participants should know that they will not be permitted to make election changes due this change in the law.

BennyTM Card Changes

The benefits industry is gearing up for this significant change effective January 1, 2011. The list of eligible expenses, provided to merchants by the non-profit group SIGIS, has been updated and will be released on December 15, 2010. IRS guidance gives merchants until January 15, 2011, to update their systems to comply with the new rules. If your plan provides access to the BennyTM Card, card functionality will change. Employers and participants should anticipate that cards will not function when purchasing OTC medicines and drugs as of January 1, 2011.

What Items are Medicines or Drugs?

Medicines and drugs include the items listed below. Keep in mind that OTC medicines and drugs purchased after December 31, 2010, are still reimbursable; however, new rules require an additional step by participants before reimbursement will be made—participants must submit or have on file with Flex-Plan a prescription for the OTC item or an LMN certifying the prescription exists.

Items Requiring a Prescription after January 1, 2011

• Acid Controllers
• Allergy & Sinus medicine Antibiotics
• Anti-Gas Products
• Anti-Parasitic Treatments
• Cold Sore Remedies
• Digestive Aids
• Hemorrhoidal Preps
• Motion Sickness
• Respiratory Treatments
• Stomach Remedies
• Anti-Diarrheals
• Anti-Itch & Insect Bite
• Baby Rash Ointments/Creams
• Cough, Cold & Flu
• Feminine Anti-Fungal/Anti-Itch
• Laxatives
• Pain Relievers
• Sleep Aids & Sedatives

Keep in mind that these rules do not apply to items that are not OTC medicines or drugs, including equipment such as crutches, or supplies such as bandages, saline solution, reading glasses and diagnostic devices such as blood sugar test kits.

Changes to the Tax Treatment of Adult Children Permits Reimbursement of Adult Children Expenses

Link to IRS Notice 2010-38 here

Health care reform expanded the definition of “dependent” for purposes of tax-free health coverage. This change means that participants can immediately receive reimbursement for expenses incurred by Adult Children from their Health Care Flexible Spending Arrangement (“FSA”) or Health Reimbursement Arrangement (“HRA”) for expenses incurred on or after March 30, 2010.

Adult Child includes children, stepchildren, adopted children and eligible foster children who do not reach age 27 within the relevant taxable year. Under prior law expenses of an Adult Child could not be reimbursed from a parent’s FSA unless that person met the definition of “qualifying child” or “qualifying relative” (see IRS Publication 501).

Keep in mind that the restrictions are limited—yet tricky. Participants may not be reimbursed expenses incurred by the child in the year in which the child turns 27. For example, assume the adult child is 26 today and will turn 27 on November 13, 2010. Your employee cannot be reimbursed expenses incurred by that child during the entire 2010 taxable year (unless they otherwise meet the definitions in publication 501).

We will be communicating this information to participants contemporaneous with the OTC communications listed above.

Health Care Reform Limits Health FSA to $2500 effective January 1, 2013

Now is the time to increase your FSA maximum! Section 9005 of the Patient Protection and Affordable Care Act (“PPACA”) limits the amount employees can set aside in their Health Care FSA. In the past employers could set any Health Care FSA maximum—limits were self imposed with origins in nondiscrimination testing or reducing risk of loss. Effective January 1, 2013, PPACA will limit the amount participants can allocate toward their Health Care FSAs to $2500.

This rule sounds similar to the Day Care FSA but functions in a very different way. The new rule only limits employee contributions, therefore employers can “seed” or “fund” above the $2500 employee contribution limit. For example, an employer could match employee’s contributions of $2500 ($2500 from the employer and $2500 from the employee with a maximum total benefit of $5000).

Although the employer and employee could each contribute $2500 for a maximum benefit of $5000, Flex-Plan recommends that employers simply reduce their total Plan maximum to $2500 to avoid confusion and ensure that no employee exceeds the maximum as the penalties of exceeding the maximum are significant.

The new law states that, “such benefit shall not be treated as a qualified benefit unless the cafeteria plan provides that an employee may not elect for any taxable year to have salary reduction contributions in excess of $2,500 made to such arrangement.’’ Translation: if any employee contributes more than the $2500 threshold the entire plan could lose its pre-tax status. Of course, more guidance is welcomed.

