Chaz

Pending other guidance: B.

Section 1403 of HCERA changed the effective date of the limit to 1/1/13: SEC. 1403. DELAY OF LIMITATION ON HEALTH FLEXIBLE SPENDING ARRANGEMENTS UNDER CAFETERIA PLANS. (a) IN GENERAL.—Section 10902(b) of the Patient Protection and Affordable Care Act is amended by striking ‘‘December 31, 2010’’ and inserting ‘‘December 31, 15 2012’’.

I don't know the answer to this but I wonder if there are any ADA or other employment-law related issues at play here.

In general, under COBRA, you generally have 60 days from the date that your coverage ends to elect COBRA and then have 45 days to make the initial COBRA premium payment. If your coverage ends on October 31, then you will have until the end of December to make the election. If you need medical care before 2011, you are permitted to elect COBRA retroactively. But leevena makes a good point; your company make have decided to continue coverage for the remainder of the year for individuals in your circumstances.

Note that, although the CLASS Act (as it's called) is technically effective January 1, 2011, regulations are not due until October 2012, so enrollment probably won't start until sometime in 2012 or later.

Thanks, it helps clarify the issue in my mind. My example was a hypothetical but the exact circumstances are bound to come up. Many employers will conclude that it is too expensive to keep these these types of executive-only plans going on a grandfathered basis because of the cost and if these plans lose grandfathered status, they will be subject to the nondiscrimination rules. Eliminating the option will have the effect of transferring the executives into the grandfathered self-insured plan, but the reason is not "just to get them into a grandfathered plan." I'm torn between the intent of the provision, which is to serve as an anti-abuse protection and the words of the regulation, which states that transferring employees must be for a valid business reason and cost is not such a reason. As you say, it's a moving target, and I hope the regulators provide some guidance.

Anyone have any thoughts?

Employer has self-insured medical plan for the bulk of its employees. Employer also has a rich insured "executive-only" policy. Will eliminating the executive-only policy, which would cause the executives to begin to participate in the self-insured plan, make the self-insured plan lose its grandfathered status under the "anti-abuse" provision of the interim final grandfather regulations?

The IRS issued Notice 2010-59 a couple of days ago. It answered my questions: 1-January 1, 2011, is the date, regardless if there is a grace period. 2-It is only OTC drugs and medicines that are not reimbursable (unless there is a prescription).

If that's the case, then why do happy hours generally last more than one hour?

Kathy D - I most certainly do NOT want to provide coverage or collect premiums with respect to a dependent who I know is ineligible. If I intimated that, it's not what I meant. Rather, if proof is not provided, the "dependent" should be taken off the plan (in accordance with the plan document or insurance policy, of course). I am not sure what you mean by your second sentence but the only difference between a fully and self-insured plan in this context is that with an insured plan keeping a dependent on the plan that you know is ineligible likely constitutes insurance fraud.

In virtually all the cases I've dealt with, the spousal surcharge is imposed by the employer. I've seen it used in both the fully insured and self-insured contexts. I have never, ever, heard of any employer taking the surcharge out after-tax. The employees' who pay the surcharge just have a higher premium to pay.

Do you have a link or quote of these regs? The section of PPACA that David Rigby quoted said available for the child, not to the child, and I think that might be an important distinction. I'm not sure of the significance of provide coverage "for" or providing coverage "to" the child. I think the regs use the words interchangeably but I haven't checked that closely. Here is sample language from the regs (actually the preamble) that says that the child "pays" for the coverage. The phrase is used multiple times. "The child also cannot be required to pay more for coverage than similarly situated individuals who did not lose coverage by reason of cessation of dependent status." If the employee has the choice, wouldn't the regs say "The employee cannot be required to pay more. . . ."?

I think under the "old rules," the child would have legal standing to demand coverage in cases where coverage is being provided through COBRA. The question for me is whether the PPACA age 26 requirement is to be treated the same way.

So you are saying, if the normal health employee contribution to cover a spouse on a plan is $200/month and if a spouse is eligible for other coverage, the employee has to pay $250/month, the employee has to pay the $50 "surcharge" to cover the spouse after-tax? If so, I have never heard anyone take this position. Do you have any guidance that supports this view? What if it is phrased the opposite way (Normal employee contribution for spouse is $250/month but if spouse doesn't have other coverage it's only $200)? Is the answer different?

That would be good advice if the plan administrator was comfortable that the plan (however it is interpreted) is in compliance with the law. I'm not sure that I am comfortable with whether such a denial would comply with PPACA and in my mind it would be risky finding out through a court decision

When I wrote the hypothetical, I presumed that the son wasn't a dependent. I'm not sure why (theoretically, at least) it would matter in any case.

The issue from my perspective is not whether the parent can prevent the child from enrolling even if the parent isn't affected (i.e., has to pay), it's whether the employer needs to set up a separate administrative scheme for collecting the premiums from the child.

Thanks for the response. I understand that an employee cannot refuse to pay and still receive coverage. (I would argue, though, that the terms of an employment relationship CAN require the employee to pay for health coverage. That's a topic for a different time.) In any event, in my hypothetical, assume that the son is willing to pay. I guess my question comes down to whether the EMPLOYEE can control whether the child gets coverage or whether the child has an independent right (like with COBRA) to the coverage, with or without the employee's involvement. The regs discuss that coverage must be made "available" to the child and also talks about the child paying for the coverage. The second question is, if coverage must be offered, MUST the plan provide for an alternative payment option for the child (it probably COULD do it but must it?) or could it cram down the employee?

mli - I think you need to get some legal advice on this. I think the correct answer is the one that you fear but there may be alternatives that you should discuss with counsel.

As we all know, effective January 1, 2011 (for calendar year plans), plans that cover dependent children will be required to coverage adult children to age 26, regardless of dependency status. Hypo: Employer has a number of tiers of coverage, including Employee-only, Employee + Children. Both the employer and employee contribute to the coverage. Employee is estranged from his 25 year old son. The son comes to plan and says "I am entitled to coverage. Put me on the plan." Employee says "I don't want to pay more for his coverage." Three questions: 1-Does the plan have to cover the child? 2-If the plan does have to cover the child, can the plan require the employee pay for the employee share (presumably pre-tax through a cafeteria plan) or must the employer have the child pay separately? 3-If the child pays separately, does he pay the Employee-only rate or does he pay the difference between the Employee + Children rate and the Employee-only rate? Any help is appreciated.

The Medicare regulations state that Medicare is primary to COBRA continuation coverage when Medicare coverage is based on age or disability. Aetna can't cut off the COBRA coverage but it appears from the facts you present that they are correct that Medicare pays first.

Many employers require proof of other coverage for the simple reason that they do not want their employees to go "bare" without coverage. It's a common requirement and does not violate any law that I am aware.

Even before the health care act, if the person is a "highly compensated individual" in order for him or her to pay a portion of the premiums for health insurance on a pre-tax basis, the plan would have to pass the cafeteria plan nondiscrimination tests. Now, under PPACA, even if the person does not pay any portion of premium or pays it on an after-tax basis, (different) nondiscrimination rules will apply. The tests are complicated as is the determination whether a plan is grandfathered so you should obtain expert advice. The new law doesn't change how much compensation you can pay someone, so a simpler approach may be to increase the person's salary or bonus. PPACA does not change any rules about sick pay at all. Does this help?

I'm not sure for what reason you need the definition. If you post more information, I might be able to provide some help.