Health Care Reform
Let American Fidelity be your guide.
Let American Fidelity be your guide.
American Fidelity Assurance Company's goal is to be our customers' primary resource for managing challenges and changes resulting from Health Care Reform and rising health care costs. This website is a resource to help our customer groups focus on the steps you need to take today, find the answers you need, and plan for additional changes. We look forward to helping you during the months and years ahead.
Under federal tax law, spouses receive special treatment for certain benefits. For example, employer provided health care coverage for spouses is not included in the employee’s income, and an employee may pay for spousal coverage on a pre-tax basis. Under the Defense of Marriage Act, the IRS did not recognize same sex spouses for federal tax purposes. As a result, employers withheld employment and income tax with respect to certain benefits provided to same sex spouses.
The Supreme Court recently found DOMA unconstitutional, and the IRS now recognizes same sex spouses for tax purposes. The IRS issued guidance on how an employer can expedite overpayments of Federal Insurance Contribution Act (FICA) taxes and Federal income tax withholding that occurred because same sex spouses were not recognized. The guidance provides that if an employee made pre-tax salary reductions under a cafeteria plan and paid for health care coverage for a same sex spouse on an after-tax basis, an employer may treat the amount that an employee paid for same sex spousal coverage on an after-tax basis as pre-tax salary reductions. The FICA and income tax paid on the after-tax amount would be considered an overpayment.
For 2013, there are two alternatives. First, if an employer repays or reimburses its employees for the amount of the over collected FICA tax and income tax withholding with respect to the same-sex spouse benefits for the first three quarters of 2013 on or before December 31, 2013, the employer can then reduce the amount of FICA and income tax withholding reported for the fourth quarter on Form 941. If the employer does not repay or reimburse employees before the end of 2013, the employer may correct the overpayments using Form 941-X, provided it otherwise satisfies the Form 941-X filing requirements, such as obtaining employee consent. Employers must file a claim for a refund by the later of the three years from the date the return was filed or within two years of paying the tax.
Health Care Reform comes at a time of limited resources for many employers across the nation. Employers need to understand their responsibilities and choices, assess whether costs are sustainable, develop their strategies, prepare for compliance, and implement their plans. Even with the Free Rider Penalty delay, action is required for most employers as early as 2013.
In response to great demand from American Fidelity Assurance Company customers, American Fidelity Administrative Services (AFAS) has designed a suite of solutions to make Health Care Reform easy for you. We are pleased to announce the following services:
Whether you are looking for more comprehensive strategic planning and administrative assistance or just some guidance with Health Care Reform-related questions, AFAS provides an end-to-end solution by offering a variety of services that can assist with managing the developing law.
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Under the Defense of Marriage Act (DOMA), the federal government only recognized marriages between opposite sex couples. This had significant impacts on many employee benefit programs. For example, an employer was required to impute income on the value of the health care coverage if a same sex spouse were covered under a health care plan, but was not required to do so for an opposite sex spouse. The Supreme Court found that this provision of DOMA was unconstitutional.
In recent guidance, the IRS concluded that for purposes of the Internal Revenue Code, the terms spouse, marriage and husband or wife include an individual married to a person of the same sex if the couple is lawfully married under state (or foreign) law.
The IRS also announced that for federal tax purposes, it will recognize the validity of a same-sex marriage that was valid in the state in which it was entered, regardless of where the married couple may live. For example, if a couple enters into a valid marriage in Maryland, but later moves to Virginia which does not recognize same sex marriage, the IRS would continue to recognize the marriage. This result helps to streamline plan administration. For example, if the spouse were covered under the employer group health plan, the employer would not need to impute income merely because the couple moved to a state that does not recognize same sex marriage.
Finally, the IRS concluded that for federal tax purposes, marriage does not include registered domestic partnerships, civil unions or other similar formal relationships recognized under state law that are not denominated as marriage.
An HRA is an employer-funded arrangement of a set dollar amount that reimburses employees, spouses and dependents for medical expenses, as designated by the employer, including premiums. The reimbursement is excludable from the employee’s income, and unused funds generally roll-over from year to year. A health Flexible Spending Account also reimburses employees for medical expenses. Both employers and employees can contribute to a health FSA, but Health Care Reform limits employee contributions to $2,500 per year. Any unused health FSA amounts are forfeited. Some employers do not sponsor a group health plan, but, instead, reimburse employees for substantiated, individual coverage premiums. In the past, the IRS stated that these reimbursements are not includable in an employee’s income. These are referred to as employer payment plans.