Tell Us What You Think
Tell us what you think. Is this good news to your company or simply one more tidbit of info that you need to digest, implement, and then file?
CAREY Benefit Associates and Chase Carey has been helping people and employers for more than 20 years to reduce the cost of employee benefits. Please give us a call at 770.751.6460. You want your benefits to operate seamlessly in the background, providing good value but no distraction. And we want the same thing for you and your business.

We help businesses and individuals save significantly on their insurance and benefit costs. Have you gotten a recent rate increase or would like to see if you can save on your health and life insurance costs? Businesses can contact us at Info@CareyBenefits.com and individuals can run rates using our industry leading Rate Shopping Cart at http://www.careybenefits.com/apply.php.

Grandfathering – Don’t Let it Confuse You To Death!

Health Care Reform over the next two years will be taking “baby steps”, at least for now. The major changes are scheduled for 2013 and 2014.

One of the provisions/option points was on September 23, 2010. There is an option to Grandfather or not to Grandfather your plans. The short story is, don’t worry about it and there is nothing you need to do. The insurance companies will be making this decision for you and the decision will be to not Grandfather. And that is a good thing.

What is Grandfathering?

1. First off, it only applies to very large groups for the most part (those that can customize their plans and provisions), which usually means groups with 500 or more employees.

2. For groups choosing Grandfathering, it allows them to bypass a few relatively minor adjustments to their plans for about a year or two. If a group has a choice and chooses Grandfathering they will delay when certain improvements to their medical benefits are made. These are improvements you and your employees both want (better payment for preventive services and removal of dollar caps for many benefit classes, now grouped together as “Essential Benefits”). These improvements might add about 1%, +/- to your premium.

3. For groups choosing Grandfathering, they will be subject to increased reporting and documentation requirements, and if your business is like most businesses these days, you and your employees have enough to do already.

Tell Us What You Think
Tell us what you think. Is your company trying to get Grand Fathered status or are they moving on and making the change?

CAREY Benefit Associates and Chase Carey has been helping people and employers for more than 20 years to reduce the cost and the persistence of illness. Please give us a call Just give us a call at 770.751.6460. You want your benefits to operate seamlessly in the background, providing good value but no distraction. And we want the same thing for you and your business.

We help businesses and individuals save up to 60% on their insurance and benefit costs. Have you gotten a recent rate increase or would like to see if you can save on your health and life insurance costs? Businesses can contact us at Info@CareyBenefits.com and individuals can run rates using our industry leading Rate Shopping Cart at http://www.careybenefits.com/apply.php.

Agencies Publish Guidance Regarding “Grandfathered” Health Plans (Fisher & Phillips, 6/23/2010)

