The American Rescue Plan Act brought some good news to those who lost their healthcare coverage due to job loss in the past eighteen months. While COBRA benefits were already available to these individuals, many did not enroll due to the high cost of premiums. The new law provides for 100 percent coverage of COBRA premiums, provided those former employees, or those who lost their plans due a reduction in hours, meet certain qualifications.
However, those qualifications seem a bit murky to many, so let’s clear up the confusion.
First, anyone who lost their healthcare coverage due to a reduction in work hours is eligible to enroll in the subsidized COBRA program. It does not matter if the reduction in work hours was voluntary or involuntary.
As for those who lost their healthcare coverage because they became unemployed, the termination in employment must have been involuntary in order to qualify for subsidized COBRA.
Herein lies the confusion: What types of situations fall under “involuntary termination of employment”? The following conditions were outlined in 2009, and are likely to be adopted by the IRS at this time:
- There was a separation of employment
- The separation was due to the independent exercise of the unilateral authority of the employer to terminate the employment
- And not due to implicit or explicit request by the employee
- And the employee was willing and able to continue performing services
Under the 2009 law, layoffs, buyouts, seasonal work, failure to renew contracts, and military callups all qualified as involuntary terminations. And under certain circumstances, some retirements and “good reason quits” qualified as well.
The IRS is still undertaking the process of interpreting the new COBRA laws. But because it looks likely that they will adopt some form of previous interpretations, keep the above rules in mind as guidance is issued to former employees.
We also recommend that you contact your COBRA Administrator or insurance carrier if you are subject to Cal COBRA regulations.
As you might already know, the May 31 deadline for submitting notices of COBRA and CAL-COBRA eligibility (as outlined by the American Rescue Plan Act) is rapidly approaching.
The ARPA extended “free” COBRA coverage to all employees who would have otherwise been eligible during the past 18 months. You, as the employer, are responsible for providing that coverage and will be reimbursed by a tax credit later on.
But first, you must submit information on these employees to your health insurance provider. Some insurance companies have already communicated with covered small businesses, while others are still working through the process. Either way, you will be required to follow through with your side of the responsibilities by the deadline.
Please note that this information applies to both COBRA and CAL-COBRA groups.
COBRA Administrators should already be in contact with you. Watch for their notifications.
CAL-COBRA groups need to be prepared to take the action as directed by their insurance carrier. Not all carriers are handling this situation the same way and it could require you to take prompt action as we are approaching the deadline. Please pay attention and be ready for any correspondence that might come from your insurance carrier.
Prepare this information now, so that it is ready to go once your notice arrives. Eligible employees include:
- Those who have been insured during the last 18 months, but were terminated or laid off. (Those who quit voluntarily are not eligible.)
- Those who were insured but are no longer eligible for health benefits due to a reduction in hours
- Dependents of the above past or present employees
Additionally, you will be responsible for providing the same information to your insurance company for any COBRA-eligible employees in the future. As of now, the ARPA offers this subsidized COBRA coverage through September 30.
Notices must be sent to all ex-employees who Involuntarily lost benefits, and Assistance Eligible Individuals (AEIs) by May 31. Get ahead of this deadline now, so that you aren’t forced to rush at the last minute. Contact our office if you need further assistance to understand this process.
A pandemic is probably the last event during which anyone wants to lose their health insurance. But unfortunately, due to major shake-ups in employment over the past year, that’s exactly what happened to many Americans. If you lost health insurance due to job loss, or other reasons, you have the option to continue your coverage under COBRA provisions.
In the past, COBRA coverage was theoretically possible, but not always practical. That’s because the premiums can run fairly high, especially for those who lose their healthcare plans due to job loss. But due to the challenges posed by the pandemic, the American Rescue Plan Act includes provisions to help the uninsured continue their healthcare coverage through COBRA.
As of April 1, and continuing through September 30, group health plans that provide COBRA coverage must also offer a 100 percent COBRA subsidy for “assistance eligible individuals” and their qualified beneficiaries.
This subsidy applies to major medical plans, along with dental and vision plans, but does not apply to health flexible spending accounts.
Who is “assistance eligible”?
Individuals who qualify for COBRA due to involuntary termination or a reduction in hours should be eligible for the 100 percent subsidy.
Those employees who voluntarily terminated employment, or are eligible for COBRA for some other reason, will not be able to claim the subsidy.
Those who would have been eligible for the COBRA subsidy in the past 18 months, but did not elect the coverage, might also be eligible to enroll and get help with premiums.
Premiums are advanced by the employer or the insurer and are reimbursed by the federal government via a payroll tax credit. This should save the insured individual some time and hassle, allowing easy enrollment for those who qualify and wish to do so. However, employers must be aware of and prepared for being responsible for these premiums. Since federal reimbursement comes in the form of a payroll tax credit, there will be a waiting period before employers will recoup the premiums.
If you have questions about this new legislation or your responsibilities as an employer, contact us right away. The program began on April 1 and will last through September if it is not renewed.
Most business owners know that hiring experienced and educated workers is just the first step to ensuring workplace efficiency and effectiveness. Those workers must also be supported, and their needs or concerns addressed, in order to help them continue to perform to their full potential.