The IRS issued Notice 2013-54, and the DOL issued Technical Release 2013-03, both of which discuss the interaction of the prohibition on annual dollar limits on essential health benefits for all plans and the mandate to cover certain preventive services on non-grandfathered plans certain with Health Reimbursement Accounts (HRA), health Flexible Spending Accounts (FSA) and other employer arrangements. The guidance also addresses other related issues.
In previous guidance, the IRS stated that an HRA that is integrated with a group health plan that meets the annual dollar limit requirement would be allowed. In addition, the guidance provided that stand alone retiree HRAs also are permitted. In other guidance, the Agencies stated that an FSA that is an excepted benefit is not subject to the annual dollar limit prohibition.
In the new guidance, the Agencies reiterate that an HRA used to purchase coverage on the individual market is not integrated with that coverage for purposes of the annual dollar limit; and, therefore, violate the annual dollar limit prohibition because by its very nature there is an annual dollar limit. They went further to state that other arrangements that reimburse employees for individual policies, such as employer payment plans, are subject to the annual dollar prohibition, and also violate this prohibition and cannot be integrated with an individual plan.
The Agencies also applied a similar analysis to preventative services and HRAs and employer payment plans. Specifically, such plans cannot be integrated with individual policies to meet the requirement that plans cover specific preventative services at 100 percent.
The guidance provides two ways in which an HRA will be considered integrated with a group health plan. Neither method requires that the HRA necessarily be integrated with the group health plan sponsored by the employer who sponsors the HRA. In addition, an employee or former employee must be allowed to opt out of or waive future HRA contributions.
Under the minimum value not required method, an HRA is considered integrated with another group health plan if:
Under the minimum value required method, the HRA is considered integrated with another group health plan if:
The guidance also clarified that coverage under a HRA after coverage ends under an integrated group health plan will not violate the annual limit prohibitions. In addition, this would constitute minimum essential coverage for purposes of the individual mandate. The guidance also provided that a HRA that is integrated with a group health plan that imposes an annual limit on essential health benefits will violate the prohibition on essential health benefits, even if the HRA is available for reimbursing those expenses.
The guidance also stated that a retiree covered by a standalone HRA would not be eligible for a premium tax credit.
The guidance reaffirmed that the annual dollar prohibitions do not apply to health FSAs that are excepted benefits. In addition, the guidance stated that only health FSAs offered through a cafeteria plan are exempt from the annual dollar limit prohibitions.
Under Health Care Reform, an entity that provides minimum essential coverage must report the names of the individuals covered and the period of coverage to the IRS. A reporting entity must provide a similar statement to the individual. The reporting was required for 2014, but the IRS delayed the effective date by one year. The IRS issued proposed regulations related to this reporting.
The proposed regulations clarify that the insurer is required to report minimum essential coverage provided through an insured group health plan. For self-funded plans, the responsible entity varies depending on the type of plan. For example, it is the employer for a single employer plan, the committee or joint board of trustee for a multiemployer plan, each employer for a multiple employer welfare arrangement, or the person designated as the plan sponsor or administrator for other plans. A special rule applies for self-funded governmental plans, which allows the employer to enter into a written agreement with another government unit to be responsible for the reporting.
The proposed regulations require that all entities report the following to the IRS:
If the insurer is reporting coverage offered in a group health plan, the insurer also must include the name, address and EIN of the employer sponsoring the plan and whether the coverage is a qualified health plan offered through the Small Business Health Options Program.
The information must be filed with the IRS by February 28 (or March 31 if filed electronically) of the year following the calendar year for which coverage was provided. All entities may file electronically using Form 1095-B. The first report will be in 2016 for 2015.
A reporting entity also must provide a statement to each responsible individual (generally, the primary insured, employee or former employee) that includes the information it provided to the IRS for that individual and the contact phone number for the person required to file the return and the policy number, if applicable. The reporting entity is not required to provide statements to each spouse or dependent covered under the plan. The statement may either be the return filed with the IRS or a substitute statement. A truncated TIN may be used on the statement.
The statement must be provided by January 31 following the calendar year of coverage. This means the first statement will be provided by January 31, 2016 for 2015 coverage. If it is mailed, it must be sent to the last know permanent address or the individual’s temporary address. The statement may be provided electronically if the individual affirmatively consents to electronic delivery.
