Part 3: Should your company consider a self-insured health care plan?

Almost every employer that offers a group health benefit program is searching for methods to lower their company’s spending.

There are several ways to cut health insurance spending that are probably familiar, such as modifying plan designs, changing insurance companies and shifting more costs to employees. What many employers don’t consider is shifting from offering an insured health plan to self-insurance, says Aaron Ochs, consultant and project manager at JRG Advisors.

“The market is rapidly changing. Because of the effects of the Accountable Care Act and ever escalating costs, self-insurance — normally considered a funding method only available to large employers — is becoming a viable option for employers as small as 25 employees or less,” Ochs says.

Smart Business spoke with Ochs about who should consider getting a self-insured plan.

How does self-funding work?

As the term implies, in a self-insured, or self-funded, health plan, the employer takes on direct financial responsibility for employees’ health care costs. Rather than being pooled into a larger risk pool, the self-funding employer takes on the risk for its own employee group.

Some customization can be applied to the structure of these contracts. For example, all of a health plan may be self-funded, or a contract might be purchased to cover certain types of claims. Most self-funded employers buy stop-loss insurance to cover catastrophic claims, capping the financial risk exposure.

Self-insured health plans are exempt from most state insurance laws and mandates, and not having to pay regular premiums to an insurance company can result in substantial savings. An employer also only pays for the claims that actually occur, not the claims an insurance company projects may occur.

Despite these advantages, many employers, especially smaller ones, tend to avoid self-funding — perceiving it as too risky. According to a recent Kaiser Foundation survey, among employers with 200 or more workers, 82 percent of employees are self-insured. Conversely, only 13 percent of employees in firms with three to 199 employees are in a self-insured plan.

What do employers need to know before starting a self-insured plan?

Self-insurance is not the right approach for every employer. Some companies will benefit from such an arrangement, others will not. An employer should consider that:

  • Self-funding can provide more control over your health plan. Coverage can be customized since you are not purchasing a pre-packaged product. Self-insured plans are subject to ERISA but aren’t bound by state insurance laws and state coverage requirements. You can truly meet employee health care needs with a plan that makes sense.
  • A self-insured company pays health claims as they incur, rather than paying a monthly premium regardless of actual claims activity. This can be attractive, especially during periods where health claims are low. On the other hand, the reverse is also true in that you will have to handle large claims as they come in. Remember, however, that stop-loss insurance limits this exposure and there are other methods to minimize payment swings, such as level funding.
  • When you pay a premium to an insurance company, you pay for more than just claims. The premium takes into account the insurer’s overhead costs, including advertising, technology, legal, etc., some allowance against their own financial risk and a profit margin. Self-insured employers don’t have to pay these hidden costs, but they do incur other expenses like third-party administration of claims and the premium for stop-loss insurance.

In addition, workforce demographics can make a self-insured solution either more or less attractive. Young and healthy employees do not necessarily guarantee a less expensive self-insured solution. Nor will older and unhealthy employees always break the bank. Always remember that self-funding means your company bears the risk associated with your employees, along with the protection of a stop-loss carrier.

It’s worth closely analyzing this risk with a professional who can give you well thought out estimates of your company’s potential liability. Only then will you be able to intelligently decide whether self-insurance is for you.

Insights Employee Benefits is brought to you by JRG Advisors

Part 2: The Defined Contribution model and how it can help you

The concept of Defined Contribution is not a new one, but it is newer for small and midsized businesses. Defined Contribution models have helped large businesses control their costs and provide more choices for their employees.

For small and midsized businesses, this was not an option in the past due to insurance company restrictions on the number of plans a business could offer to employees. The larger the business, the more options the insurance companies allowed them to offer.

As the cost of providing health care increased, there became a need for a new way to offer insurance that made sense for both the employer and the employees.

“The truth is the best plan for the business and the best plan for the employees are usually two very different things,” says Craig Pritts, senior sales executive at JRG Advisors. “The best plan for the business is usually the most cost-effective plan and the plan that most employees would prefer to have is usually the most expensive plan.”