On June 17, 2010, the Internal Revenue Service (IRS), Department of Labor (DOL) and Department of Health and Human Services (HHS) jointly issued interim final regulations regarding a group health plan’s status as a “grandfathered health plan” (i.e., one in existence on March 23, 2010) under provisions of the recent healthcare reform legislation. This legislation creates a multitude of new requirements for group health plans ranging from the minimum level of benefits that must be provided to dictating which individuals must be offered coverage under a plan.
However, various provisions of the new laws either do not apply at all or have extended compliance deadlines for grandfathered plans. The interim regulations help explain what changes a group health plan that was in existence on March 23, 2010 may make to its plan terms without losing its status as a grandfathered plan.
The regulations are designed to take into account reasonable changes routinely made by plans or insurance issuers without the plan or health insurance coverage losing its grandfathered status, so that individuals may retain the ability to remain enrolled in the coverage they had on March 23, 2010. As such, plans and issuers are generally permitted to make voluntary changes to increase benefits, to conform to required legal changes and to voluntarily adopt other provisions of the new healthcare reform laws that the plans, as grandfathered plans, would not otherwise be required to adopt. A group health plan’s status as a grandfathered health plan also is not affected by new enrollees enrolling in the plan after March 23, 2010.
Changes That Will Cause A Plan To Lose Grandfathered Status
A plan will lose its grandfathered plan status if changes are made to the plan’s coverage that significantly decrease the benefits, materially increase cost sharing by participants in ways that might discourage covered individuals from seeking needed treatment, or substantially increase the cost of coverage paid by participants. Specifically, the following changes will cause a health plan to lose its grandfathered status:
• increasing non-fixed amount cost sharing requirements (such as increasing an employee’s portion of all costs from 20% to 25%);
• increasing fixed-amount co-payments by an amount that exceeds the greater of (i) a percentage that is more than 15% plus the amount of medical inflation above the levels in effect on March 23, 2010 or (ii) $5 increased by medical inflation above the levels in effect on March 23, 2010;
• increasing fixed-amount cost sharing payments other than copayments (such as deductibles and out-of-pocket limits) by a percentage that is more than 15% plus the amount of medical inflation (set by the DOL using the overall medical care component of the Consumer Price Index for All Urban Consumers, unadjusted) above the copayment levels in effect on March 23, 2010; or
• decreasing the employer contribution rate by more than 5% below the contribution rate in effect on March 23, 2010. The “contribution rate” for this purpose is defined as the amount of contributions made by an employer compared to the total cost of coverage, expressed as a percentage. This rule applies to all tiers of coverage.
In addition, changing policies (or insurance carriers) will cause a plan to lose grandfathered status, and the elimination of all or substantially all benefits to diagnose or treat a particular condition will cause a plan to cease to be grandfathered. The elimination of benefits for any necessary element to diagnose or treat a condition is considered the elimination of all or substantially all benefits to diagnose or treat a particular condition.
The regulations provide that if the principal purpose of a corporate merger, acquisition or similar business restructuring is to cover new individuals under a recipient grandfathered health plan or if a recipient plan is different enough from a transferor plan to be considered a change that would cause the transferor plan to lose its grandfathered status if the recipient plan terms were considered to be an amendment to the transferor plan, then the recipient plan will cease to be a grandfathered health plan.
Disclosure Of Grandfather Status Required
In order to maintain grandfathered status, a plan must include a statement in any plan materials provided to participants and beneficiaries describing the benefits provided under the plan (such as a summary plan description, or SPD) that the plan believes it is a grandfathered health plan. This statement must include contact information for questions and complaints. The new regulations provide model language for this disclosure statement.
The regulations also require that a plan maintain records documenting the plan or policy terms in connection with the coverage in effect on March 23, 2010 to verify the plan’s continued status as a grandfathered health plan. Such records must be made available for examination upon request.
The Importance Of Grandfather Status
Every plan, eventually, whether it is fully-insured or self-insured, will lose its grandfathered status. Something as basic as changing insurance carriers will cause a fully-insured plan to lose its grandfathered status. Paying fewer claims during a plan year could cause an unfunded self-insured plan to lose its grandfathered status. Since most plans will lose their grandfather status eventually, it is useful to focus on why a plan sponsor might want to retain grandfathered status at all. Why not just embrace non-grandfathered status and its requirements now to gain the most flexibility for ongoing plan design?
One healthcare reform change – the extension of coverage to children under age 26 – provides for an extended compliance date for grandfathered plans. Non-grandfathered plans must extend coverage to dependents under age 26 (regardless of student, marital or financial status) as of the first day of the first plan year that begins on or after September 23, 1010. Grandfathered plans must fully comply with this rule beginning in 2014. But before 2014 grandfathered plans do not have to extend coverage to a dependent if the dependent has access to medical coverage under the dependent’s employer’s group health plan.
Many employers may find this exception difficult to administer and therefore decide to offer coverage to all dependents under age 26 at the beginning of their next plan year even though they could take advantage of the exception for grandfathered plans. For plans that do want to take advantage of the exception, maintaining grandfathered status is important. For those that do not, maintaining grandfathered status may be less important.
Healthcare reform changes that will never apply to grandfathered plans include some of the changes with near-term effective dates: 1) the requirement to install an external review process; 2) mandatory 100% coverage of preventive care services (to be defined, but will most likely include immunizations, mammograms, pap smears, etc.); 3) greater access to emergency services (removal of increased cost sharing for out-of-network emergency services); 4) participants’ freedom to choose any network doctor as their primary care provider (such as a pediatrician or OB/GYN); and 5) most significantly, the application of the nondiscrimination rules of Internal Revenue Code section 105(h) to fully-insured plans (these rules already apply to self-insured plans).
Many plans already provide some of these new coverage mandates, such as 100% coverage of most preventive services. Accordingly, it could be that for most employers that sponsor fully-insured plans, the importance of maintaining grandfathered status will come down to the impact of having to apply the 105(h) nondiscrimination rules to their plans. These rules require that a plan not discriminate in favor of “highly-compensated individuals” with regard to both contributions and benefits. For purposes of these rules, a “highly-compensated individual” is an employee who 1) is one of the 5 highest-paid officers, 2) owns more than 10% of the value of the employer’s stock or 3) is among the highest 25% of employees ranked by pay. Accordingly, roughly 25% of employees (including most closely-related domestic affiliates) will be classified as “highly compensated” under this definition, regardless of how much compensation they earn.
Having different waiting periods for different classes of employees or contributing different amounts of employer subsidies towards premiums for different classes of employees could cause a plan to fail its annual 105(h) nondiscrimination test. Also, a plan with two or more benefit options that do not have substantially the same benefits could fail nondiscrimination testing if the highly-compensated individuals tend to elect the benefit option with the better benefit and the non-highly-compensated individuals elect the other option. If any of these circumstances apply to a plan, compliance with the 105(h) nondiscrimination rules could have a significant impact.
Summary
Before getting overwhelmed with the restrictions on maintaining grandfathered plan status, it’s important to take a step back and evaluate the relative benefits of such status. In many cases, the only significant upside to grandfathered status may be the ability to avoid the 105(h) nondiscrimination rules. If this is not important to you, then the restrictions of maintaining grandfathered status may be more hassle than they are worth. But if you wish to avoid the 105(h) nondiscrimination rules or any of the other rules that apply to non-grandfathered plans, then it will be important to ensure that any future changes to your plan are within the parameters set by the new interim regulations.
If you need assistance in evaluating the grandfathered plan issue or any other aspect of healthcare reform, please contact one of the attorneys in the Employee Benefits Practice Group at Fisher & Phillips.
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This Legal Alert presents an overview of complex new regulations. It is not intended to be, and should not be construed as, legal advice for any specific fact situation.