Under Health Care Reform, large employers (employers with more than 50 full-time equivalent employees) are required to file informational returns with the IRS relating to the Free Rider Penalty (referred to as Section 6056 reporting). Health Care Reform also requires that an employer provide each full-time employee who is listed on the IRS return with a statement showing the name and address of the person required to provide the form and the information in the IRS return.
Who Must File
The proposed regulations define large employer with reference to the definition in the Free Rider Penalty proposed regulations. Although each member of a controlled group is combined to determine whether the entity is a large employer, under the proposed regulations, each member of a controlled group must file the Section 6056 return separately. In addition, each employer must report on an employee who works for more than one member of the controlled group and is considered full-time by combining all hours of service. The preamble to the proposed regulations provide that until further guidance is issued, government entities, churches and a convention or association of churches may apply a reasonable good faith interpretation of whether they are part of a controlled group.
The preamble to the proposed regulations provides that an employer may contract with a third party to provide the Section 6056 return and other information to the IRS and employees, but the employer ultimately remains responsible. However, a government entity may designate a related governmental unit as the responsible party, if the designation is in writing, indicates, among other things, for which full-time employees the designee is responsible, and is signed by the large employer and the designee.
Information to Be Reported
In an effort to streamline reporting, the IRS stated that employers would need to file the following information on a return:
The IRS indicated that it may request additional information such as whether the coverage was offered to employees and dependents, meets minimum value, and was offered to spouse, the total number employees by calendar month, and a variety of requests for members of controlled groups. The proposed regulations noted that additional information may be required in guidance, forms and instructions.
The proposed regulations reiterate that the employer statement must include the name, address and EIN and the above information with respect to the employee.
Method of Reporting
Information will be reported using Form 1094-C (transmittal) and Form 1095-C (employee statement). All employers with more than 250 information returns, such as Form W-2, Form 1099, during the calendar year must file the return to the IRS electronically. For smaller employers, filing electronically is optional. The employee statement may be provided electronically if the employee is provided adequate notice, affirmatively consents, and can show that hardware and software requirements are met. The IRS stated that it is considering combining the Section 6056 returns with other returns and statements as well as streamlining the reporting. The IRS seeks comments on this.
Time for Reporting
The return must be filed with the IRS by February 28 (March 31 if filed electronically) of the year immediately following the calendar year to which the return relates. The first return for the 2015 calendar year must be filed no later than March 1, 2016 (February 28, 2016 is a Sunday) or March 31, 2016, if filed electronically. The employee statement must be provided by February 1, 2016 for 2015.
Under Health Care Reform, employers are required to provide current employees and new hires a Notice of Exchange. In May 2014, the Department of Labor (DOL) issued Technical Release 2013-2 and two model notices. The Technical Release provides temporary guidance that employers may rely upon until further guidance is issued.
Employers are required to provide the notice to all employees regardless of full or part time status or plan enrollment. Employers must provide the notice to current employees by October 1, 2013, and upon hire for new employees after October 1, 2013. Starting January 1, 2014 employers will have up to 14 days from the date of hire to provide the notice to new employees.
Recently, the DOL issued a FAQ that stated an employer satisfies this obligation if a third party provides the Notice of Exchange on the employer’s behalf. The DOL noted that when issuers, multiemployer plans or third party administrators provide the notice on the employer’s behalf, such entity should take steps to provide the notice to employees not covered by the plan or inform the employer that it only is providing the notice to a subset of employees (namely, employees enrolled in the plan).
The IRS recently issued an FAQ announcing that although Health Care Reform requires the Notice to be provided, it does not provide for any penalty or fine for not reporting. However, the DOL encourages employers to provide this Notice.
The IRS recently issued a FAQ announcing that although Health Care Reform requires the Notice to be provided, it does not provide for any penalty or fine for not reporting. However, the DOL encourages employers to provide this Notice.
An individual may only establish a health savings account (HSA) if covered by a high deductible health plan (HDHP) that meets certain requirements. Among the requirements are that the HDHP may not cover most benefits until the deductible is met, except for limited preventive services. Health Care Reform requires group health plans, including HDHPs, to cover additional preventive services without imposing cost sharing. In recent guidance, the IRS clarified that the HDHP that covers these additional preventive services at no cost remains compatible with an HSA.