Smart Business spoke with Pritts on how Defined Contribution can work for both employers and employees.

What is the basic model for a Defined Contribution plan?

The model allows a business to establish its contribution to the employees’ benefits and provides a menu of choices for the employees to select from. The menu may only include medical coverage or may include a long list of benefits such as dental, vision, life, disability and even pet insurance in some cases.

Some insurance companies offer this on a private exchange or an electronic platform. The private exchange is built specifically for business. The employers’ contribution is pre-populated and the plans are loaded on the website. The employees are then provided a login to the website where they can shop for the plans that are best for their needs.

Some insurance companies do not use a website at this time, but simply allow the employer to offer more than the traditional one or two plans.

What are some of the benefits for employers and employees?

There are a lot of benefits to both the employer and employees when using a Defined Contribution platform. Business owners find great benefit by controlling their costs, budgeting for future years and reducing the time spent trying to determine the best option for both the business and employees.

Employees love the choice and flexibility of deciding how their money will be spent by selecting the plan that is best for their coverage needs. Experience shows that most employees, when given a choice, will select a different plan than the one the employer provided when the same plan and employer contribution are provided.

The number of businesses using this model has been increasing every year and experts predict that most insurance plans will be offered on an exchange in the next few years.

What else should employers know about Defined Contribution?

The concept of Defined Contribution is also used by the marketplace on the Small Business Health Options Program (SHOP). There are guidelines a business must meet to use the SHOP based on number of employees, average wages and employer contribution.

The SHOP also may provide a business tax credit for groups that meet guidelines set by the Affordable Care Act. In 2015, an employer may only select one plan for the employees, but in 2016 an employer will be able to define its contribution, select the metal level it wishes to offer, and the employees will be able to select a plan from multiple insurance companies within the selected metal level.

Over the last few years, the health insurance industry has seen a lot of changes that have resulted in most businesses waiting and reacting to the changes. This concept gives employers a tool to be proactive in controlling their health care costs.

Insights Employee Benefits is brought to you by JRG Advisors

Part 1: The consumer driven health care approach — HSAs, FSAs and HRAs

Consumer driven health plans are plans designed to lower monthly premiums while engaging employees to manage more of their health care and make smarter decisions.

“Typically these plans have higher deductibles resulting in lower monthly premiums and are partnered with a savings account or a funding arrangement that provides a benefit to the employee,” says Doug Fleisner, a sales executive at JRG Advisors.

The three main types of accounts used with a consumer driven health plan are a Health Savings Account (HSA), Flexible Savings Account (FSA) and Health Reimbursement Account (HRA).

All three are designed to get employees more involved with heath care decisions.

Smart Business spoke with Fleisner about these creative funding strategies.

What are HSAs?

HSAs started in 2004 to replace Medical Savings Accounts and have increased in number ever since. An HSA is only available to individuals enrolled in a qualified high-deductible health plan that is approved by and meets the standards set by the IRS.

If the plan is qualified, whether it is through an employer or purchased as an individual, an HSA may be set up. The account may be funded by anyone, but the insureds’ funds are deposited into the account pre-tax. The IRS will allow a single insured person to deposit up to $3,350 in 2015 and anyone enrolled with a spouse or dependents up to $6,650 in 2015.

Individuals 55 years old and over can contribute an extra $1,000 per year as a ‘catch-up’ contribution. These amounts are reviewed and adjusted for cost of living from time to time. The money in the account can earn interest and grow through a savings account or investment options.

There are sometimes minimum balance requirements for the investment option. Any interest or gains earned are tax-free, in that a person will not pay income tax on that money and if the money is used to pay for qualified medical expenses there is no tax paid on the money when used either. This is often referred to as a triple tax advantage.

Qualified plans with an HSA promote and encourage engagement by placing more of the upfront costs on the employee. This in part has resulted in more people shopping for the best costs and outcomes before using their insurance when they can.

