Archives for Legislative Update

California: New Legislation Amends the Paid Sick Leave as of July 13, 2015

Posted by mnjinsurance on August 5, 2015

California’s new paid sick leave law, the “Healthy Workplaces, Healthy Families Act of 2014” (paid sick leave law) recently went into effect on July 1, 2015. Less than two weeks later, the law has already been amended. On July 13, 2015, the California legislature passed AB 304 amending the Paid Sick Leave Law. Governor Jerry Brown signed the bill into law the same day, as the law contains an urgency clause and the changes become effective immediately. Below is a brief description of the most important changes.

 

Who are covered workers?

The amendments clarify that the law applies to an employee who works in California for the same employer for 30 or more days within a year.

 

How does the employer calculate the sick leave accrual?

 

The original law provided only one method of calculating the sickleave a grill. Now, with the amendment, the employer can calculate sick leave pay for nonexempt employees by one of the following:

  •  Using the same calculation used to determine the employees regular hourly rate for overtime purposes, or
  • Dividing the employees total wages (excluding overtime) by the employee’s total hours worked in the full pay cycle of the prior 90 days of employment.

 

Under the amendment, the employer can calculate sick leave pay for exempt employees by the following:

  •  The same method of calculating wages as it uses for other forms of paid leave, such as vacation.

 

Alternative accrual method:

  • The paid sick leave amendment clarifies that employers may use methods of occurring sick leave other than the “one hour of sick leave for every 30 hours worked method” (1-in-30 method) used in the original language of the law.
  • Alternative accrual method, such as accrual by pay period or by months of employment are also valid, provided that the employees receive at least 24 hours (3 days) of sick leave by the 120th calendar day of employment or the employer’s sick leave year (calendar year or otherwise).

 

Employers existing paid time off (PTO) or sick leave policies:

Under the amendment of the Paid Sick Leave law, sick leave policies that existed before January 1, 2015 and that use an accrual method that differed from the “1-in-30 method,” have been grandfathered IF they meet the following three conditions:

 

  1. Accrual occurs on a regular basis;
  2. Employees receive not less than eight hours (one day) of sick leave within the first three months of employment or sick leave year; and
  3. Employees receive at least 24 hours of sick leave within the first nine months.

 

Listed below are some additional minor changes and clarifications to the paid sick leave law:

 

  • Employers with unlimited sick leave policies can state “unlimited” on employees paycheck stubs, rather than having to list a specific number of days or hours.
  • Employers do not have an obligation to reinstate an employee sick leave upon rehire within one year, if the employer paid the employee for the accrued sick leave upon termination.
  • Employers do not have an obligation to ask employees about the reason for taking the leave.
  • The language in the law of “a year” means a year of employment, a calendar year, or another employer designated 12 month period.
  • The amendment clarifies that employees have to work for 30 days for the same employer before becoming eligible for paid sick leave.

 

Action items for Employers to comply with Healthy Workplace Healthy Family Act of 2014 (AB 1522):

 

If an employer implemented a new sick leave policy, or revise their previous sick leave or paid time off policy within the last six months, to comply with the requirements of the paid sick leave law, most likely, no immediate action is required. However, if an employer failed to revise its existing policy prior to July 1, 2015, the employer should immediately review the newly amended law to ensure their sick leave policy complies with the amended Paid Sick Leave law. Regardless of whether the employer’s policy is grandfathered or not, the newly amended law allows the employer to have an option of an accrual method that may better meet its business needs. We recommend that you have your policy reviewed by your legal counsel/Business attorney to ensure compliance and the appropriate language in your policies.

