CA Waiting Period Update & Federal Changes on the Horizon: August 20, 2014

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August 15, 2014 California Governor Jerry Brown signed into law legislation SB 1034 to better align California’s health coverage waiting period requirements with federal law. The intent of the bill is to resolve confusion between California and Federal law and to better conform to the waiting period provisions of the Affordable Care Act. While the ACA had established a 90-day waiting period for employers, California originally established a 60-day waiting period in 2014.

 

Therefore, as new plans begin or plans renew on or after January 1, 2015, employers will have the following options for waiting periods (depending on the medical carrier):

  1. First of the month following date of hire,
  2. First of the month following 30 days, or
  3. First of the month following 60 days.

 

Please check with your medical carrier for details or we can assist you to ensure you have the best option for your group.  If your group would like to change your waiting period for first of the month following 60 days, as your plan’s current waiting period was changed upon your renewal in 2014 to a lesser waiting period, this MAY be an option in 2015 (depending on carrier), or you can change upon your next renewal.

 

Federal action on waiting periods-in this case orientation periods – is also occurring at the federal level. In a final rule released in June 25, 2014 the Internal Revenue Service, the Employee Benefits Security Administration, and the Health and Human Services Department are authorizing an employer (who is offering ACA defined credible coverage) to have a “bona fide orientation period that occurs before the 90 waiting period begins. That means an employer that offers health coverage to employees could have an additional month of time before adding a new hire onto their health policy if there is a bona fide reason for an orientation period.

 

Under the final regulations, a group health plan and a health insurance issuer offering group health insurance coverage may not apply any waiting period that exceeds 90 days. The regulations define “waiting period” as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. Being otherwise eligible to enroll in a plan means having met the plan’s substantive eligibility conditions (such as, for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period.

 

The proposed regulations provided that one month would be the maximum allowed length of any reasonable and bona fide employment-based orientation period. During an orientation period, the regulators envisioned that an employer and employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin. Under the proposed regulations, if a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

 

The federal orientation period rule becomes effective on all group policies issued or renewed after January 1, 2015.

 

Click here for the Federal Register Notice.

 

Reference:  CAHU News Agents Can Use (August 20, 2014)

 

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.

COBRA Notices Updated by DOL: May 2, 2014

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Did you know that on May 2, 2014, the Department of Labor (DOL) issued updates to the Model General Notice and COBRA Election Notice?  Are you confident that you are providing the correct notices in a timely manner to your eligible employees and qualified beneficiaries? The Obama administration announced updates to model notices that employers must provide to employees, informing workers of their eligibility to continue health care coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA).  The Department of Labor (DOL) on May 2, 2014, released a new model general notice form and model election notice form for providing COBRA notices to employees, and a related notice of proposed rulemaking on the COBRA notice requirements, published in the May 7 edition of the Federal Register.​ Federal agencies also released an updated model notice regarding premium assistance under Medicaid and the Children’s Health Insurance Program (CHIP).

The updated notices let employees and qualified beneficiaries know that if they are eligible for COBRA continuation coverage, they also have an option to purchase coverage through the Affordable Care Act’s (ACA) Health Insurance Marketplace, as the government-run exchange is formally known.  Employees directed to Covered California/public exchange, may qualify for federal subsidies depending on income, and are less likely to opt to pay the full premium to continue with their former employer’s health coverage through COBRA. Regardless of the availability of Covered California/public exchange, employers with 20 or more are still required to comply with COBRA.  Ultimately, the decision of continuation of medical coverage will depend on what is best for the individual/family. For more information on COBRA Continuation Coverage, see the resources below.

or Employees

For Employers

Posters and Flyers

Video

Reference:  As seen at http://www.dol.gov/ebsa/COBRA.html dated August 1, 2015.

 

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.

Small Group Rating on New ACA Plans Beginning in 2014

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The Affordable Care Act (“ACA”) and new state laws great new rules for how small group health plan rates will be calculated in 2014 and beyond for small groups. These changes are different than how small group has been rated prior to ACA. For non-grandfathered small group plans, insurance must maintain a single risk pool for coverage in the small group market, and there will be no medical underwriting.

For grandfathered plans, rates in 2014 will be calculated using the same methodology used in 2013 (i.e. age bands, dependent coverage, etc.). For non-grandfathered plans, including “metal tier” plans available on and off-exchange, rates can vary based only on the following factors:

  • Standard age curve: this age curve expands the number of age bands from 7 to 40 5H bands, requires all ensures to use the same age curve, and limits the oldest adult rate to no more than three times the youngest adult rate (defining adults as 21 and older).
  • Family coverage: the cost of family coverage will be calculated by adding together the premium rate for each family member using the standard age curve. Insurance can charge no more than three oldest children under the age 21 per family. This approach to establishing family coverage is called the “member level rating,” as opposed to family to your rating, which is based on the employees age and family coverage category.
  • Geographic area: rates can be higher for people who live in areas with high medical costs. The number of geographic right areas in California will jump from 9 to 19 into thousand 14, and they must be standardized across the insurers. In 2015, small group plans in California will be rated based on employer ZIP Code, whereas in the past, rates for most curious were based on employee home ZIP Code.

Example: Family with six children

 Dad, age 55  Mom, age 52  Child, age 24  Child, age 20  Child, age 17  Child, age 14  Child, age 10  Child, age 5

Based on the medical plan selected, the new member level family rating would be calculated as follows:

Premium for dad, age 55, plus

Premium for mom, age 52, plus

Premium for child, age 24 (as family member’s age 21 and older are eight rated separately),

plus Premium for child, age 20,

plus Premium for child, age 17,

plus Premium for child, age 14 (as previously mentioned, insurance can charge for no more than the three oldest children under age 21 per family)

The additional children, age 10 and age 5, are not rated for this family’s premium.

Add each premium together and that is the new family rate under ACA for small groups.

 

NOTE: Birthday billing rates will adjust for age at contract renewal, along with the carriers trend increase for the small risk pool.

NOTE:  As of January 1, 2016, small group rating will be for group sizes of 1-100, which will significantly change the 51-100 mid-sized employer’s rating and benefit offerings.

For more information, download Final Rule on Rate Review

 

MNJ Insurance Solutions can offer you affordable healthcare coverage for California employer groups of any size.  Please contact us for a complementary quote from various insurance carriers 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.