The Fact of the Month
Here’s something to talk about when discussing plan design options and employer contribution strategy with group clients in the New Year.
Flexible spending arrangements (FSAs) are an employee benefit more likely to benefit older members of the workforce. According to recent research from the Employee Benefits Research Institute, older workers are more likely to incur health care expenditures than younger workers. Perhaps resulting from that, when it came to FSAs, older accountholders tended to contribute more, take distributions more frequently, and were less likely to have money left over at the end of the year. This mirrors the evidence found in EBRI’s earlier analyses of HSAs. So brokers and employers should keep in mind that as accountholders age, they are more likely to take fuller advantage of these tax-advantaged spending vehicles. Source: FSA Utilization Differs by Age, Employee Benefits Research Institute, April 29, 2021
Source: FSA Utilization Differs by Age
The Big Three
Each month GPAHU identifies three top public policy or legal developments that could impact our members and clients. Here are this month’s big three!
New Federal Regulatory Guidance Affects COBRA Subsidy Recipients and People Buying Exchange-Based Coverage
The American Rescue Plan Act (ARPA) provides health insurance purchasing assistance to people affected by the COVID-19 economic downturn. Recent federal and state regulatory actions are helping more people access that assistance.
One of the ways ARPA is helping people access coverage is by fully subsidizing COBRA and state continuation coverage for certain qualified individuals through September 30, 2021. Building on that assistance, a new federal final rule makes it clear that when someone’s COBRA or state continuation coverage subsidy runs out, the person qualifies for an individual market special enrollment period (SEP). COBRA subsidy-eligible people can enroll in any type of individual market coverage, including coverage available through a health insurance exchange, up to 60 days before or after their federal continuation coverage assistance runs out.
ARPA also makes individual exchange-based coverage more affordable for millions of individuals. People with family incomes of up to 400% of the Federal Poverty Level (FPL) have always been able to access advance premium tax credits for individual coverage purchased through a health insurance exchange. Now, for the next two years, no one will be required to spend more than 8.5% of their income on a benchmark health plan if they buy individual coverage through an exchange. This policy extends to both the Pennsylvania state-based exchange, Pennie, and Healthcare.gov, which serves Delaware residents. While the reach of the expanded ARPA subsidies depends on which policy a person picks, the new money is expected to help people with family incomes in the range of up to 500% of the FPL.
Besides the new funding available due to ARPA, the State of New Jersey is making even more financial help available to exchange customers, effective May 1, 2021. Get Covered New Jersey will be making subsidies available to people with incomes up to 600% of the FPL, or $76,560 for an individual and $157,200 for families of four. Individuals who receive unemployment compensation during any week beginning in 2021 may also be eligible for additional financial help. This state-specific funding comes from New Jersey’s Section 1332 ACA waiver.
GPAHU members working in the individual market should make sure any clients already enrolled in exchange-based coverage plans know about the enhanced subsidies. Clients with off-exchange individual coverage may also now qualify for subsidies for the first time.
On the group side, GPAHU members will want to make both employers and eligible COBRA subsidy recipients aware of the new individual market SEP when subsidies end. Also, higher exchange-based subsidy levels may affect applicable large employer (ALE) clients. For ALEs, the employer mandate penalty trigger is if an eligible employee qualifies for a subsidy through an exchange. ARPA does not change the federal affordability safe harbors for ALEs, but if tax credits are available to more people, more employers may get notified of a potential penalty assessment. So, GPAHU members can show value to large group clients by helping them pick an affordability safe harbor carefully and ensuring that all related employer reporting forms are coded correctly.
2022 Health Plan Limits Released
Over the past few weeks, the federal Department of Health and Human Services and the Internal Revenue Service set important limits for health insurance coverage options in 2022. The Annual Notice of Benefit and Payment Parameters set the maximum out-of-pocket (MOOP) cost-sharing limit for 2022. Next year, besides premium costs, the most a person can pay towards traditional ACA-compliant health coverage will be $8,700 for self-only coverage and $17,400 for anything other than self-only coverage.
More limits are included in the Internal Revenue Service (IRS) notice, Revenue Procedure 2021-25. To contribute to a health savings account (HSA), a person must be under age 65 and have a qualified high deductible health plan (HDHP). In 2022, HSA owners with individual coverage will be able to contribute up to $3,650 to their accounts, and those with family coverage may contribute up to $7,300.
For 2022, the minimum self-only HDHP deductible will be $1,400, and the minimum deductible for other coverage will rise to $2,800.
The maximum out-of-pocket limits for HDHP plans are different than other ACA-compliant health plans. In 2022, those with self-only HDHP coverage will have a $7,050 limit. The maximum out-of-pocket payment level for those with family HDHP coverage will be $14,100.
The maximum value of an excepted benefits health reimbursement arrangement (excepted benefit HRA) will be $1,800 in 2022.
New Law and Related Guidance Requires Employer Group Plan Sponsors and Carriers to Produce Parity Non-Quantitative Treatment Limitation Analyses ASAP
One of the provisions buried in the December 2020 COVID-19 stimulus law (The Consolidated Appropriations Act, 2021, or CAA) is a requirement that all employer health plan sponsors and insurance carriers subject to the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) prepare a comprehensive analysis of any non-quantitative treatment limitations their specific plan places on coverage. The Department of Labor (DOL) recently issued new clarifying guidance and FAQs explaining exactly what employers and health insurance carriers need to do, and also emphasizing that this requirement is not optional.
The law gave plans 45 days to prepare their analyses, so technically they were due on February 10, 2021. The FAQs note the CAA “expressly requires that plans and issuers now conduct and document comparative analyses of the design and application of NQTLs. Therefore, this process is no longer a best practice; it is required.”
Due to the scope of the MHPAEA and how the Affordable Care Act extends its requirements to individual and small group fully-insured plans, almost all employer group health plan sponsors have a responsibility to meet the new requirement. (One of the only exceptions is groups of 50 or less with level-funded coverage.) Both carriers and employers have liability if they do not prepare a report, including serious financial penalties, public disclosure of noncompliance, and the possibility of having to reprocess all claims. For self-funded and level-funded groups, the employer bears all of the legal responsibility on their own. However, employers will not be able to complete the documentation on their own.
To support clients, brokers should reach out to carriers to determine when fully-insured clients can expect to get their NQTL comparisons. For clients with self-funded or level-funded coverage, check with the TPA and other related vendors to see if they will prepare the analysis or how they can help. Also, check out a recent NAHU webinar about how brokers can help clients meet their MHPAEA obligations.
Check This Out!
If you want to expand your health policy knowledge beyond this newsletter, here is a resource to check out!
Did you know that both group benefit plan participants and their advisors can directly access the Department of Labor’s Employee Benefits Security Administration for compliance assistance and questions? Ask EBSA is a service available to provide quick information, answers to common questions, and information about complying with the federal laws that cover private sector employee benefit plans. You can reach a live benefit advisor by calling 1-866-444-3272 or submitting a question online.