What are FSAs?

FSAs are similar to HSAs in that an employee can use pre-tax dollars to pay for qualified medical expenses. There are even options to use the account for certain dependent day care and transportation costs. The account is set up through an employer and is only funded by the employee or the employer. An employee may choose how much to deposit in the account pre-tax from their paycheck and what qualified items to use the money for.

These plans have a maximum that may be deposited in the account. For 2015, the maximum is $2,550 and a maximum of $500 may carry over. It is important to consider what the FSA will be used for to avoid overfunding the account and losing money. These accounts do not offer investment options and do not earn interest, but they do allow a person use pre-tax dollars for medical and non-medical items and services. It is also important to verify items approved by the IRS for purchase with an FSA.

What are HRAs?

With HRAs, an employer will select a plan with a higher deductible and a lower monthly premium. The savings generated by the lower premium can be used to reimburse the employee for some portion of the deductible and out-of-pocket costs. The account is owned by the employer and typically administered by the insurance company or a third party administrator.

There are more restrictions on this type of funding arrangement now due to the Affordable Care Act (ACA). There may be limits on how much an employer may contribute. Those interested in this option should work closely with their benefits advisor to be sure to remain in compliance with the ACA and the insurance company’s guidelines.

Insights Employee Benefits is brought to you by JRG Advisors

Health care reform signifies new obligations for companies

Of the many components to the Affordable Care Act (ACA), one of the more complex and confusing is just around the corner: new reporting requirements under Internal Revenue Code Sections 6055 and 6056.

“Under these new reporting rules, certain employers must provide information to the IRS about the health plan coverage they offer (or do not offer) to their employees,” says Aaron Ochs, consultant and project manager at JRG Advisors.

Smart Business spoke with Ochs on the new reporting requirements and their impact.

What are some of the new reporting requirements?

On Feb. 8, the IRS released final versions of forms and related instructions that employers may use to report under Sections 6055 and 6056 for 2014. These forms are not required to be filed for 2014, but reporting entities may voluntarily file them in 2015 for 2014 coverage. Forms and instructions for 2015 reporting have not yet been released.

One of the changes permits an Applicable Large Employer (ALE) to use either the first or last day of the first payroll period that starts during each month, or the first or last day of each month, when determining the total employee count.

An ALE is defined as having employed an average of at least 50 full-time employees on business days during the preceding calendar year. A full-time employee generally must have worked 30 hours in a week or meet the definition of full-time equivalents (FTE) as defined by the FTE calculation requirements.

All ALEs will be required to file Form 1094-C (a transmittal) and Form 1095-C (an information return) for each full-time employee. Form 1094-C is used to report employer summary information to the IRS and to transmit Forms 1095-C to the IRS. Form 1095-C is used to report information about each employee.

What is the purpose of these forms?

These forms help the IRS determine whether an ALE owes penalties under the employer shared responsibility rules and to determine whether an employee is eligible for premium tax credits.

Form 1095-C will generally be used by ALEs to satisfy both the Section 6055 and 6056 reporting requirements, as applicable. If an ALE sponsors a self-insured plan they will complete all sections of Form 1095-C to report the information required under both Sections 6055 and 6056; therefore, these ALEs will be able to use a single form to report information regarding whether an employee was covered. In turn, each full-time employee, as defined by the ACA, will receive a copy of Form 1095-C.

The final instructions for Forms 1094-C and 1095-C include a new option for ALEs reporting information for nonemployees (such as nonemployee directors, retirees or nonemployee COBRA beneficiaries).

The final instructions for Forms 1094-C and 1095-C also made several changes to the alternative methods of reporting under Section 6056. Two alternative methods of reporting are available under Section 6056 — the Qualifying Offer Method (and the Qualifying Offer Method Transition Relief for 2015), and the 98 Percent Offer Method.

What about deadlines and any penalties?

