In some of our blog posts, we’re able to provide you with actionable information that will help you better serve your clients, and in others we try to give you some ideas that will help you sell more business. This post doesn’t fit into either of those categories. Instead, we just want to put a few things on your radar this Open Enrollment Period. We don’t have a lot of details on most of these items yet, but it’s definitely worth keeping an eye on what’s happening in D.C. during the last few months of President Obama’s second term in office.
While an outgoing president is often referred to as a “lame duck,” that doesn’t mean that nothing gets accomplished. Like most of his predecessors, President Obama still has a few things to mark off of his “to do” list before he hands over the reins to the 45th president. For that reason, we can expect a flurry of new regulations from the various government agencies under the president’s control. Health and Human Services (HHS), the Department of Labor (DOL), and the Internal Revenue Service (IRS) have been hard at work for the past few months, and they’re unlikely to slow down in the weeks to come. The new rules they’re busy writing could have a big impact on our clients starting next year, and some are already in effect.
Of course, we’re not only nearing the end of the Obama presidency, we’re also nearing the end of the One Hundred-Fourteenth United States Congress. And while they won’t be meeting for many more days in 2016, our legislators also have some unfinished business and could push a couple bills through that might be signed into law.
Here, in no particular order and without a lot of detail, are a few of the things our elected officials and federal regulators are working on. Expect even more in the weeks ahead.
This bill, which has already passed the House, is currently being considered by the Senate and could pass before the end of the session. It would permit non-applicable large employers (companies with fewer than 50 full-time equivalents that are not subject to the employer mandate) to fund individual health insurance premiums and other eligible expenses through a Health Reimbursement Arrangement. Though President Obama has publicly opposed this bill, given its bipartisan nature, it will be interesting to see if he vetoes it or signs it into law.
Carriers across the nation have lost hundreds of millions of dollars on their ACA individual business, and many report that their SEP business—coverage sold during a special enrollment period—is even more costly than policies during the open enrollment period. In an effort “to strengthen the integrity of special enrollment periods” and “to avoid SEPs being misused or abused,” HHS announced in May that it “is tightening the rules for certain special enrollment periods and making clear that SEPs are only available in six defined and limited types of circumstances.” These include 1) loss of coverage, 2) changes in household size (marriage or birth), 3) moving to another area, 4) becoming eligible or ineligible for financial assistance, 5) Marketplace errors, and 6) other specific cases like alternating between Medicaid and Marketplace coverage.
As you well know by now, the Affordable Care Act requires carriers to provide Summary of Benefits and Coverage forms to their health plan members when they sign up for coverage and when they renew. You also know that many carriers rely on agents and employers to make sure these forms are distributed. Many brokers feel that these forms, which are intended to make health plans easier to understand and to compare with one another, have only added to the confusion and to the long list of compliance requirements. Unfortunately, they don’t appear to be going anywhere anytime soon; they are changing, though. In May, the Departments finalized the new SBC template that is to be used with plans issued and renewed starting April 1, 2017. The new template incorporates a number of changes suggested by the National Association of Insurance Commissioners, including a question about any services that are covered before the plan deductible is met, specific language about embedded and aggregate deductibles, specific language about tiered networks, and a new coverage example.
In 2016, Applicable Large Employers (ALEs) and self-insured companies began reporting certain information to the IRS and to their full-time employees about the coverage they offered the previous year. This was a confusing process for many of our clients, and it’s not getting any easier. The reporting forms have changed a bit though, and they’ll change again next year as transition relief comes to an end and the IRS introduces and eliminates certain codes.
This is a big one. Currently, employers with 100 or more employees that offer group health coverage must complete a form 5500, but small employers, whether fully-insured or self-insured, are exempt from the reporting requirements. That could soon change, though. The IRS and DOL have released a proposal that would require plan sponsors of all sizes to file a 5500 as early as January 1, 2019. In the same way that the increased ERISA audits and resulting penalties have been a big concern for the past few years, the new 5500 requirements could very soon be the big topic of discussion.
Speaking of ERISA, many brokers don’t realize that the already significant ERISA penalties just went up. Way up. Effective August 1, 2016, the per-employee, per-day, and annual maximum penalties for a wide range of ERISA violations increased significantly, and there will be annual adjustments for inflation going forward. What this means for brokers, of course, is that compliance will be an even bigger issue for employer clients than it already is. If you’re not currently talking with your group clients about the long list of requirements they must comply with and recommending administrators that can help them avoid penalties, you probably need to start.
Ignoring pleas from the insurance industry, the Department of Labor declined to exclude Health Savings Accounts from its new fiduciary rules, and this could affect administrators, advisors, and employers. Specifically, administrators will need to examine their fees and investment options while brokers and their clients will need to review their education and communication material to make sure they’re not providing investment advice. Agents have until April 10, 2017 to comply with the new conduct and disclosure requirements and must be in full compliance with the rules by January 1, 2018.
Again, this is just a sampling of some of the recent and upcoming changes that could affect our clients in the very near future. As more details emerge, we’ll pass on what we know in our regular blog posts, newsletters, and agent training sessions.