 

In addition, the employer must do the following to comply:

 

  • Display poster on paid sick leave (Spanish) (Vietnamese) where employees can read it easily.Provide written notice to employees with sick leave rights (Spanish) (Vietnamese) at the time of hire.
  • Provide for accrual of one hour for every 30 hours worked and allow use of at least 24 hours or 3 days or provide at least 24 hours or 3 days at the beginning of a 12 month period of paid sick leave for each eligible employee to use per year.
  • Allow eligible employees to use accrued paid sick leave upon reasonable request.
  • Show how many days of sick leave an employee has available. This must be on a pay stub or a document issued the same day as a paycheck.
  • Keep records showing how many hours have been earned and used for three years. Affected employers may review the AB-1522 Employment: paid sick days Affected Employers may review the text of the amendments for the additional changes

 

 

For more information:  Healthy Workplace Healthy Family Act of 2014 (AB 1522)

 

  • Retaliation or discrimination against an employee who requests or uses paid sick days is prohibited. An employee may file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against the employee for exercising these rights or other rights protected under the Labor Code.
  • Local offices are listed on our website at http://www.dir.ca.gov/dlse/DistrictOffices.htm.

 

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.

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U.S. Supreme Court Ruling: Subsidies Will Continue for Federal Marketplace Coverage

Posted by mnjinsurance on August 3, 2015

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On June 25, 2015, the U.S. Supreme Court released their decision in the King v. Burwell case concerning the provision in the Patient Protection and Affordable Care Act (PPACA), and ruled that subsidies will continue to be available in all states and not just those with state-based exchanges.  Subsidies with federally-facilitated exchanges will continue, as the Obama administration intended.  The ruling affirmed the earlier decision by the Fourth Circuit Court of Appeals.

 

California has a state-based exchange, known as “Covered California,” and this decision does not affect things in California, but the clarification is important and applicable to the residents in the 34 states that utilize the Federal Marketplace.  Since nothing has changed as a result of this decision and NO ACTION is required by individuals who are currently receiving health insurance subsidies in California at this time.

 

The Court considered two possible scenarios in its decision:

  1. Adhere to the strict reading of the law that subsidies may only be available with state exchanges, OR
  2. rule in favor of the intent of the law for universal availability of subsidies in all states and all exchanged.

 

Following this ruling in favor of allowing premium subsidies to be distributed through both federal and state exchanges, the implementation of PPACA will continue and its insurance reform provision will remain in effect.

 

Since the continuity of subsidies, in both state and federal exchanges are no longer in question, it is our hope that legislation will make Health Care Reform more workable for both individual and business consumers.  In addition, it is our hope that sate and federal policymakers will not focus their attention on efforts to reduce the cost of providing health care, as PPACA has still not fully addressed the issue.  Lawmakers and regulators need to look at the portions of our health care system that are working well and keep a variety of health insurance products and options available to all consumers, and improve the areas that need adjustments.  We believe the employer-based system has been reliable and effectively delivered health coverage to generations of Americans, and as a nation, we need to preserve it!

 

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.

Healthy Workplace Healthy Family Act of 2014 (AB 1522) – Paid Sick Leave in CA

Posted by mnjinsurance on August 3, 2015

The new law, Healthy Workplace Healthy Family Act of 2014 (AB 1522), is effective as of January 1, 2015; however, the right to accrue sick leave becomes effective on July 1, 2015.  Affected employers should be mindful that a new law requires most businesses to provide up to 24 hours (or 3 days) per year of paid sick leave to employees who work in California for 30 or more days within a year from the commencement of employment.  Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked. Accrual begins on the first day of employment or July 1, 2015, whichever is later.  An employer may limit the amount of paid sick leave an employee can use in one year to 24 hours or three days. Accrued paid sick leave may be carried over to the next year, but it may be capped at 48 hours or six days.

 

Exceptions:

 

Employees covered by qualifying collective bargaining agreements, In-Home Supportive Services providers, and certain employees of air carriers are not covered by this law.

 

Background

  • Employees will accrue paid sick days at the rate of 1 hour per every 30 hours worked, beginning at the commencement of employment or July 1, 2015 (whichever is later).
  • Upon the oral or written request of an employee, an employer must provide paid sick days for certain purposes, including (among other things) diagnosis, care, or treatment of an existing health condition of—or preventive care for—an employee or an employee’s family member.
  • An employee is entitled to use accrued paid sick days beginning on the 90th day of employment, after which day he or she may use paid sick days as they are accrued.