Under Health Care Reform, non-grandfathered group health plans may not have out-of-pocket maximums that exceed certain limits. For 2014, the limit is $6,350/individual and $12,700/family. On February 20, 2013 the Agencies responsible for implementing Health Care Reform (Departments of Labor, Health and Human Services (HHS), and the Treasury) issued another series of Frequently Asked Questions (FAQs). In these FAQs the Agencies recognized that many group health plans use multiple service providers to provide benefits under one plan. For example, a plan may have a third party administrator to service the major medical portion and a pharmacy benefits manager for the prescriptions. In the FAQ, the Agencies noted that to meet these out-of-pocket maximums, the service providers will need to coordinate, which many of them do not have the capability to do today. Because of this, the Agencies stated that for the first plan year beginning on or after January 1, 2014, where a group health plan utilized more than one service provider to provide essential health benefits, the group health plan will meet the out-of-pocket limit requirement if:
It was recently reported that this is a new delay. The FAQ was published almost six months ago, and nothing has changed since that time.
Plan sponsors of self-funded plans must pay a fee to help fund the Patient-Centered Outcomes Research Institute (PCORI) based on the average number of covered lives participating in the plan, if certain conditions apply. Employers may be subject to these fees for their Health Flexible Spending Account if:
Recently, the IRS announced a one-year delay in the reports that most employers will be required to submit to the IRS and application of the Free Rider Penalty until 2015. Further guidance followed shortly after the announcement as is described at IRS Issues Transition Relief for 2014 for Information Reporting and the Free Rider Penalty (Notice 2013-45)
The Notice does not indicate when the Free Rider Penalty will apply to non-calendar year plans. In the proposed Free Rider Penalty regulations issued earlier this year, transition relief was available for certain non-calendar year plans, which effectively delayed the Free Rider Penalty until the first day of the Plan Year beginning in 2014 for these plans. The Notice states that no Free Rider Penalty would be assessed for 2014, not for the 2014 plan year. This could mean that a non-calendar year plan could be assessed a Free Rider Penalty as early as January 1, 2015. Plan sponsors of non-calendar year plans that hope to avoid triggering a Free Rider Penalty may want to offer adequate/affordable coverage to substantially all full time employees by the beginning of their 2014 plan year in order to avoid making mid-year changes and holding a second open enrollment prior to January 1, 2015. Further guidance is needed in this, and a variety of other areas.
Finally, the IRS stated that these delays do not impact any other provisions under Health Care Reform, such as the individual mandate or the premium tax credits available in the Exchanges.
Under Health Care Reform, for plan years beginning on and after January 1, 2014, the following plan design mandates will take effect for all plans:
The following mandates will take effect for plan years beginning on and after January 1, 2014 for non-grandfathered plans:
Health Care Reform does not define “plan year.” However, for other purposes, a plan year is defined as the 12 month period for which the plan’s records are kept. In addition, the 125 plan regulations under the Internal Revenue Code provide that a plan year must, except in very limited circumstances, be a 12 consecutive month period, and may only be changed for a valid business reason. The 125 plan regulations further state that changing a plan year to avoid the 125 plan rules is not a valid business purpose. Also, the Internal Revenue Service has indicated with regard to qualified retirement plans that changing a plan year to avoid complying with the law is not a valid business reason. As such, it is likely that the IRS, DOL and HHS would not view changing a plan year to delay compliance with the 2014 mandates as a valid business reason. Assuming that the underlying health plan may change its plan year, the 125 plan may not. For practical purposes, it would be administratively burdensome to have a 125 plan with a plan year that is different than the underlying benefit plans.
The IRS announced a one-year delay in the reports that most employers will be required to submit to the IRS. Employers were initially required to start capturing coverage information starting January 1, 2014 with the first reports due in January 2015. Under Health Care Reform, employers will have to report significant amounts of information on their plans and employees. One of the primary purposes of the reporting is to help enforce the Free Rider Penalty. Under that rule (also called the employer shared responsibility requirement), originally effective January 1, 2014, employers with 50+ full-time equivalent employees who either fail to offer coverage to substantially all full-time employees (and their dependents), or who offer coverage that is inadequate or unaffordable, and have at least one employee enroll in Exchange coverage and qualify for a premium tax credit would have to pay a penalty tax. Because of the delayed reporting, the IRS also delayed application of the Free Rider Penalty until 2015.
This change leaves employers with many open questions. The IRS expects to issue guidance on the reporting this summer.
