What is “Affordable” Coverage under Health Care Reform?

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Under the Patient Protection and Affordable Care Act, the employer-provided coverage must be “Affordable,” so that Applicable Large Employers avoid penalties under the “Pay or Play” rules. Affordability will be determined by whether the coverage offered costs an employer more than 9.5% of their annual household income.  Since there is no practical way for an…

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Department of Labor Releases New FMLA Forms: May 2015

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Over the Memorial Day holiday weekend, the Department of Labor published new FMLA forms. The new forms are good through May 2018.

Download the new forms:

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

What is the Difference between Federal COBRA and Cal-COBRA?

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When an employer offers a group health insurance plan, such as medical, dental, or vision insurance, the employee and covered dependents (“Qualified Beneficiaries”) are provided an opportunity to continue their current plan at the individual/family’s expense when they have a qualifying event. Qualified events may include termination or reduction of hours of the covered employee’s employment for other than gross misconduct; divorce or legal separation from a covered employee; the loss of dependent status by overage dependent; the covered employee becomes eligible for Medicare; or the death of the covered employee. The continuation of group coverage option is known as either “Federal COBRA” or “Cal-COBRA.”

 

Listed below are some highlights of Federal COBRA vs. Cal-COBRA:

 

  Federal COBRA Cal-COBRA
Employer size 20 or more employees more than 50% of the previous calendar year 2-19 employees
Who is eligible? Covered Individual and covered spouse/dependents at the time of the qualifying event Covered Individual and covered spouse/dependents at the time of the qualifying event
Who sends the COBRA Notice to the individual and qualified beneficiaries? Either the employer or a third-party administrator sends the COBRA notice within 30 days of the qualifying event. Employer must notify the insurance carrier and the carrier is responsible for sending out the Cal-COBRA notifications to the individual and qualified beneficiaries.
How long do they have to elect the COBRA/Cal-COBRA coverage? Employee and/or qualified beneficiary must elect coverage within 60 days of the qualifying event. Employee and/or qualified beneficiary must elect coverage within 60 days of the qualifying event.
How much does it cost to continue coverage? Cost is 102% of the regular premium for 18 months.NOTE: premium may change within that period, depending on plan year and renewal rates with insurance carriers. Cost is 110% of the regular premium for 18 months.NOTE: premium may change within that period, depending on plan year and renewal rates with insurance carriers.
Duration of Coverage Continuation Generally extends health coverage for 18 months. Individuals with certain qualifying events may be eligible for a longer extension (i.e. 29 or 36 months). Cal-COBRA allows individuals to continue their group coverage for up to 36 months. For individuals covered under Federal COBRA, Cal-COBRA may also be used to extend health coverage for a combined period of up to 36 months.

 

We typically recommend that employers with 20 or more employees outsource the COBRA administration to one of our preferred third-party administrators (TPA), as COBRA requires a number of plan notifications to take place at different stages in the COBRA process. Some of the notifications include:

 

The other option for Insurance coverage for individuals and qualified beneficiaries may be to elect Individual coverage, either “on” or “off-Exchange” plans, providing it is within their “Special Enrollment” period. If it is not “open enrollment” for individual coverage for on or off-Exchange plan and they had a qualifying event (as seen above), then they have up to 60 days to enroll under the special enrollment period. See blog post:   Help…I lost my job…Should I take COBRA or Covered California (Exchange)?

 

For more information, please do not hesitate to contact MNJ Insurance Solutions at (714) 716-4303.

 

Additional COBRA Information:

 

This material is for informational purposes only and not for the purpose of providing legal advise.  You should always contact your attorney to determine if this interpretation is appropriate for your particular situation.

Help…I Lost my Job…Should I Take COBRA or an Individual Policy?

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COBRA is a federal law that requires employers of 20 or more employees with group health plans to offer employees, their spouse and dependents a temporary period of continued health care coverage if they lose coverage through the employer’s group health plan.  Employers who have not continuously had 20 employees are covered if they had at least 20 employees on more than 50% of  the typical business day in the previous calendar year.  Both full-time and part-time employees are counted to determine whether the plan is subject to COBRA.

 

Individuals are not obligated to participate in COBRA after leaving an employer or having a reduction in hours.  However, if an individual declines the initial offer of COBRA, he/she may qualify for “special enrollment” in Covered California health insurance or an “off-exchange plan” outside of the annual Open Enrollment period for Individual/Family coverage.  An “off-exchange plan” are plans that are offered by the carrier direct, rather than through Covered California.  In order t take advantage of the special enrollment in Covered California or “off-exchange plan,” the individual/family losing group coverage must apply for coverage no later than 60 days after their employer-sponsored plan ends.  It is also important to note that if an individual were to terminate their COBRA coverage during Open Enrollment of Covered California or elect an off-exchange plan, he/she cannot change their mind to go back to COBRA.

 

If an individual were to elect COBRA and loses his/her coverage (i.e. due to non-payment), he/she will NOT be eligible for special enrollment through Covered California, nor opt to an off-exchange individual plan at that time.  Outside of Open Enrollment, individuals qualify for special enrollment with Covered California or off-exchange individual plans if one of the following apply:

  • If former employer was responsible for remitting payments for the COBRA premium and fails to do so in a timely manner, therefore participant is cancelled due to group non-payment;
  • The COBRA participant moves out of the plan coverage area and there is not another option available (i.e. former employer offers HMO only plan and COBRA participant moves out of state and the HMO would no longer be a good option);
  • If the former employer cancels the group plan, therefore, COBRA is no longer available; or
  • The beneficiary has maximized their COBRA duration available under the plan.

