Compliance update: Do not try to reimburse individual policies; new COBRA templates, and BAY AREA commuter requirements
In a continuing effort to work together instead of independently, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury, have issued additional guidance related to Affordable Care Act (ACA) Health Care Arrangements and COBRA enrollment, including new COBRA templates. Highlights follow:
Certain Employer Health Care Arrangements
The Internal Revenue Service (IRS) issued further guidance related to certain health care arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy. Notice 2013-54 makes it clear that such arrangements cannot be integrated with individual policies to satisfy the market reforms. Therefore, such arrangements fail to satisfy the market reforms and may be subject to a $100 per day excise tax per applicable employee (which equals $36,500 per year, per employee) under Code Section 4980D.
Special Marketplace Enrollment for COBRA Participants
As BBD notified clients in May, California COBRA-eligible former employees have until July 15, 2014 to enroll in Covered California. The California extension is two weeks longer than the federal HHS authorized one.
Updated Model COBRA Notices
The DOL released a new model General Notice and a model Election Notice for providing COBRA notices to employees, and a related notice of proposed rulemaking to eliminate these notices from the appendices of its regulations and, instead, publish updates directly in DOL guidance. The agency also released an updated model notice regarding premium assistance under the Children’s Health Insurance Program Reauthorization Act (CHIPRA). All updated notices now specify the special enrollment rights available through the Health Insurance Marketplace.
Health FSA Carryovers and Excepted Benefits
In published frequently asked questions (FAQs), the agencies noted that health flexible spending accounts (FSA) are generally treated as excepted benefits — not subject to ACA requirements — as long as an employer also offers a group health plan not limited to excepted benefits and does not make employer contributions exceeding certain limits. Furthermore, the agencies clarified that health FSA carryover amounts (up to $500 in unused amounts carried over to the next year) should not be included when determining if the health FSA satisfies the maximum benefits payable limit under excepted benefits guidance.