Carey Benefits Earns Green Certification

Chase Carey is a cut above more insurance agents in many ways. He is pro-active, a community leader, and an absolute professional. Chase is the owner.operator of Caery Benefits, and he recently worked with Damon Sgrignoli to earn a Green business certification from the Green Business League.
Chase Carey has taken steps to be a quality business as well as a Green business. It started with changing the old ways of pesticides, cleaning products, and recycling the trash. The office has switched to energy efficient lights, placed timers on certain appliances, and added insulation to cut energy costs.
Water use is being cut, paper use is transferred to paperless systems, and ink and toner purchase are from recycled ink services.
CAREY Benefit Associates believes that Benefits and Insurance are important factors in Employees choosing which Employer and in Individuals protecting their families’ health and income. Because of that, we offer a broad variety of Benefits and Insurance from the top carriers. Why the top carriers? Because they have the depth to stay the course, which you and your family deserves.
This company also believes in the betterment of the community. Going Green is only a token effort for many businesses, but all members of the Green Business League undergo a thorough audit every year to continually improve their Green practices and reduce their carbon footprint.
The Green Business League is pleased to grant the Chase Carey Benefits office the silver level Green Business Certification.
Please check out this link:
http://greenbusinessleague.com/blog/carey-benefits

Health Care Reform Tax Credit CALCULATOR For Small Businesses in Georgia

Most smaller businesses should be receiving a post card from the IRS in the next couple of weeks that tells you that your business may be eligible for a Health Care Tax Credit for the 2010 tax year.
What Are The Qualifying Parameters?
In short, your business will qualify for a 35% reimbursement (via a dollar for dollar tax reduction) of the premium your business pays for its group medical benefits if you meet all of the following conditions:
1. You have fewer than 25 Full Time Equivalents (FTE) working for you;
2. Your average wages are less than $50,000 per year per FTE; and
3. You pay at least 1/2 of the medical premium for Employee-Only coverage.
We’ve posted a Health Care Reform Tax Credit CALCULATOR on LinkenIn at http://www.LinkedIn.com/In/ChaseCarey . The calculator is pretty self explanatory and requires that you input just a few specific pieces of information in the YELLOW boxes. Your CFO/Finance Manager should be able to plug in estimates pretty easily. If not, please give us a call and we’ll help he or she out. By the way, the 35% tax credit is scheduled to increase to 50% by 2014.
Note
Please consider that this is a BETA version of our calculator; it is based on IRS notices and other information available to date, not all of which is that detailed. But the calculator should be a good estimator. This calculator is programmed for GEORGIA for-profit businesses only. Businesses in each state are eligible for the Tax Credit as well as non-profits but they have different parameters and credit percentages. (It is interesting to note that the cost of health insurance in Georgia ranks 41 out of 50 states, meaning there are only 9 states that have lower health insurance costs).
Share with Your CFO/Finance Manger/Business Accountant
Please share our HCR Tax Credit Calculator with your CFO/Finance Manger and Business Accountant; we’d love to hear their feedback.

