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REPEAL OF ANNUAL DEDUCTIBLE LIMIT FOR SMALL GROUP HEALTH PLANS

The Affordable Care Act (ACA) initially required small group health plans to adhere to annually-adjusted limits on the size of deductibles.  The 2014 plan year limits were set at $2,000 for employee-only coverage and $4,000 for family coverage; those amounts were set to increase to $2,050 and $4,100 for the 2015 plan year.  Although there was an exception permitted based on actuarial value, most small group plans were incorporating the deductible limits in their plan designs.

However, the recent passage of the ‘Protecting Access to Medicare Act of 2014’ has retroactively eliminated the cap on deductibles for small group plans.  Out-of-pocket maximums, which include the plan’s deductibles in calculating employee cost-sharing, will remain subject to previously announced ACA limits.  Consult the following for more detailed information:

Government guidance

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CLARIFICATION ON HEALTH FSA CARRYOVERS

Through a Memorandum issued on March 28 the Internal Revenue Service has provided some guidance on how the carryover provisions of a health flexible spending account (Health FSA) could impact a participant’s eligibility to make health savings account (HSA) contributions.  Plan sponsors need to review their procedures to be sure that general purpose FSAs permit an HSA participant to decline or waive the carry-over, or that the FSA is compatible with HSA participation (limited purposed FSA).   The following article provides more specific guidance:

Government guidance

  • Internal Revenue Service, Office of Chief Counsel, Memorandum number 201413005, March 28, 2014.  Health Flexible Spending Arrangement (health FSA) Carryovers and Eligibility for a Health Savings Account (HSA).  http://www.irs.gov/pub/irs-wd/1413005.pdf

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THE ADVANTAGES OF SELF-FUNDING

As costs for benefit programs, particularly health care plans, continue to rise, plan sponsors need to consider whether different approaches to the design, delivery, and financing of their plans would offer some relief.  Among those considerations should be a close look at alternative funding.  Plan sponsors who have relied solely on insurance policies to cover their benefit obligations should investigate the possibility of self-funding.

Among the positive impacts of self-funding, these points are most often cited:

  • Eliminating insurance-based costs (state premium taxes, risk charges, etc.).
  • Greater flexibility in benefits design.
  • Choice in obtaining plan-related services (claims administration and cost/quality management).
  • Avoid state-mandated insurance laws, preferring more-predictable subjection to ERISA.
  • Improved cash-flow (through payment of claims as they become due, rather than via premiums, and the earnings on the investment of cash otherwise paid out as premiums).

Many plan sponsors choose self-funding for certain benefit programs, while keeping others conventionally insured.   Nearly all obtain an insurance policy for the risk that would be in excess of what their financial managers feel is reasonable exposure.  If the materials below lead you to believe that self-funding could be an appropriate move for your plan, please contact Touchstone to help you make a complete evaluation of the situation and to develop a plan of action.

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TREATMENT OF SAME-SEX SPOUSES IN EMPLOYEE BENEFIT PLANS

Since the Supreme Court decision in United States v. Windsor was issued last June 26, federal government agencies have been updating their regulations to appropriately reflect the Court’s finding.  Likewise, state governments have responded to changes brought about by legislative revisions or court actions that have changed their insurance or employment laws.  Plan sponsors must stay on top of these, so that their benefit plans are in full compliance with appropriate laws.

The following recent articles provide guidance on the treatment of same-sex marriages under health and retirement plans, as well as state-specific concerns for plan sponsors in New York.  (Also included is an overview of New Jersey mandates, briefly mentioning the requirements for covering same-sex couples.)

The article ‘Accounting for Benefits for Same-sex Spouses’ in our January 2014 newsletter is followed by additional links focused on federal regulations.