 

Usage


  • An employee may use accrued paid sick days beginning on the 90th day of employment.
  • An employee may request paid sick days in writing or verbally. An employee cannot be required to find a replacement as a condition for using paid sick days.
  • An employee can take paid leave for employee’s own or a family member for the diagnosis, care or treatment of an existing health condition or preventive care or for specified purposes for an employee who is a victim of domestic violence, sexual assault or stalking.

Action Items for Employers to comply with the Healthy Workplace Healthy Family Act of 2014 (AB 1522):


Important:  Retaliation or discrimination against an employee who requests or uses paid sick days is prohibited. An employee may file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against the employee for exercising these rights or other rights protected under the Labor Code.”

 

As seen on:  State of California Department of Industrial Relations as of August 2, 1015.

 

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.

DOL Revised FMLA Definition of “Spouse”: February 25, 2015

Posted by mnjinsurance on August 3, 2015

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The Family and Medical Leave Act (FMLA) entitles eligible employees of covered employees of covered Employers to take unpaid, job-protected leave for specified family and medical reasons.  The FMLA also includes certain military family leave provisions.  On February 25, 2015, the U.S. Department of Labor revised Family Medical Leave Act definition of a “spouse.”   The Final Rule’s definition of spouse expressly includes individuals in lawfully recognized same-sex and common law marriages and marriages that were validly entered into outside of the United States if they could have been entered into in at least one state.

 

The DOL noted in its Fact Sheet on the Final Rule that the definitional change means that eligible employees, regardless of where they live, will be able to take:

 

  • FMLA leave to care for their lawfully married same-sex spouse with serious health conditions,
  • Qualifying emergency leave due to their lawfully married same-sex spouse’s covered military service,
  • Military caregiver leave for their lawfully married same-sex spouse,
  • FMLA leave to care for a stepchild, regardless of whether the in loco parentis (in the place of parents) requirement of providing day-to-day care or financial support for the child is met,
  • FMLA leave to care for a stepparent, who is same-sex spouse of the employee’s parent, regardless of whether the stepparent ever stood in loco parentis to the employee,
  • FMLA leave for their own serious condition, or
  • FMLA leave for the birth of a child or the placement of a child for adoption or foster care and bonding.

 

Action Items for Employers:

Employers that are required to provide FMLA should train and familiarize their Human Resources, Leave Administrators, and Managers/Supervisors with this new rule if they are involved with the leave management process, as benefits available to certain employees may change with the Final Rule.

 

In addition, we recommend that employers update their FMLA policy in their Employee Handbook, forms, and notices, if they specifically defined “spouse” in any matter, so that the documentation reflects the new changes of the DOL’s definition, which takes effect March 27, 2015.

 

Additional Information on the Final Rule:

 

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.

 

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

Posted by mnjinsurance on August 3, 2015

August 15, 2014 California Governor Jerry Brown signed into law legislation 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.

Grandmothering Bill Signed (SB 1446): July 7, 2014

Posted by mnjinsurance on August 3, 2015

California Senate Bill 1446 (“SB 1446″) was signed by Governor Brown on July 7, 2014, to provide some small employers with non-grandfathered health insurance plans in effect as of December 31, 2013, the option to renew their existing coverage for one year, rather than be required to move to new ACA-compliant coverage by the end of 2014.    The employer is not eligible if they are enrolled in ACA compliant plans.  Grandfathered plans (plans that were in force prior to March 23, 2010) are NOT impacted by SB 1446.

 

The new law provides employers with 50 or fewer employees the ability to renew their small group health plan if the policy was in effect as of December 31, 2013, and still in force at the time SB 1446 was signed into law as of July 7, 2014.  Plans that meet this definition are now referred to as “Grandmothered” plans.  SB 1446 will permit these Grandmothered plans to continue to renew until January 1, 2015 and those policies to remain in force until December 31, 2015.  This change moves state law closer to recent federal policy changes, allowing for a longer transition period to ACA–compliant plans.  SB 1446 has an urgency measure, that provides the new law to take effect immediately after signing.