It is important to be aware of the deadlines established for reporting. These forms must be filed with the IRS annually, no later than Feb. 28 or March 31, if filed electronically, of the year following the calendar year in which it provided coverage. Any ALE that files at least 250 returns under Section 6055 or 6056 must file electronically. ALEs will be required to furnish statements annually to full-time employees on or before Jan. 31 of the year immediately following the calendar year to which the statements relate.

An ALE that fails to comply with Section 6055 or Section 6056 reporting requirements may be subject to the general reporting penalties. The penalty is generally $100 for each return, up to $1.5 million per calendar year. Penalties may be waived, however, if the failure is due to reasonable cause and not to willful neglect.

All ALEs need to pay attention to the new reporting requirements as they apply to them. Now is the time for companies to begin to track the data that will be needed and decide how best to get this data by discussing this with their payroll provider, tax adviser and benefits consultant.

Insights Employee Benefits is brought to you by JRG Advisors

Health care reform audits: Summary plan descriptions vs. summary of benefits and coverage

With the goal of enforcing compliance with the Patient Protection and Affordable Care Act (PPACA), the federal government has started regular audits of group health plans. These audits extend into compliance of the Employee Retirement Income Security Act (ERISA).

“Sadly, many employers are unaware of the potentially large penalties they face for failure to prove compliance,” says Chuck Whitford, consultant at JRG Advisors.

“In 2013, more than 70 percent of audits resulted in fines or other corrective action. The most common triggers are participant complaints and incomplete or inconsistent information.”

Smart Business spoke with Whitford on what to know about health care reform compliance.

What is the most common compliance failure employers may experience?

The most common one may be having and maintaining an up-to-date Summary Plan Description (SPD). Over the past several years, the government has issued penalties in the $10,000 to $18,000 range for simply failing to provide an SPD within 30 days of a request.

Many employers, to their surprise, may think they are too small to be required to have an SPD. Nearly every employer providing benefits covered under ERISA needs an SPD. The other misconception is that the certificate of insurance from their insurance company will suffice. It does not in almost all cases.

What is an SPD document?

This document is provided to plan participants to explain the plan’s benefits, claims review procedures and participants’ rights. ERISA contains standards for the information that must be included in the SPD and for how the SPD must be distributed to participants.

Employers are responsible for providing an SPD within 120 days of starting a group health plan, within 90 days of enrollment for new participants, within 30 days of a participant’s request for an SPD, every five years if material modifications are made during that period and every 10 years if no changes have occurred.

Are there any other ERISA requirements?

In addition to the SPD document itself, ERISA requires additional notifications that must be provided to plan participants. This includes documents showing compliance with Health Insurance Portability and Accountability Act and COBRA. Last year, one employer was fined $25,000 for continuous failure to provide COBRA election notices.

The Affordable Care Act (ACA) has created additional notices that employers must provide. For example, the ACA requires plan administrators and issuers to provide participants in a group health plan with a Summary of Benefits and Coverage (SBC) during open enrollment and 60 days in advance of any change in plan terms or coverage that takes place mid-plan year.

An SBC is different from an SPD but is no less important. A willful failure to provide and SBC in the required format and delivery can trigger a $1,000 per day penalty for each affected individual. Both the insurer and plan administrator are potentially subject to this penalty.

Have there been recent changes proposed for the SBC?

On Dec. 22, 2014, the departments of Health and Human Services, Labor and Treasury issued proposed regulations for changes to the SBC. These changes clarify when and how a plan administrator or insurer must provide an SBC, shorten the SBC template, add a third cost example (simple foot fracture) and revise the uniform glossary.

The proposed SBC is 2½ double-sided pages instead of the current four double-sided pages. References to essential health benefits and pre-existing condition exclusions will be removed. These proposed changes are effective for plan years and open enrollment periods beginning on or after Sept. 1, 2015.