Georgia Continuation Update – Extended for 15 Months

The Governor of Georgia signed Act 362 on May 20th, 2010. This provision extends coverage for former employees under GA Continuation from 9 to 15 months. This extension applies to Assistance Eligible Individuals who are those who were involuntarily terminated or lost coverage due to an involuntary termination between September 1, 2008 and May 31, 2010.

Attached is the text of the ACT, which originated as HB 1268:

10 HB 1268/AP
House Bill 1268 (AS PASSED HOUSE AND SENATE)
By: Representative Knox of the 24th

A BILL TO BE ENTITLED
AN ACT

To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to revise the time periods and eligibility for continuation coverage under certain group accident and sickness insurance plans; to provide for related matters; to provide an effective date; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.
Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by revising Code Section 33-24-21.1, relating to conversion privilege and continuation right provisions for group accident and sickness insurance, as follows:
“33-24-21.1.
(a) As used in this Code section, the term:
(1) ‘Assistance eligible individual’ shall have the same meaning as provided by Section 3001 of Title III of the federal American Recovery and Reinvestment Act of 2009, as amended.
(2) ‘Creditable coverage’ under another health benefit plan means medical expense coverage with no greater than a 90 day gap in coverage under any of the following:
(A) Medicare or Medicaid;
(B) An employer based accident and sickness insurance or health benefit arrangement;
(C) An individual accident and sickness insurance policy, including coverage issued by a health maintenance organization, nonprofit hospital or nonprofit medical service corporation, health care corporation, or fraternal benefit society;
(D) A spouse’s benefits or coverage under medicare or Medicaid or an employer based health insurance or health benefit arrangement;
(E) A conversion policy;
(F) A franchise policy issued on an individual basis to a member of a true association as defined in subsection (b) of Code Section 33-30-1;
(G) A health plan formed pursuant to 10 U.S.C. Chapter 55;
(H) A health plan provided through the Indian Health Service or a tribal organization program or both;
(I) A state health benefits risk pool;
(J) A health plan formed pursuant to 5 U.S.C. Chapter 89;
(K) A public health plan; or
(L) A Peace Corps Act health benefit plan.
(3) ‘Eligible dependent’ means a person who is entitled to medical benefits coverage under a group contract or group plan by reason of such person’s dependency on or relationship to a group member.
(4) ‘Group contract or group plan’ is synonymous with the term ‘contract or plan’ and means:
(A) A group contract of the type issued by a nonprofit medical service corporation established under Chapter 18 of this title;
(B) A group contract of the type issued by a nonprofit hospital service corporation established under Chapter 19 of this title;
(C) A group contract of the type issued by a health care plan established under Chapter 20 of this title;
(D) A group contract of the type issued by a health maintenance organization established under Chapter 21 of this title; or
(E) A group accident and sickness insurance policy or contract, as defined in Chapter 30 of this title.
(5) ‘Group member’ means a person who has been a member of the group for at least six months and who is entitled to medical benefits coverage under a group contract or group plan and who is an insured, certificate holder, or subscriber under the contract or plan.
(6) ‘Insurer’ means an insurance company, health care corporation, nonprofit hospital service corporation, medical service nonprofit corporation, health care plan, or health maintenance organization.
(7) ‘Qualifying eligible individual’ means:
(A) A Georgia domiciliary, for whom, as of the date on which the individual seeks coverage under this Code section, the aggregate of the periods of creditable coverage is 18 months or more; and
(B) Who is not eligible for coverage under any of the following:
(i) A group health plan, including continuation rights under this Code section or the federal Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA);
(ii) Part A or Part B of Title XVIII of the federal Social Security Act; or
(iii) The state plan under Title XIX of the federal Social Security Act or any successor program.
(a.1) Any group member or qualifying eligible individual who is an assistance eligible individual as provided by Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, during the period permitted under such act whose coverage has been terminated and who has been continuously covered under the group contract or group plan, and under any contract or plan providing similar benefits that it replaces, for at least six months immediately prior to such termination, shall be entitled to have his or her coverage and the coverage of his or her eligible dependents continued under the contract or plan in accordance with paragraph (2) of subsection (c) of this Code section. Such coverage shall continue for the fractional policy month remaining, if any, at termination plus nine up to the maximum number of additional policy months specified in paragraph (2) of subsection (c) of this Code section upon payment of the premium to the insurer by cash, certified check, or money order, at the same rate for active group members set forth in the contract or plan, on a monthly basis in advance as such premium becomes due during this coverage period. An assistance eligible individual who is in a transition period as defined in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, shall be treated for purposes of any continuation of coverage provision as having timely paid such premium if such individual was covered under the continuation of coverage to which such premium relates for the period immediately preceding such transition period, if such individual remains eligible for such continuation of coverage, and if such individual pays the amount of such premium not later than 30 days after the date of provision of notice regarding eligibility for extended continuation of coverage. For the period that the assistance eligible individual is eligible for the premium reduction assistance subsidy as provided in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, such premium payment shall be calculated as 35 percent of the rate for active group members including any portion of the premium paid by a former employer or other person if such employer or other person no longer contributes premium payments for this coverage.