 

The small group policies affected by SB 1446 must still include many ACA and state-based mandated benefits, such as preventive healthcare coverage without copays or deductibles, no lifetime caps on benefits, maternity care, coverage for autism, and the elimination of gender discrimination in setting premiums.  The insurance carriers will be handling “Grandmothering” different, depending on their position they opt in the market.  Please refer to UpdatedCarriersGrandmotheringGuide_20140711B (1) (1) for more details.

 

The new law also requires insurers who offer “Grandmothered” plans for renew to provide notice to the group contract holder regarding the option to renew that states:

 

“New health care coverage options are available in California.  You currently have health care coverage that is not required to comply with many new laws.  A new health benefit plan may be more affordable and/or offer more comprehensive benefits.  New plans may also have limits on deductibles and out-of-pocket costs, while your existing plan may have no such limits.

 

You have the option to remain with your current coverage for one more year or switch to new coverage that complies with the new laws.  Covered California, the state’s new health insurance marketplace, offers small employers health insurance from a number of companies through tis Small Business Health Options Program (SHOP).  Federal tax credits are available through the SHOP to those small employers that qualify.  Talk to Covered California (1-877-453-9198), your plan representative, or your insurance agent to discuss your options.”

 

Please contact MNJ Insurance Solutions at (714) 716-4303 to discuss your group’s current plan and options.  We can evaluate Grandmothered plan options and rates, and compare them to the ACA-compatible plans to explore both options and rates.

 

Reference: CAHU News Agents can Use (July 7, 2014), “Grandmothering Bill Signed: Takes Immediate Effect”

 

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

Posted by mnjinsurance on August 2, 2015

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.

For 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.

Key Benefit Provisions that DO and DO NOT Apply to Grandfathered Plans

Posted by mnjinsurance on July 31, 2015

Group health plans in existence on or before March 23, 2010, when the Affordable Care Act was signed into law may be considered “Grandfathered.”  Grandfathered plans are exempt from certain health care provisions, whereas non-grandfathered plans must comply with health care reform mandates.  Listed below are a summary of key benefit provisions that apply to Grandfathered Plans, and a list of key benefit provisions that DO NOT apply to Grandfathered plans.

 

It is important to note, that NOT all health insurance carriers are allowing a “Grandfathered” plan option.  In mid 2014, the carriers in California that were allowing Grandfathered group plan options were Kaiser Permanente and Health Net.  The other group carriers in California discontinued the “Grandfathered plan options.”

 

Key Benefit Provisions That DO Apply to Grandfathered Plans

 

Many of the changes under Health Care Reform apply to all plans, regardless of grandfathered status. Key requirements that grandfathered group health plans must comply with include:

 

  • 90-Day Limit on Waiting Periods. In plan years beginning on or after January 1, 2014, group health plans may not apply any waiting period that exceeds 90 days.  A waiting period is the period  of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective.
  • Dependent Coverage to Age 26. Grandfathered group health plans that offer dependent coverage must continue to make the coverage available until a child reaches the age of 26, unless the adult child has another offer of employer-based coverage (such as through his/her job). Beginning in 2014, a child up to age 26 can stay on the parent’s plan, even if the adult child is eligible to enroll in another employer-sponsored health plan.  Eligible dependents can also remain on their parents’ health insurance plan if they are married, up to age 26.
  • Elimination of Preexisting Condition Exclusions. Group health plans cannot limit or deny benefits or coverage for a child younger than age 19 on the basis of a preexisting condition (a health problem that developed before the child applied to join the plan). Effective for plan years beginning on or after January 1, 2014, this rule applies to both children and adults.
  • Medical Loss Ratio (MLR) Rebates. Employers who sponsor group health plans and receive rebates, as a result of insurance companies not meeting specific standards related to how premium dollars are spent, may be responsible for distributing the rebates to eligible plan enrollees annually.
  • No Lifetime or Annual Limits. Group health plans may not impose lifetime limits on coverage of “essential health benefits.” Annual limits on essential health benefits are prohibited for plans issued or renewed beginning January 1, 2014. Until then, annual limits are being phased out according to the limits set by law.
  • Prohibition on Rescission of Coverage. Group health plans are not permitted to rescind health coverage (meaning declare the coverage invalid from the time of enrollment), except in the case of fraud or intentional misrepresentation by a person covered under the plan.
  • Summary of Benefits and Coverage (SBC). Effective for plan years and open enrollment periods beginning on or after September 23, 2012, group health plans and health insurance issuers offering group coverage are required to provide participants and beneficiaries with a summary of benefits and coverage at several points during the enrollment process and upon request.