No Changes to Other Health Care Reform Requirements
None of the other Health Care Reform requirements have been delayed. For example, the Exchanges and availability of federal premium tax credits will still take effect January 1, 2014 as scheduled. This means that employers will need to communicate to employees and the Exchanges whether employer coverage is adequate and/or affordable. The PCORI (or CER) fee is still due for many employers by July 31, 2013 (by filing Tax Form 720). Employers are still required to send Exchange notices to all employees (not just benefits eligible employees) by October 1, 2013 to inform them about the availability for Exchange Coverage. The plan design mandatesare all still scheduled to take effect for plan years beginning on or after January 1, 2014. These are only a few examples of the provisions with effective dates around the corner.
What Does All of This Mean for Employers?
From a practical standpoint, the delay in the reporting provides welcome relief because most employers do not currently capture all of the information that will be required to be reported. In the absence of regulations, many were worried about whether they would have time to make necessary system changes before January 1, 2014. Guidance on the reporting is expected this summer and the IRS is urging employers to go ahead and implement the changes sooner rather than later in order to test whether their systems will do everything they need to do.
In addition, the fact that the premium tax credits will still be available in 2014 means that employers will not completely avoid the Free Rider Penalty requirements. For example, employers have to certify for employees who are applying for tax credits whether their coverage is adequate and affordable, which means employers will still need to understand and perform those calculations. The fact that the individual mandate still takes effect in 2014 means that employers who were planning to offer coverage (perhaps an employee-pay-all option) to employees who are not currently eligible may still want to implement those plans. Similarly, employers that were planning to add a minimum value plan in order to have a more affordable option available (and, therefore, limit the number of employees who might trigger a Free Rider Penalty due to coverage being unaffordable) may want to go ahead with those plans as well. Finally, it’s unclear whether any of the transition relief available to employers for the first year the Free Rider Penalty is effective will still be offered. For example, employers were able to measure hours for variable hour employees for six months this first year, even if the employer planned to use a 12-month measurement and stability period going forward. Now the employer will likely need to be prepared to capture hours for a full 12 months prior to the start of the 2015 plan year in order to avoid a penalty. Hopefully, questions such as these will be answered in the anticipated IRS guidance.
Generally, a group health plan may not discriminate against an individual based on a health factor. However, there is an exception for certain wellness programs. Health Care Reform adopted the regulation relating to HIPAA nondiscrimination and wellness programs. Recently, the Agencies issued final regulation relating to this. The regulations are effective for plan years beginning on and after January 1, 2014.
The final regulations divide wellness programs into two categories: participatory and health contingent programs. A participatory program is defined as a program that does not provide an award or does not include any conditions for obtaining an award that are based on health status factors. Examples include fitness center reimbursements, diagnostic testing that does not base an award on a health status, or general health education. Participatory wellness programs must be made available to all similarly situated individuals regardless of health status.
Health contingent wellness programs require an individual to satisfy a health related factor to qualify for an reward. The final regulations break health contingent wellness programs down into two classes: activity only and outcome based. An activity only program requires an individual to perform an activity related to a health status, but does not require a particular outcome for the reward. For example, a participant would be required to walk a certain number of hours per week. As the name suggests, an outcome based program requires a particular health related outcome to be eligible for the reward. The regulations break these programs down into two tiers. First, the initial measurement, test or standard; and, second, a larger program that targets individuals who do not meet the initial measurement, test or standard and are required to perform additional activity to obtain the award. For outcome based programs, if an individual does not initially meet the standard, but does four months later, the reward must be provided retroactively to the date others who first met the standard, were eligible for the reward.
Health contingent wellness programs must meet additional standards. Both must be eligible to qualify for the reward at least once a year. In addition, the amount of the award may not exceed 30% of the premium (or 50% for smoking cessation programs). Such programs, based on all facts and circumstances, must be reasonably designed to promote health or prevent disease. Both must provide for reasonable alternatives that may vary depending on the type of program. In addition, the plan documentation describing the wellness program must include a discussion of the availability of reasonable alternatives.
For activity only programs, the program must allow a reasonable alternative standard or waiver for individuals for whom the activity is unreasonably difficult due to medical conditions or medically unadvisable to complete activity. Group health plans are not required to come up with a reasonable alternative in advance, but only upon request. If reasonable under the circumstances, a group health plan may require verification that the activity is unreasonable or inadvisable from an individual's physician.
