Recent Regulatory Developments (Benefit Minute)

Posted in: Benefit Minute, Employee Benefits

This issue provides a summary of recent regulatory activity.

HSA Limits for 2016

The limits for qualified high deductible health plans (QHDHPs) and health savings accounts (HSAs) for plan years beginning in 2016 are:

 HSA Contribution Limit (individual)  $3,350
 HSA Contribution Limit (family)                    $6,750
 QHDHP Minimum Deductible (individual)             $1,300
 QHDHP Minimum Deductible (family)                   $2,600
 QHDHP Out-of-Pocket Max (individual)                $6,550
 QHDHP Out-of-Pocket Max (family)                     $13,100

Summary of Benefits & Coverage Update

The Affordable Care Act (ACA) requires health insurers or group health plans to provide a Summary of Benefits & Coverage (SBC) in a uniform format.  Final regulations regarding the format, content, and distribution of the SBC that were issued in 2012 have been amended for open enrollment periods beginning on or after September 1, 2015.  The amended regulations include the following changes: 

  • Clarify that if the SBC is provided upon request prior to an individual’s eligibility for enrollment, it does not have to be provided again at time of eligibility if there are no changes;
  • Allow a group health plan to contract with another entity to provide the SBC as long as the group health plan monitors the other entity’s performance, and either corrects any noncompliance or, if unable to correct, communicates with the participants about the noncompliance and takes steps to avoid future violations;
  • Require insurers to include an internet address linking to the group certificate of coverage for each product offered (this provision does not apply to group health plan coverage that provides benefits on a self-insured basis);
  • Permit a group health plan that offers two or more benefit packages to include the information in a single SBC or provide multiple SBCs;
  • Incorporate the safe harbor for electronic delivery which allows the SBC to be delivered electronically in connection with online enrollment, including the annual open enrollment; and
  • State that willful failure to provide the SBC may result in a fine of not more than $1,000 per failure. Each participant who does not receive an SBC is considered a separate failure subject to the $1,000 fine.  The IRS and DOL will use existing processes and procedures for enforcement of this fine.

While the final regulations have been issued, revisions to the SBC template, instructions, and uniform glossary have not. The agencies anticipate that these revisions will be finalized in January 2016 and will apply for the fall 2016 open enrollment period.

Out-of-pocket Maximums

The ACA established out-of-pocket maximums for non-grandfathered group health plans for plan years beginning on or after January 1, 2014.  For 2016, the out-of-pocket maximum is $6,850 for individual coverage and $13,700 for family coverage.  In a recent FAQ, the DOL clarified that, beginning in 2016, group health plans must have an individual out-of-pocket limit that applies to each family member covered under a family plan (i.e. an embedded individual out-of-pocket limit).  Once a family member meets the individual out-of-pocket limit (which cannot exceed $6,850 in 2016), claims for essential health benefits would be paid without cost-sharing. If the family out-of-pocket limit is less than $6,850, no embedded individual out-of-pocket limit is needed.

The ACA out-of-pocket maximums specifically impact QHDHPs:

  • QHDHPs are subject to separate out-of-pocket maximums established by the IRS (see HSA Limits for 2016) and must use the lower of the 2 separate limits. For 2016, the out-of-pocket maximums for QHDHPs are $6,550 for individual coverage and $13,100 for family coverage.
  • QHDHPs are subject to the new requirement to include an individual out-of-pocket maximum. However, the individual out-of-pocket limit cannot be lower than the QHDHP minimum deductible for family coverage ($2,600 in 2016).

ACA Reporting Updates

The IRS has released draft versions of Forms 1094 and 1095 for 2015 (but not instructions).  These forms will be used by health insurers and applicable large employers to report enrollment in and offer of minimum essential coverage.  The draft forms for 2015 are basically unchanged from the 2014 versions finalized earlier this year.  A new field for “Plan Start Month” has been added to the Form 1095-C, but completion of this field will be optional in 2015.

The IRS has also begun to provide information on the electronic filing of Forms 1094 and 1095, which must be done through the Affordable Care Act Information Return System (AIR).

Finally, the penalties for failure to comply with the ACA reporting requirements have changed.  The per return penalty has increased from $100 to $250 with an annual cap of $3,000,000.  Lesser penalties may apply if the failure is timely corrected.  In the case of intentional disregard, the per return penalty is $500 with no cap.

Updated FMLA Forms

The DOL has issued new forms for employers to use for leave under the Family and Medical Leave Act (FMLA).  The medical certification forms have been revised to specifically reference the Genetic Information Nondiscrimination Act (GINA) by instructing health care providers not to provide family history or information about genetic tests and services.  The other forms are unchanged.

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