 

Key Benefit Provisions That DO NOT Apply to Grandfathered Plans

 

Grandfathered group health plans are not required to comply with certain changes under Health Care Reform, including requirements relating to:

 

 

As always, if you would like to evaluate which option is best for your company, MNJ Insurance Solutions is available to assist you and review the pros and cons of each scenario.  For more information, please contact us 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.

 

 

Grandfathered Plans

Posted by mnjinsurance on July 31, 2015

Group health plans in existence as of March 23, 2010, when the Affordable Care Act was signed into law may be considered “Grandfathered.” Grandfathered plans are exempt from certain health care reform provisions, whereas non-grandfathered plans must comply with the healthcare reform mandates. Group health plans with “grandfathered” status may have significant consequences if they change to non-grandfathered/ACA compliant plans, including an increase in the cost of benefits and change of benefits.

 

What changes trigger loss of “grandfathered” status?

 

Any one of the following plan changes will cause a grandfather group health plan to lose its “grandfathered” status:

 

  • An increase in percentage of cost-sharing requirement, such as coinsurance, regardless of the amount;
  • An increase in the deductible or out-of-pocket maximum by an amount that exceeds medical inflation, plus 15% points;
  • An increase in copayments (if the increase exceeds the greater of five dollars, adjusted for medical inflation or medical inflation +15% points);
  • A decrease in the employer’s contribution rate by more than 5% (measured for each tier of coverage);
  • Elimination of all or substantially all benefits to treat a particular condition;
  • Adding or decreasing a new overall dollar limit to the plan that was in a fact as of March 23, 2010; or
  • The carrier no longer offers “grandfathered” plans.

 

Any of the following changes in the plan may also trigger the loss of grandfathered status of the plan, depending on the level of change:

 

  • The addition of a new prescription drug tier with new cost-sharing;
  • An increase in cost sharing related to wellness incentives or penalties;
  • An increase in retiree self-pay rates;
  • Transfer of employees into a less generous plan or plan option where the transfer is not due to a bona fide employment-based reason; and
  • Certain changes made in response to the Mental Health Parity and addiction equity at, such as increasing cost sharing for medical/surgical benefits, instead of lowering cost sharing for mental health and/or substance abuse disorder benefits.

 

NOTE: The employer must include a notice about the plans grandfather status insignificant participant communications, such as enrollment materials and summary plan descriptions. The notice does not need to be included with the SBC or EOBs). A model notice is available at: DOL Grandathered Model Notice

 

 What changes do not trigger loss of “Grandfathered” status?

 

The U.S. Departments of Health and Human Services (HHS), Department of Labor  (DOL), and Department of Treasury recently amended the requirements for maintaining grandfathered status under health care reform. Effective November 15, 2010 you can retain your plans grandfathered status after changing carriers or moving from a self-insured to a fully insured plan, as long as you have not made other changes that would cause the plan to lose grandfathered status. In addition, changing third-party administrators, pharmacy benefit managers, or changing the plans networks will not cause a plan to lose its grandfathered status.

 

According to HHS, they estimate the following:

 

  • 40% to 67% of individual policies will lose grandfathered status by 2011;
  • 34% to 64% of large employer group plans (100 or more employees) will lose their grandfather status by 2013; and
  • 49% to 80% of small employer group plans (3 to 99 employees) Will lose their grandfather status by 2013.

 

Loss of grandfathered status coincides with the effective date of the design changes. Also, once an employer loses its grandfathered status, they cannot return to set status at a later date. With all of the changes with the affordable care act, the decisions of whether or not to remain grandfathered must be carefully considered, as it has broad implications for the health plan and it’s participants.

 

When is the last time you had an evaluation of your current benefits? Call MNJ insurance solutions for a consultation at (714) 716-4303.

 

Resources for Grandfathered Health Plans:

 

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.