Every employer, regardless of size, needs to be certain it complies with these laws in the event that the DOL comes knocking on the door. Employers should consult with their benefit adviser for information to avoid DOL triggers, as well as tools to prepare for and navigate an audit.

Insights Employee Benefits is brought to you by JRG Advisors

A new wave of options gives employees choices in coverage with voluntary benefits

Although voluntary benefits are not a new concept, they have increased in popularity as the landscape of health care continues to change and evolve with the implementation of the Affordable Care Act. Traditionally, these types of benefits were offered by large employers.

Smart Business spoke with Michael Galardini, sales executive with JRG Advisors, about the growth in demand for voluntary benefits.

What are voluntary benefits?

These benefits are made available to employees on a voluntary or optional basis. Some key characteristics of voluntary benefits include 100 percent employee-paid insurance, offered through an employer with premiums paid through automatic payroll deductions. Others may include accident insurance, critical illness, auto/homeowners, cancer, disability income and pet insurance. Because these types of benefits are cost efficient and contribute to the employee’s work/life balance, they are becoming a central component of many companies’ overall benefits strategies.

Why should employers consider adding them to the benefits portfolio?

Since many employers find it increasingly difficult to provide employees with a complete benefits package, voluntary benefits have become a solution or supplement to an employee benefits program. Employers can offer these types of coverages without any added expense to the company. Implementation requires little or no administration or support. Trends also show that voluntary benefits have strong emotional appeal to employees, and they have actually come to expect them.

What are some of the advantages to offering voluntary benefits?

Voluntary benefits appeal to both the employer as well as the employee. From an employer standpoint, they offer a means of increased expense control. They provide the employer with a cost-effective way of supplementing benefit cuts or reductions that may be necessary due to budget constraints. By offering voluntary benefits, an employer can stand out from competitors in offerings and image, and thus may attract and retain valued employees.

From the employees’ perspective, voluntary benefits provide the opportunity to access a broader array of benefits in one place and the freedom to choose what best suits their needs. Voluntary benefits often have lower premiums than individual policies that employees would purchase on their own, and the premiums are payroll deducted, often on a pre-tax basis.

What should an employer consider when offering voluntary benefits in its portfolio?

First, employers wishing to offer voluntary benefits must show their support for the benefit program if they want them to be successful with the employees. Such support on behalf of the employer lends itself to motivating employees to see the value of voluntary benefits for themselves and their families. An employer should talk to employees to help determine what offerings would be most useful.

In addition, employers should carefully examine their current benefits package to determine which benefits are popular and those that are not. Most importantly, employers need to determine the type(s) of voluntary benefits that offer the most value for the lowest cost. This is crucial to the success of the voluntary benefits program due to employee’s perceived value.

As the program is implemented, employers should educate employees on what voluntary plans are available and the benefits of enrolling. Lastly, employers should follow up with employees on a regular basis to ensure that they are satisfied, and that there are no problems.

How is the success of a program measured?

Employers should review their voluntary benefits program every 12 to 24 months to gauge the program’s success and effectiveness. This can be accomplished through employee surveys to measure employee awareness, understanding and satisfaction with the benefits that are being offered. In addition, through benchmarking and reviewing participation rates among their workforce, employers can further determine if they are at industry norms with regard to enrollment, re-enrollment and persistency.

Insights Employee Benefits is brought to you by JRG Advisors

What employers need to consider as 2015 arrives on the work scene

Since the law was passed over four years ago, the Affordable Care Act (ACA) has made a number of significant changes to group health plans. Many of these key reforms became effective in 2014, including health plan design changes, increased wellness program incentives and reinsurance fees.

“There are additional reforms becoming effective in 2015 for employers sponsoring group health plans,” says Aaron Ochs, consultant and project manager at JRG Advisors. “The most significant development impacting employers in 2015 is the Shared Responsibility Penalty for applicable large employers and the related reporting requirements.”

Smart Business spoke with Ochs on how employers should review upcoming requirements and develop a compliance strategy for 2015.