Whether an alternative standard is reasonable is based on all facts and circumstances. However, under the final regulations, the following criteria must be met for both activity only and outcome based programs:
For outcome based programs to be considered reasonably designed, the program must include a reasonable alternative standard or waiver to qualify for the reward for all individuals who do not meet the initial measurement, test or standard. The regulations provide that it is not reasonable to seek verification from an individual's physician that the individual may not meet the initial standard. Although a group health plan is not required to provide a reasonable standard in advance, if one is not provided upon request, the standard must be waived. Whether the standard is reasonable is based on all of the facts and circumstances, including those described for activity only programs, including the limitations.
If the reasonable alternative is an activity only program, the requirements for activity only programs must be met. The reasonable alternative standard cannot require an individual to meet a different level of the same initial standard without additional time to meet the requirement that takes the individual’s circumstances into account. In addition, an individual must be given the opportunity to comply with the individual’s personal physician’s recommendation rather than the plan sponsor’s reasonable alternative.
Finally, a plan may be required to continue to allow for a reasonable standard or various reasonable standards. For example, if the initial standard is not smoking, and the alternative standard is an education seminar, but the person continues to smoke after taking the class, the person would be eligible for the reward. The person later may be required to try a different reasonable alternative standard to qualify for the reward.
Tax Form 720 is the form on which employers report the annual fee liability for the Patient-Centered Outcomes Research Trust Institute (PCORI) fee. The Form 720 is a form filed quarterly to report various excise taxes and penalties. The PCORI fee reporting has been added to this form. The fee must be reported annually on the 2nd quarter Form 720 and paid by July 31 each year.
Plan sponsors of self-funded health plans and insurers of insured health plans must pay a fee to help fund the Patient-Centered Outcomes Research Trust Institute a new entity intended to advance comparative effectiveness research. The PCORI fee is based on the average number of lives covered by the plan.
The PCORI fee will be imposed for each plan year ending on or after September 30, 2012, and before October 1, 2019. The PCORI fee is $1 dollar multiplied by the average number of covered lives for plan years ending after September 30, 2012 and before October 1, 2013. The amount per covered life will be increased each year based on the percentage increase in the projected per capita amount of National Health Expenditures.
Under Health Care Reform, employers are required to provide current employees and new hires a notice explaining Exchanges. On May 8, 2013 the Department of Labor (DOL) issued Technical Release 2013-2 and two model notice. The Technical Release also provides an updated COBRA notice that includes a description of Exchange coverage. The Technical Release provides temporary guidance that employers may rely upon until further guidance is issued.
Employers are required to provide the notice to all employees regardless of full or part time status or plan enrollment. Employers must provide the notice to current employees by October 1, 2013, and upon hire for new employees after October 1, 2013. Starting January 1, 2014 employers will have up to 14 days from the date of hire to provide the notice to new employees. The notice must be provided by first class mail, or electronically if current DOL requirements for electronic deliver are met (namely, use of electronic media is an integral part of the employee's job or the employee actively elects to receive the notice electronically).
A copy of the notice for employers who do not offer coverage is available here. A copy of the notice for employers who offer coverage to some or all employees is available here. This notice also contains an optional section for the employer to complete regarding the plan's actuarial value and the lowest cost option. It is unclear whether the plan must complete a different section, which includes information that the employee must include on the Exchange application.
The Agencies that oversee implementation of Health Care Reform recently issued FAQ XIV relating to the Summary of Benefits and Coverage (SBC). SBCs are meant to provide participants a high level description of benefits and coverage under the plan. Plan sponsors and issuers were required to provide SBCs starting with the first open enrollment on and after September 23, 2012 and for new participants for the first plan year beginning on and after January 1, 2013.
In the recent guidance, the Agencies modified the SBC instructions and template to require that a plan indicate whether it provides minimum essential coverage and has at least a 60 percent actuarial value. If it is too administratively burdensome to change the current SBC, a plan may instead include a cover letter with the SBC that contains this information (sample language was included in the FAQ).
The FAQ also clarified that in completing the annual limit section of the SBC, the plan should respond "No" to the question whether the plan has an overall annual limit. However, if the plan imposes other limits on benefits that are not essential health benefits, those limits should be listed on the limitations and exceptions column.
The information provided here is only a brief summary that reflects our current understanding of select provisions of the law, often in the absence of regulations. All interpretations are subject to change as the appropriate agencies publish additional guidance. American Fidelity does not provide legal advice – as such, we suggest that employers and individuals consult with their legal counsel and/or tax advisors about how Health Care Reform may impact them.
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