To prepare for open enrollment, group health plan sponsors should be aware of the legal changes affecting the design and administration of their plans for plan years beginning on or after Jan. 1, 2019. Employers should review their plan documents to confirm that they include these required changes.
In addition, any changes to a health plan’s benefits for the 2019 plan year should be communicated to plan participants through an updated summary plan description (SPD) or a summary of material modifications (SMM).
Health plan sponsors should also confirm that their open enrollment materials contain certain required participant notices, when applicable—for example, the summary of benefits and coverage (SBC). There are also some participant notices that must be provided annually or upon initial enrollment. To minimize costs and streamline administration, employers should consider including these notices in their open enrollment materials.
PLAN DESIGN CHANGES
Grandfathered Plan Status
A grandfathered plan is one that was in existence when the Affordable Care Act (ACA) was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered.
- If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2019 plan year. Grandfathered plans are exempt from some of the ACA’s requirements. A grandfathered plan’s status will affect its compliance obligations from year to year. If your plan will maintain its grandfathered status, make sure you provide the notice of grandfathered status in your open enrollment materials. See the “ACA Disclosure Requirements” section below for more information on this notice.
- If your plan will lose its grandfathered status for 2019, confirm that the plan has all of the additional patient rights and benefits required by the ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.
ACA Affordability Standard
Under the ACA’s employer shared responsibility rules, applicable large employers (ALEs) are required to offer affordable, minimum value health coverage to their full-time employees (and dependent children) or risk paying a penalty. These employer shared responsibility requirements are also known as the “employer mandate” or “pay or play” rules.
Under the ACA, an ALE’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year (as adjusted each year). The adjusted percentage is 9.56 percent for 2018.
For plan years that begin on or after Jan. 1, 2019, the affordability percentage is 9.86 percent. This means that employer-sponsored coverage for the 2019 plan year will be considered affordable under the employer shared responsibility rules if the employee’s required contribution for self-only coverage does not exceed 9.86 percent of the employee’s household income for the tax year.
- If you are an ALE, confirm that at least one of the health plans offered to full-time employees (and their dependent children) satisfies the ACA’s affordability standard (9.86 percent for 2019 plan years). Because the affordability percentage significantly increases from 2018, employers may have additional flexibility to increase the employee share of the premium while still avoiding a penalty under the pay or play rules.
Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost sharing for essential health benefits (EHB). The ACA’s out-of-pocket maximum applies to all non-grandfathered group health plans, including self-insured health plans and insured plans.
The annual limit on total enrollee cost sharing for EHB for plan years beginning on or after Jan. 1, 2019, is $7,900 for self-only coverage and $15,800 for family coverage.
- Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2019 plan year ($7,900 for self-only coverage and $15,800 for family coverage).
- If you have a high deductible health plan (HDHP) that is compatible with a health savings account (HSA), keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2019 plan years, the out-of-pocket maximum limit for HDHPs is $6,750 for self-only coverage and $13,500 for family coverage.
- If your plan uses multiple service providers to administer benefits, confirm that the plan coordinates all claims for EHB across the plan’s service providers or divides the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2019.
Health FSA Contributions
The ACA imposes a dollar limit on employees’ salary reduction contributions to a health flexible spending account (FSA) offered under a cafeteria plan. An employer may impose its own dollar limit on employees’ salary reduction contributions to a health FSA, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year.
The ACA’s limit on employees’ pre-tax health FSA contributions first became effective for plan years beginning on or after Jan. 1, 2013. The ACA set the health FSA contribution limit at $2,500. For years after 2013, the dollar limit is indexed for cost-of-living adjustments. For 2018 plan years, the health FSA limit is $2,650. For 2019 plan years, the health FSA limit increases to $2,700.
- Confirm that your health FSA will not allow employees to make pre-tax contributions in excess of $2,700 for the 2019 plan year.
- Communicate the health FSA limit to employees as part of the open enrollment process.
HDHP and HSA Limits for 2019
If you offer an HDHP to your employees that is compatible with an HSA, you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2019 limits. The IRS limits for HSA contributions and HDHP cost-sharing increase for 2019. The HSA contribution limits will increase effective Jan. 1, 2019, while the HDHP limits will increase effective for plan years beginning on or after Jan. 1, 2019.
- Check whether your HDHP’s cost-sharing limits need to be adjusted for the 2019 limits.
- If you communicate the HSA contribution limits to employees as part of the enrollment process, these enrollment materials should be updated to reflect the increased limits that apply for 2019.
ACA Disclosure Requirements
Summary of Benefits and Coverage
The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including those who are newly eligible for coverage and special enrollees).
The SBC template and related materials are available from the Department of Labor (DOL).
- In connection with a plan’s 2019 open enrollment period, the SBC should be included with the plan’s application materials. If coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.
- For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should confirm that your health insurance issuer will assume responsibility for providing the SBCs. Please contact your representative at Financial Benefit Services, LLC for assistance.
Grandfathered Plan Notice
If you have a grandfathered plan, make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as SPDs and open enrollment materials. Model language is available from the DOL.
Notice of Patient Protections
Under the ACA, non-grandfathered group health plans and issuers that require designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Also, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for obstetrical/gynecological care.
If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant. If your plan is subject to this notice requirement, you should confirm that it is included in the plan’s open enrollment materials. Model language is available from the DOL.
If your group needs help navigating the many compliance requirements of the open enrollment season, contact us to talk to the experts.