What is the status of existing health insurance plans?

If a health insurance plan was in existence when the ACA was enacted on March 23, 2010, then it could be considered ‘grandfathered.’ However, if a company makes certain design or contribution changes to its plan that go beyond permitted guidelines, then the plan will lose its ‘grandfathered’ status.

The status will need to be reviewed for the 2015 plan year. These plans are exempt from some of the ACA’s mandates.

What is the reinsurance program?

The transitional reinsurance program was first introduced in 2014 and is intended to support the first three years of the marketplace’s operation (2014-2016). The fees are used to help stabilize premiums for coverage in the individual market. If you are a fully insured employer, you do not have to pay the fee directly as your insurance company pays the fees on your behalf. If you are a self-insured employer, you are responsible for paying the fee.

There are certain types of coverage that are excluded from the reinsurance fees. Fees are based on a national contribution rate, which the Department of Health and Human Services establishes annually.

There are some exceptions for self-insured companies that exempt them from the reinsurance fees.

Are there penalties for not offering health insurance coverage?

Perhaps the most impactful group of regulations of 2015 is the ACA employer penalty rules. These rules are applicable to Applicable Large Employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is both affordable and provides minimum value. Such employers will be subject to penalties if any full-time employee receives a government subsidy for health coverage through the Health Insurance Marketplace.

Employers who find themselves out of compliance with the shared responsibility requirements will be subject to an annualized employer penalty of $2,000 per full-time employee (less the first 80 full-time employees in 2015) if the employers do not offer health insurance to at least 70 percent (95 percent after 2015) of their full-time employees and their dependents.

How is ALE status determined?

It is important that employers determine their ALE status. ALEs are defined as employer with 50 or more full-time employees (including full-time equivalent employees, or FTEs) on business days during the preceding calendar year.

However, there is a one-year delay for medium-sized ALEs, those with fewer than 100 full-time employees (including FTEs).

Is there transitional relief for non-calendar year plans?

The final regulations also include transition relief for non-calendar plans that allow employers to begin complying with the pay or play rules at the start of their 2015 plan years, rather than on Jan. 1, 2015. The relief applies to employers that maintained non-calendar year plans as of Dec. 27, 2012.

There are additional checklists the employer should work through to determine their eligibility for relief. Again, employers should work with their benefits, legal and tax advisors to determine their eligibility for relief.

Insights Employee Benefits is brought to you by JRG Advisors

Affordable Care Act penalties to take effect on first of the year

While the recent focus often has been on how a company calculates full-time equivalent employees under the Affordable Care Act (ACA), there are many more federal reporting requirements created for employers and health plans.

“This reporting is primarily to provide the government with information to administer the large employer shared responsibility penalty and the individual mandate,” says Chuck Whitford, consultant with JRG Advisors.

The ACA’s employer penalties will take effect on Jan. 1, 2015, with that in mind, Smart Business spoke with Whitford about the requirements.

How are applicable large employers (ALEs) defined?

An employer qualifies as an ALE under the employer shared responsibility provisions if it employed an average of at least 50 full-time employees, including full-time equivalents, on business days during the preceding calendar year. ALEs must file a Section 6056 return with the IRS that reports the terms and conditions of the health care coverage provided to the employer’s full-time employees for the calendar year. A separate Section 6056 employee statement is required for each full-time employee.

What is required on the ALE’s tax return?

The return must include the following:

  • The ALE’s name, address and employer identification number (EIN).
  • The name and telephone number of the ALE’s contact person.
  • The calendar year for which the information is reported.
  • A certification as to whether the ALE offered to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (MEC) under an eligible employer- sponsored plan, by calendar month.
  • The calendar year months for which MEC under the plan was available.
  • Each full-time employee’s share of the lowest cost monthly premium for self- only coverage providing minimum value offered to that full-time employee under an eligible employer-sponsored plan, by calendar month.
  • The number of full-time employees for each month during the calendar year.
  • The name, address and taxpayer identification number (TIN) of each full-time employee during the calendar year and the months during which the employee was covered under the eligible employer-sponsored plan during the calendar year.
  • Other information the IRS requires.