(a.2) The rights and benefits under this Code section attributable to Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, shall expire when that act expires. Any extension of such benefits shall require an Act of the Georgia General Assembly. Under no circumstances shall the extended benefits for assistance eligible individuals become the responsibility of the State of Georgia or any insurer after September 30, 2010 the expiration of the premium subsidy made available to individuals pursuant to Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended.
(b) Each group contract or group plan delivered or issued for delivery in this state, other than a group accident and sickness insurance policy, contract, or plan issued in connection with an extension of credit, which provides hospital, surgical, or major medical coverage, or any combination of these coverages, on an expense incurred or service basis, excluding contracts and plans which provide benefits for specific diseases or accidental injuries only, shall provide that members and qualifying eligible individuals whose insurance under the group contract or plan would otherwise terminate shall be entitled to continue their hospital, surgical, and major medical insurance coverage under that group contract or plan for themselves and their eligible dependents.
(c)(1) Any group member or qualifying eligible individual whose coverage has been terminated and who has been continuously covered under the group contract or group plan, and under any contract or plan providing similar benefits which it replaces, for at least six months immediately prior to such termination, shall be entitled to have his or her coverage and the coverage of his or her eligible dependents continued under the contract or plan. Such coverage must continue for the fractional policy month remaining, if any, at termination plus three additional policy months, except the period of continuation coverage for assistance eligible individual in subsection (a.1) of this Code section, shall be nine months, upon payment of the premium by cash, certified check, or money order, at the option of the employer, to the policyholder or employer, at the same rate for active group members set forth in the contract or plan, on a monthly basis in advance as such premium becomes due during this coverage period. Such premium payment must include any portion of the premium paid by a former employer or other person if such employer or other person no longer contributes premium payments for this coverage. At the end of such period, the group member shall have the same conversion rights that were available on the date of termination of coverage in accordance with the conversion privileges contained in the group contract or group plan.
(2) A covered individual Any group member or qualifying eligible individual who is an assistance eligible individual has a right to elect continuation of his or her coverage and the coverage of his or her dependents at any time between May 5, 2009, and 60 days after receiving notice from the employer’s insurer of the right to participate in a second election period for state continuation benefits under this Code section in accordance with Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, if:
(A) The individual was involuntarily terminated from employment between September 1, 2008, and February 17, 2009, as defined or otherwise experienced a loss of coverage due to qualifying events specified in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended;
(B) The individual was eligible for state continuation under this chapter at the time of termination;
(C) The individual continues to be eligible for state continuation benefits under this chapter, provided that the total period of continuous eligibility shall not exceed nine the number of policy months equal to the maximum premium reduction period specified in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, as measured from the month of the qualifying event making the individual an assistance eligible individual or the date of the election as provided in this paragraph, whichever is later; and
(D) The individual or the employer of the individual contacts the insurer and informs the insurer that the individual wants to take advantage of the second election period for state continuation coverage under the provisions of Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended.
(3) In addition to the group policy under which the group member was insured, the group member and any qualifying eligible individual shall, to the extent that such plan is currently offered under the group plans offered by the company, also be offered the option of continuation coverage through a high deductible health plan, or its actuarial equivalent, that is eligible for use with a health savings account under the applicable provisions of Section 223 of the Internal Revenue Code. Such high deductible health plans shall have premiums consistent with the underlying group plan of coverage rated relative to the standard or manual rates for the benefits provided.
(4) Claims for a covered individual under continuation of coverage shall not be considered in rating or rerating the group premiums for the group from which the continuation of coverage is provided, except that the pooled experience for all of the insurer’s continuation of coverage claims for fully insured claims may impact all such groups on an equal percentage basis.