 

Listed below are pros and cons of Electing COBRA vs. Enrolling in Covered California after an individual and qualified beneficiaries have had a qualifying event.

 

PROS CONS
ELECTING COBRA
  • The network of doctors and hospitals available in each plan and individual can continue the current benefits.
  • Covers more Rx than individual plans.
  • Transition and electing COBRA is typically an easier process than enrolling in Covered California.
  • If you are currently seeking treatment or under the care of a physician, it is easier to continue care under COBRA.
  • The total monthly premiums for the individual and qualified beneficiaries (family members previously enrolled on the plans) are paid by individual.
  • If the individual and qualified beneficiaries enrolled in COBRA, they cannot drop their COBRA plan and enroll in Covered California plan unless it is Open Enrollment for Covered California.
  • Depending on the level of benefits previously provided by the employer, the COBRA monthly premiums may be more expensive than desired coverage through Covered California (i.e. if employee or dependents may not need the rich covered previously offered by the employer).

 
ENROLLING IN COVERED CALIFORNIA OR “OFF EXCHANGE PLANS” WITH THE CARRIER
  • Depending on income, the individual and qualified beneficiaries may qualify for tax credit and/or subsidy (depends on household income – chart for 2015) with Covered California.
  • Copays and deductibles may vary with options for Covered California or “off-exchange plans.”
  • Individual has options to move to another carrier (plans for 2015) than what may be provided through their former employer.

 
  •  Doctors and hospitals may not be in the network for the Covered California or “off-exchange” plan option.  It is important to confirm preferred doctors before selecting a plan to ensure they are in the network.
  • Prescription plans offered through Covered California individual plans or “off-exchange” plans often cover a smaller list of formulary drugs than group plans.

 

Note: If you have a qualifying event, your spouse has other group coverage offered through his/her employer, you may also want to explore adding onto their group plan as an additional alternative.  If this is an option through his/her employer, it must be done within 30 days of the loss of coverage.

If you have questions regarding your personal situation, MNJ Insurance Solutions are able to assist and can be reached at (714) 716-4303.

 

More Resources:

COBRA vs. Exchange Coverage – Covered CA

 

Disclaimer:  The views and opinions expressed are those of the author and do not necessarily reflect the official policy or position of Covered California.  Any content provided by our bloggers or author is of their opinion and are not intended to malign any organization, company, government entity, anyone or anything.

This document is for general information only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy or completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice from their own attorneys and tax advisors with respect to their individual circumstances.

HSA, HRA, or FSA…What is the Difference?

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high-interest-savings-account

Health care accounts are not all created equal. That’s why you need an experienced, trusted adviser to help you understand health care accounts. MNJ Insurance Solutions is here to help you understand the complex, and sometimes confusing, health care accounts and their acronyms, like HSAs, HRAs, and FSAs, so you can make an informed decision about the type of health plan and corresponding health account that is right for you.

Below is a chart to help compare Health Savings Accounts (HSA), Health Reimbursement Arrangements (HRA), and Flexible Spending Accounts (FSA) and highlight their differences in benefits.

  Health Savings Account (HSA) Health Reimbursement Arrangement (HRA) Flexible Spending Account (FSA)
Account definitions A tax-advantaged account used to pay for qualified medical expenses of the account holder, spouse, and/or dependents. An employer-funded arrangement used to reimburse employees for out-of-pocket qualified medical expenses. An employer-established and optional tax-advantaged account funded by the employee to pay for qualified medical expenses with pre-taxed dollars.
Who can open the account? The employee or employer as long as the employee is enrolled in an HSA-compatible health plan. The employer. The employer.
Who can contribute? Employers, employee/account holder, or any third party, IF the employee has a HSA-compatible health plan. The employer. The employee.
Who owns the account? The employee/account holder. The employer. The employee, but unused account balances revert back to the employer at the end of the plan year.
Is there an annual contribution limit? In 2013, limits are $3,250 and $6,450, respectively. See HSA limits per applicable year. Yes, as determined by the employer’s plan design. Yes, as determined by the employer’s plan design, and subject to maximums redefined by ACA.
Do unused funds carry over to the next year? Yes. Possibly, as determined by employer’s plan design. Possibly, if the plan document includes the rollover provision.   See your Section 125 FSA Summary Plan Description for more details.
Can you take the account funds with you if you change jobs, change health plans, or retire? Yes. No. Section 125 FSA plans are a COBRA eligible benefit.   Therefore, an employee may opt to take COBRA for the unused benefits for the duration allowed.
Can you use the account for retirement income? Yes, after age 65, you can withdraw funds for any reason with no penalty. Although, if not used for qualified medical expenses, withdrawals will be taxed as income and an excise tax will be applied. No. No.
Is the account tax advantaged? Yes, account holders contribute tax-free, any interest or investment gains are tax-free, and when used for qualified expense, you withdrawals are tax-free. No. Yes, employees’ contributions are made through pre-taxed payroll deductions.
Can the account earn interest? Yes, and after the account balance reaches a minimum balance requirement (typically $2,000), you can invest in funds available with your HSA third-party administrator and any gains are also tax-free. No. No.
Can the account reduce the out-of-pocket health care expenses of the account holder? Yes. Yes. Yes.

Additional Information Resource:

ACA impact on health reimbursement arrangements (HRAs)

 

If you have any questions or would like to further explore HSA, HRA, and/or FSA options for your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.