The first Section 6056 returns required to be filed are for the 2015 calendar year, and must be filed no later than March 1, 2016 or March 31, 2016, if filed electronically.

What do employee statements need to list?

The employee statement must furnish:

  • A copy of the Section 6056 return on Form 1095-C for that full-time employee (or a form the IRS designates).
  • A substitute employee statement for that full-time employee, as long as it includes all the required information and complies with IRS procedures or other applicable guidance.

The employee statement must include the name, address and EIN of the ALE, and the information required to be shown on the Section 6056 return with respect to the full-time employee. Employee statements may identify the employee using an IRS truncated TIN rather than the employee’s social security number on the corresponding information return filed with the IRS.

The employee statements must be furnished annually to full-time employees. The first Section 6056 employee statements (the statements for 2015) must be furnished by Feb. 1, 2016 (Jan. 31, 2016, being a Sunday). Extensions may be available.

For employers who maintain any self-insured plans, the ACA requires them to file a Section 6055 annual return with the IRS reporting information for each individual provided with this coverage. Fortunately, the final regulations allow all ALEs to use a single combined form for reporting the information required under both Section 6055 and Section 6056.

All ALEs should discuss these new requirements with their advisors and not wait too long to start the process.

Insights Employee Benefits is brought to you by JRG Advisors

Individual open enrollment period here again for next three months

The next open enrollment period in which individuals can buy health insurance policies on and off the health insurance marketplace runs from Nov. 15, 2014 to Feb. 15, 2015.

“If you do not purchase a plan within this period, you may be barred from obtaining health insurance coverage until 2016’s open enrollment, unless you have a ‘qualifying life event’ throughout the year,” says Douglas Fleisner, sales executive, JRG Advisors.

Some examples of a qualifying event are birth, marriage, divorce, losing current coverage, certain changes in your income and moving to a new state or area where different medical plans are available.

Smart Business spoke with Fleisner about what individuals need to know about the open enrollment process.

What primary concerns should people be aware of regarding open enrollment?

Those who experience a qualifying event will have 60 days to apply for coverage. If they fail to do so, they will have to wait until the next open enrollment period to enroll in a plan.

If they go without qualified minimum essential medical coverage for all or part of 2015, they may be subject to an individual mandate penalty. This penalty increases in 2015 to $325 per adult or 2 percent of the modified adjusted gross household income, whichever is greater.

Qualifying medical coverage can include coverage provided by an employer, health insurance purchased in the health insurance marketplace, most government-sponsored coverages and coverage that is purchased directly from an insurance company.

However, qualifying coverage does not include coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation or coverage that only pertains to a specific disease or condition.

Can people shop somewhere other than

There are many options for individuals looking for coverage both on and off the health insurance marketplace.

The first step people should take when shopping for individual coverage would be to see if they and/or family members qualify for a premium tax credit through They may qualify if their adjusted gross household income falls between 100 to 400 percent of the federal poverty level (FPL).

If their income is below 250 percent of the FPL, they may even qualify for cost sharing reductions, which provide them with a richer benefit health plan than if they purchased one outside the marketplace. Advance payments of the tax credit can be used right away to lower monthly premium costs.

If the amount of advance credit payments received for the year is less than the tax credit that is due, they will get the difference as a refundable credit when they file their federal income tax return. If advance payments for the year are more than the amount of the credit, they must repay the excess advance payments with their tax return.

In order to qualify for a subsidy or cost sharing reductions, a person must be a citizen or non-citizen lawfully present in the U.S., reside in the state covered by the exchange and not be claimed as a tax dependent by another taxpayer. An individual cannot be eligible for health insurance through an employer group program that is deemed affordable and provides minimal value under the Affordable Care Act (ACA), and cannot be eligible for any government-sponsored program such as CHIP, Medicaid or Medicare.