That’s why a comprehensive group benefits program can be so helpful in attracting and retaining the best employees. But did you know that many Group Life or Group Disability plans also include something called Employee Assistance Programs (EAPs)? These programs can address a wide variety of employee needs and help to solve problems that could interfere with their work performance.
Over the past year in particular, we’ve all seen that anything going on outside of work (like a pandemic and the associated stress, for example) can affect happenings inside the workplace as well. Employee Assistance Programs are designed to provide assistance to employees and cover a wide range of personal and legal issues that can add stress to their lives or require time away from work for treatment.
What types of situations fall under the umbrella of an Employee Assistance Program? You might be surprised at the wide range of topics that your program could address, such as:
- Alcohol or other substance abuse treatment
- Child or elder care complications
- Financial and legal problems
- Marital or relationship discord
- Traumatic events
- Wellness matters
- Adoption assistance
- …and more
These services can be available via a variety of formats, such as email, phone, video chatting, or face-to-face meetings, as the situation warrants. They are delivered at no charge via EAP vendors or providers within the employee’s healthcare plan network.
Services are usually available to the employee as well as their spouse or domestic partner and children.
Many employers actually have Employee Assistance Programs available within their group benefits plans, and don’t even know it! For more information on EAPs and your group benefits plan, give us a call and we’ll be happy to explain your benefits.
If you’re preparing to file your 2020 federal and state income tax returns, remember that you need to document more than just your income. Because the Affordable Care Act and California’s own Individual Mandate law both require most people to maintain qualified health insurance coverage, you will need certain forms to accurately report your coverage status.
Forms 1095-A and 1095-B were designed for this purpose. You should receive these in the mail soon.
Form 1095-A is of particular importance to anyone who receives a tax subsidy to help with the cost of their healthcare premiums. By inputting the correct amounts on your tax return, you will reconcile the credit on your return with any advance payments of the premium tax credits.
Form 1095-B simply provides information about your health insurance coverage. Those who maintained minimum essential coverage for the year are not liable for the shared responsibility payment (essentially, a penalty for failing to maintain coverage).
Even though the shared responsibility payment under the ACA is now set at 0 dollars at the federal level – essentially meaning there is no penalty for failing to maintain coverage – the state of California does impose its own penalty. So, you do want to ensure that you receive 1095-B and report the information accurately on your return.
No, you aren’t actually required to file the forms with your tax returns. However, you will need the information contained within the form in order to accurately file your taxes. And, you should keep a copy of these forms in your files, just in case your tax return is ever audited.
Watch your mail closely for these forms, which should be arriving soon, and consult with your tax professional if you have any questions about how to use them.
It’s not difficult to imagine the dismay many patients have felt over the years, upon receiving a medical bill that exceeds expected costs by hundreds or thousands of dollars. Fortunately, surprise medical billing appears to be soon relegated to the past. In December 2020, Congress included direction within the coronavirus relief legislation and year-end spending bills to end this unpopular practice.
For example, in the event that a patient goes to a hospital normally covered under their health insurance policy, they cannot be surprise billed for services via an uncovered provider within that system. Insurance companies are now required to cover those bills. However, insurers and medical providers might still disagree over costs, in which case the bill sets forth a clear procedure to deal with those situations. This measure shifts responsibility for negotiations from the patient to the insurance company.
The new law requires parties to negotiate and agree upon a rate or bring the dispute to mediation. After batching together billing disputes, mediators will consider factors such as median in-network rates, the complexity of the medical case in question and relative market power of insurers versus doctors or hospitals.
Larger bills for out-of-network care are not outlawed entirely. If patients are informed that their insurance company will not cover the bill and notice of charges is provided at least 72 hours before onset of care, providers might still bill patients for the difference in what insurance companies would otherwise pay.
While imperfect, the new bipartisan law is expected to drastically reduce incidences of surprise billing and clarify procedures for patients, insurance companies, and healthcare providers. For more information on health insurance coverage and avoiding surprise billing, give us a call to discuss your concerns in more detail.
For those of you with 100 or fewer employees, who have endured lower revenues at this time, we have some good news. California is providing a new tax credit for small businesses that might help you.
The tax credit is available for the tax year 2020 only (for now), and is targeted toward businesses that were forced to lay off employees or dramatically reduce work hours earlier this year. If you’re now rehiring those employees, hiring new employees, or increasing work hours, this credit might help you.
In order to qualify, you must employ 100 or fewer employees (including part-time workers) as of December 31, 2019. You also must have experienced a 50 percent decrease in gross receipts from April 1, 2020 to June 30, 2020, as compared to April 1 to June 30 of 2019.
Business owners must reserve the credit with the California Department of Tax and Fee Administration. Reservations began on December 1 and will be taken until January 15, or whenever the $100 million credit allocation is reached.
The tax credit will amount to $1,000 for each net increase in qualified employees, up to a $100,000 maximum.
Take note: We believe the $100 million credit allocation will be reserved well before January 15, so we strongly recommend applying for this credit right away.