(d)(1) A group member shall not be entitled to have coverage continued if: (A) termination of coverage occurred because the employment of the group member was terminated for cause; (B) termination of coverage occurred because the group member failed to pay any required contribution; or (C) any discontinued group coverage is immediately replaced by similar group coverage including coverage under a health benefits plan as defined in the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. Section 1001, et seq. Further, a group member shall not be entitled to have coverage continued if the group contract or group plan was terminated in its entirety or was terminated with respect to a class to which the group member belonged. This subsection shall not affect conversion rights available to a qualifying eligible individual under any contract or plan.
(2) A qualifying eligible individual shall not be entitled to have coverage continued if the most recent creditable coverage within the coverage period was terminated based on one of the following factors: (A) failure of the qualifying eligible individual to pay premiums or contributions in accordance with the terms of the health insurance coverage or failure of the issuer to receive timely premium payments; (B) the qualifying eligible individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of coverage; or (C) any discontinued group coverage is immediately replaced by similar group coverage including coverage under a health benefits plan as defined in the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. Section 1001, et seq. This subsection shall not affect conversion rights available to a group member under any contract or plan.
(e) If the group contract or group plan terminates while any group member or qualifying eligible individual is covered or whose coverage is being continued, the group administrator, as prescribed by the insurer, must notify each such group member or qualifying eligible individual that he or she must exercise his or her conversion rights within:
(1) Thirty days of such notice for group members who are not qualifying eligible individuals; or
(2) Sixty-three days of such notice for qualifying eligible individuals.
(f) Every group contract or group plan, other than a group accident and sickness insurance policy, contract, or plan issued in connection with an extension of credit, which provides hospital, surgical, or major medical expense insurance, or any combination of these coverages, on an expense incurred or service basis, excluding policies which provide benefits for specific diseases or for accidental injuries only, shall contain a conversion privilege provision.
(g) Eligibility for the converted policies or contracts shall be as follows:
(1) Any qualifying eligible individual whose insurance and its corresponding eligibility under the group policy, including any continuation available, elected, and exhausted under this Code section or the federal Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), has been terminated for any reason, including failure of the employer to pay premiums to the insurer, other than fraud or failure of the qualifying eligible individual to pay a required premium contribution to the employer or, if so required, to the insurer directly and who has at least 18 months of creditable coverage immediately prior to termination shall be entitled, without evidence of insurability, to convert to individual or group based coverage covering such qualifying eligible individual and any eligible dependents who were covered under the qualifying eligible individual’s coverage under the group contract or group plan. Such conversion coverage must be, at the option of the individual, retroactive to the date of termination of the group coverage or the date on which continuation or COBRA coverage ended, whichever is later. The insurer must offer qualifying eligible individuals at least two distinct conversion options from which to choose. One such choice of coverage shall be comparable to comprehensive health insurance coverage offered in the individual market in this state or comparable to a standard option of coverage available under the group or individual health insurance laws of this state. The other choice may be more limited in nature but must also qualify as creditable coverage. Each coverage shall be filed, together with applicable rates, for approval by the Commissioner. Such choices shall be known as the ‘Enhanced Conversion Options’;
(2) Premiums for the enhanced conversion options for all qualifying eligible individuals shall be determined in accordance with the following provisions:
(A) Solely for purposes of this subsection, the claims experience produced by all groups covered under comprehensive major medical or hospitalization accident and sickness insurance for each insurer shall be fully pooled to determine the group pool rate. Except to the extent that the claims experience of an individual group affects the overall experience of the group pool, the claims experience produced by any individual group of each insurer shall not be used in any manner for enhanced conversion policy rating purposes;
(B) Each insurer’s group pool shall consist of each insurer’s total claims experience produced by all groups in this state, regardless of the marketing mechanism or distribution system utilized in the sale of the group insurance from which the qualifying eligible individual is converting. The pool shall include the experience generated under any medical expense insurance coverage offered under separate group contracts and contracts issued to trusts, multiple employer trusts, or association groups or trusts, including trusts or arrangements providing group or group-type coverage issued to a trust or association or to any other group policyholder where such group or group-type contract provides coverage, primarily or incidentally, through contracts issued or issued for delivery in this state or provided by solicitation and sale to Georgia residents through an out-of-state multiple employer trust or arrangement; and any other group-type coverage which is determined to be a group shall also be included in the pool for enhanced conversion policy rating purposes; and