How else can a person be prepared?

It is important to look at all options available, make sure the window to enroll in a plan isn’t missed and avoid the individual mandate penalty. It is important that individuals have a clear understanding of the requirements mandated by the ACA. It may also be helpful to consult with an insurance specialist who is certified to help individuals both on and off the government marketplace.

A certified insurance professional can ensure that an individual is selecting an insurance plan that best meets their financial, medical and network needs.

Insights Employee Benefits is brought to you by JRG Advisors

How to help your aging employees navigate through the various options

In the past decade, 52 percent of Americans were working past the Medicare-eligibility age of 65, according to the U.S. Bureau of Labor Statistics.

“At many companies, retiring used to mean transitioning from your employer’s health plan to a retiree health plan,” says Crystal Manning, Medicare specialist at JRG Advisors. “Now, more individuals are faced with trying to navigate through dozens of different Medicare plan options.”

Since fewer employers offer retiree coverage, it’s important that people study options early enough to make good choices based on their needs.

Smart Business spoke with Manning on how to optimize the choices for Medicare-eligible employees.

What can a company do to improve an employee’s Medicare experience?

More companies are taking steps to coordinate their health care coverage options for employees eligible for Medicare.  Research shows that for each employee that moves off the employer’s group medical plan, the employer may save  $6,000 to more than $12,000 on premiums for the employee alone. The savings for larger employers can far exceed these numbers. For small employers, the 2014 rate increase for the 65-plus age group will drive up an employer’s costs even higher.

When coordinating coverage under the group plan with Medicare, employer size is a factor. If an organization has more than 20 employees, the group health plan is the primary payer. If there are fewer than 20 employees in the organization, Medicare is the primary payer, and the employer’s plan is the secondary payer. In this occasion, it’s normally essential that employees turning 65 enroll in Medicare Parts A and B.

What about for smaller businesses?

The law does not require small employers to offer employees or a covered spouse the same coverage as other employees. Therefore, smaller businesses can require an employee to enroll in Medicare. Some smaller employers may offer coverage that is supplemental to Medicare, such as paying the Medicare deductibles and cost-sharing.

It is essential that employees enroll in Medicare Parts A and B. If they don’t enroll, there may be penalties associated to late enrollment. Employees might be able to move to their spouse’s health care plan if it would provide them with equal or better coverage than Medicare.

Employers may create, adopt or maintain a wide range of retiree health plan designs, as well as reduce or terminate benefits for Medicare-eligible retirees without running the risk of the federal Age Discrimination in Employment Act.

What about employee savings accounts?

Generally, all employees will benefit from enrolling in Part A when they reach 65. They may choose to contact Social Security at that time, or wait until they are ready to enroll in Part B. However, people with a health savings account (HSA) may want to delay enrollment in Part A. If an employee has a health reimbursement account (HRA) and becomes eligible for Medicare, he or she may chose to enroll in Medicare or delay enrollment. If an employee does enroll, the employee may draw from the HRA to pay Medicare premiums, deductibles and cost-sharing.

What are the risks of late enrollment?

The rules for enrolling in Medicare are strict. The initial election period for employees turning 65 without penalties is three months before their birthday, the month of their birthday or three months after. For each 12-month period of enrollment delay when eligible, the employee will pay a penalty of 10 percent of the Part B premium — forever.

Once an employee leaves a job, he or she must enroll in Part B within eight months, even if the employee stays on the group plan. If the employee chooses COBRA, Medicare is primary. Also, if an employee chooses traditional Medicare and his or her income is above a certain threshold, the employee will pay more for Parts B and D.
It is not surprising many people find this process confusing. An employee often will find that the benefits relative to group coverage are much lower and changing to Medicare may be far less a risk than initially thought. A good adviser will assist the company in choosing from Medicare Advantage, prescription drug and Medigap options.

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