Contact your CPA now, to make sure that you can qualify for this credit. They will help ensure that you can reap the maximum amount of credit available, by counting your gross receipts and employees accurately.
You can find more information on this credit, including the documentation that you need to present, on the California Department of Tax and Fee Administration website.
Small business owners understand the value of providing group health insurance benefits to employees, but they don’t always feel capable of doing so. Between the high cost of premiums and the level of required employee participation (70 percent) many small business owners give up on the idea entirely.
If you know someone in this situation, please pass along this news: During Small Group Special Enrollment each fall, your employees can overcome these limitations and establish a group health insurance plan.
How does it work? It’s pretty simple. Only one employee needs to enroll in a plan. That’s it! There’s no minimum enrollment criteria, so each employee can make the decision that feels best for them, without any pressure.
As for the business owner’s part, they are not required to contribute to premiums. Or, they can contribute what they are able, and allow employees to pay for the rest. So if affordability has been an obstacle in the past, the Small Group Special Enrollment Period will allow employees to access a group healthcare plan of their choosing.
Aside from contribution and participation guidelines, all other normal underwriting guidelines are still in force. This means employees can still access high quality group plans while sidestepping what would normally be burdensome obstacles.
As a bonus, employees can access yet another benefit of these group plans. If the employer has established what is called a “cafeteria plan”, workers can pay for their premiums using pre-tax payroll deductions. This essentially serves as a significant tax deduction and savings, which any employee appreciates.
There is just one downside to this news: The Small Group Special Enrollment Period is only open for one month, between November 15 and December 15 (with plans taking effect January 1). Business owners must act fast to help their employees access these group healthcare plans, along with the potential tax savings. Contact us to learn more about how to get started.
Each year, prior to Medicare’s Annual Election Period, employers must send notices of creditable coverage to all employees over age 65 (or any other employee or dependent otherwise eligible for Medicare).
What is creditable coverage? If a health insurance plan (in this case, a group policy) is expected to pay, on average, as much as a standard Medicare Part D policy, that is called “creditable coverage”. It means that the prescription drug benefits of a healthcare plan is at least equivalent in coverage to what Medicare Part D plans would offer.
What must the notice of creditable coverage communicate? Prior to October 15 each year, employers must supply written notice to all
- Medicare-eligible employees
- COBRA-covered individuals
- retirees covered by the group health plan
- and all dependents of these employees or former employees
The notice simply certifies that the prescription drug plan offered by the group health plan qualifies as “creditable coverage” for the purposes of being equivalent with Medicare Part D.
Why does creditable coverage matter? The Medicare Modernization Act imposes a late enrollment penalty on individuals who do not maintain prescription drug coverage for 63 days or longer, following their initial date of Medicare eligibility. The notice serves to inform individuals that their group health plan does provide this coverage. Otherwise, if they are not maintaining coverage they should consider enrolling in Medicare Part D promptly, in order to avoid a penalty later.
How does Medicare know whether an individual has maintained creditable coverage? The law also requires employers to file an online disclosure to certify the creditable coverage status of their group health plan. This disclosure should be filed no later than 60 days from the beginning of the plan’s contract year, within 30 days of termination of a prescription drug plan, or within 30 days of any change to the status of creditable coverage.
Again, notices of creditable coverage must be sent to all affected employees and former employees by October 15. Medicare must also be notified of your plan’s creditable coverage status. Contact us with any questions regarding these notices, so that we can assist you in properly complying with the law.
Who could have predicted the changes 2020 has brought? Remote working, or working from home, was rising in popularity prior to this year. Even still, no one expected the swift and dramatic rise of remote work at the level we’re currently experiencing.
Because this change has happened so suddenly, many businesses found themselves somewhat unprepared for the transition. Institute these safe practices, and pass them along to your employees to help things run more smoothly.
Ensure that each device is protected. Employees should use a device dedicated to work; sharing with family members should be strongly discouraged. Remind them to install security updates when prompted, and to protect devices with passwords.
Use safe WiFi connections. Working from home sometimes also means working from hotels, cafes, other locations. Remind your employees that public WiFi connections are not secure, and can put your data and business operations at risk. As for home WiFi, make sure everyone is using a strong password and secure firewall.
Adopt a VPN. Institute a Virtual Private Network for company use, and make sure to update settings and limitations regularly.
Consider two-factor authentication. Your cloud system and any other processes should be protected with two-factor authentication, for optimal protection against data theft or loss.
Create a protocol guide. Update your old security protocol, or adopt a new guide, to clearly communicate your expectations to employees. Focus on the expected response in the event of device loss or theft, and for suspected or known security breaches. Each employee should know how to immediately proceed if one of these events occurs.
The above procedures can help protect your business from unwanted virtual viruses and more… But what about real-world viruses and other health risks? Check with your healthcare plan administrator about telemedicine (virtual healthcare appointments). This type of healthcare is not only time-saving; receiving healthcare from home can shelter us all from the inherent risks of waiting rooms.
If these benefits are available under your plan, communicate that information directly to employees. Review sick leave procedures and determine how you will handle telemedicine appointments as time away from “the office”. Working from home is still work, and together we can adopt procedures to keep each other safer at this time.