(C) Any other factors deemed relevant by the Commissioner may be considered in determination of each enhanced conversion policy pool rate so long as it does not have the effect of lessening the risk-spreading characteristic of the pooling requirement. Duration since issue and tier factors may not be considered in conversion policy rating. Notwithstanding subparagraph (A) of this paragraph, the total premium calculated for all enhanced conversion policies may deviate from the group pool rate by not more than plus or minus 50 percent based upon the experience generated under the pool of enhanced conversion policies so long as rates do not deviate for similarly situated individuals covered through the pool of enhanced conversion policies;
(3) Any group member who is not a qualifying eligible individual and whose insurance under the group policy has been terminated for any reason, including failure of the employer to pay premiums to the insurer, other than eligibility for medicare (reaching a limiting age for coverage under the group policy) or failure of the group member to pay a required premium contribution, and who has been continuously covered under the group contract or group plan, and under any contract or plan providing similar benefits which it replaces, for at least six months immediately prior to termination shall be entitled, without evidence of insurability, to convert to individual or group coverage covering such group member and any eligible dependents who were covered under the group member’s coverage under the group contract or group plan. Such conversion coverage must be, at the option of the individual, retroactive to the date of termination of the group coverage or the date on which continuation or COBRA coverage ended, whichever is later. The premium of the basic converted policy shall be determined in accordance with the insurer’s table of premium rates applicable to the age and classification of risks of each person to be covered under that policy and to the type and amount of coverage provided. This form of conversion coverage shall be known as the ‘Basic Conversion Option’; and
(4) Nothing in this Code section shall be construed to prevent an insurer from offering additional options to qualifying eligible individuals or group members.
(h) Each group certificate issued to each group member or qualifying eligible individual, in addition to setting forth any conversion rights, shall set forth the continuation right in a separate provision bearing its own caption. The provisions shall clearly set forth a full description of the continuation and conversion rights available, including all requirements, limitations, and exceptions, the premium required, and the time of payment of all premiums due during the period of continuation or conversion.
(i) This Code section shall not apply to limited benefit insurance policies. For the purposes of this Code section, the term ‘limited benefit insurance’ means accident and sickness insurance designed, advertised, and marketed to supplement major medical insurance. The term limited benefit insurance includes accident only, CHAMPUS supplement, dental, disability income, fixed indemnity, long-term care, medicare supplement, specified disease, vision, and any other accident and sickness insurance other than basic hospital expense, basic medical-surgical expense, and comprehensive major medical insurance coverage.
(j) The Commissioner shall adopt such rules and regulations as he or she deems necessary for the administration of this Code section. Such rules and regulations may prescribe various conversion plans, including minimum conversion standards and minimum benefits, but not requiring benefits in excess of those provided under the group contract or group plan from which conversion is made, scope of coverage, preexisting limitations, optional coverages, reductions, notices to covered persons, and such other requirements as the Commissioner deems necessary for the protection of the citizens of this state.
(k)(1) Except as provided in paragraph (2) of this subsection, this Code section shall apply to all group plans and group contracts delivered or issued for delivery in this state on or after July 1, 2009, and to group plans and group contracts then in effect on the first anniversary date occurring on or after July 1, 2009.
(2) The provisions of paragraphs (1), (2), and (3) of subsection (c) of this Code section shall apply to all group plans and group contracts in effect on September 1, 2008.
(l) As soon as practicable, but no later than June 4, 2009, the Commissioner shall develop and direct insurers to issue notices for assistance eligible individuals regarding availability of expanded eligibility, second election, and continuation coverage assistance to be sent to the last known addresses of such assistance eligible individuals.
(m) Nothing in this chapter shall imply that individuals entitled to continuation coverage who are not assistance eligible individuals shall receive benefits beyond the period of coverage provided in paragraph (1) of subsection (c) of this Code section or that assistance eligible individuals are entitled to any continuation benefit period beyond what is provided by Section 3001 of Title III of the federal American Recovery and Reinvestment Act of 2009 or extensions to that Act which are enacted on and after May 5, 2009.”

SECTION 2.
This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval.

SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.