Updated: Jan 9, 2019
CHANGES FOR 2019 Certain percentages and dollar amounts have changed for 2019:
Coverage affordability percentages
Maximum penalties for ACA reporting violations
EXPECTED CHANGES FOR 2019 Other updated amounts have not yet been announced, but may change for 2019, including:
Health flexible spending account (FSA) salary contribution limits
Dollar amounts for calculating employer shared responsibility penalties
The Affordable Care Act (ACA) has made a number of significant changes to group health plans since the law was enacted in 2010. Many of these key reforms became effective in 2014 and 2015, including health plan design changes, increased wellness program incentives and the employer shared responsibility penalties.
Certain changes to some ACA requirements take effect in 2019 for employers sponsoring group health plans, such as increased dollar limits. To prepare for 2019, employers should review upcoming requirements and develop a compliance strategy.
This ACA Overview provides an ACA compliance checklist for 2019. Please contact AJM Associates for assistance or if you have questions about changes that were required in previous years.
PLAN DESIGN CHANGES
Grandfathered Plan Status A grandfathered plan is one that was already in existence when the 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. However, grandfathered status does not automatically expire as of a specific date. A plan may maintain its grandfathered status as long as no prohibited changes are made. Once a plan relinquishes grandfathered status, it cannot be regained and the plan must comply with additional reforms under the ACA.
Contact AJM Associates if you have questions about changes you have made, or are considering making, to your plan.
Cost-sharing Limits Effective for plan years beginning on or after January 1, 2014, non-grandfathered health plans are subject to limits on cost sharing for essential health benefits (EHB). The ACA’s overall annual limit on cost sharing (also known as an out-of-pocket maximum) applies for all non-grandfathered group health plans, whether insured or self-insured. Under the ACA, a health plan’s out-of-pocket maximum for EHB may not exceed $7,900 for self-only coverage and $15,800 for family coverage, effective for plan years beginning on or after January 1, 2019.
Health plans with more than one service provider may divide the out-of-pocket maximum across multiple categories of benefits, rather than reconciling claims across multiple service providers. Thus, health plans and issuers may structure a benefit design using separate out-of-pocket maximums for EHB, provided that the combined amount does not exceed the annual out-of-pocket maximum limit for that year. For example, in 2019, a health plan’s self-only coverage may have an out-of-pocket maximum of $6,000 for major medical coverage and $1,900 for pharmaceutical coverage, for a combined out-of-pocket maximum of $7,900.
Beginning with the 2016 plan year, the self-only annual limit on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or family coverage. This embeds an individual out-of-pocket maximum in family coverage so that an individual’s cost sharing for essential health benefits cannot exceed the ACA’s out-of-pocket maximum for self-only coverage.
Note that the ACA’s cost-sharing limit is higher than the out-of-pocket maximum for high deductible health plans (HDHPs). In order for a health plan to qualify as an HDHP, the plan must comply with the lower out-of-pocket maximum limit for HDHPs. HHS provided FAQ guidance on how this ACA rule affects HDHPs with family deductibles that are higher than the ACA’s cost-sharing limit for self-only coverage.
According to HHS, an HDHP that has a $10,000 family deductible must apply the annual limitation on cost sharing for self-only coverage ($7,350 in 2018) to each individual in the plan, even if this amount is below the $10,000 family deductible limit. Because the $7,350 self-only maximum limitation on cost sharing exceeds the 2018 minimum annual deductible amount for HDHPs ($2,700), it will not cause a plan to fail to satisfy the requirements for a family HDHP.
Health FSA Contributions Effective for plan years beginning on or after January 1, 2013, an employee’s annual pre-tax salary reduction contributions to a health FSA must be limited to $2,500 (as adjusted for inflation). The $2,500 limit was increased to $2,550 for taxable years beginning in 2015 and 2016, then increased to $2,600 for taxable years beginning in 2017, and then increased again to $2,650 for taxable years beginning in 2018. For 2019 the IRS has increased the FSA contribution to $2,700.
The limit does not apply to employer contributions to the health FSA, and does not impact contributions under other employer-provided coverage. For example, employee salary reduction contributions to an FSA for dependent care or adoption care assistance are not affected by the health FSA limit.
SUMMARY OF BENEFITS AND COVERAGE (SBC)
Health plans and health insurance issuers must 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, as well as to participants and beneficiaries who enroll other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees).
The SBC must follow strict formatting requirements. The Departments provided templates and related materials, including instructions and a uniform glossary of coverage terms, for use by plans and issuers. On April 6, 2016, the Departments issued a new template and related materials for the SBC, effective for use with respect to open enrollment periods or plan or policy years beginning on or after April 1, 2017.
The ACA includes a requirement for health plans to file a statement with HHS certifying their compliance with the Health Insurance Portability and Accountability Act’s (HIPAA) electronic transaction standards and operating rules. These HIPAA requirements are often referred to as the electronic data interchange (EDI) rules.
However, on October 4, 2017, HHS withdrew its proposed rule in order to re-examine the issues and explore options and alternatives to comply with the HIPAA certification requirement. As a result, group health plan sponsors will not be required to certify their HIPAA compliance until HHS issues new guidance.
Although health plans are not required to certify their HIPAA compliance at this time, there is an enforcement process in place for the EDI rules. Civil monetary penalties and criminal penalties may be imposed on a covered entity that fails to comply with the EDI rules. Thus, health plans and business associates that conduct standard transactions should confirm that they are complying with the EDI rules.
EMPLOYER SHARED RESPONSIBILITY RULES
Under the ACA’s employer shared responsibility rules, applicable large employers (ALEs) are required to offer affordable, minimum value (MV) health coverage to their full-time employees (and dependent children) or pay a penalty. These employer shared responsibility requirements are also known as the “employer mandate” or “pay or play” rules.
An ALE will be subject to penalties if one or more full-time employees receive a subsidy for purchasing health coverage through an Exchange. An individual may be eligible for an Exchange subsidy either because the ALE:
Does not offer coverage to that individual; or