Enrollment Process Under the New Legislation To Assure Success and Avoid Future Penalty
The Department of Health and Human Services (HHS) and the Treasury Department released new regulatory guidance under the Patient Protection and Affordable Care Act (PPACA) in early 2013. These rules will come in to effect from January 1, 2014 and will apply to everyone in US. An introduction to these regulations could mean that a number of individuals in the U.S. will remain uninsured in 2014 and perhaps beyond.
Two out of the three rules published; focus on the individual shared responsibility or the individual mandate. In specific, it requires that all non exempt individuals must enroll and have Minimum Essential Coverage (MEC) or face a penalty in form of an excise tax.
Enrollment of Employees
The MEC covers a broad range of health coverage which will enable an individual to satisfy the obligation to enroll in health coverage and avoid a penalty. The regulation clarifies that an employee is treated as eligible for coverage under an employer-sponsored plan for each month of the plan year. Accordingly, an individual eligible to enroll:
- in a retiree coverage under an employer-sponsored group health plan is treated as eligible to purchase MEC under the same rules applicable to current employees; and
- in Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage (or comparable continuation coverage under state law) is considered eligible to purchase MEC only if the individual actually enrolls in that coverage.
Applicability to Employers
MEC rule does not does not expressly provide that employer-sponsored coverage must be adequate to qualify as minimum essential coverage for compliance with the individual mandate. However, it affects employers as part of a broader analysis of health care reform, strategy and compliance.
Those employers who seek to minimize any penalty must offer a group health plan, i.e., a minimum essential coverage to 95 percent of their full-time employees and their respective children under the age of 26. Coverage does not have to be offered to a spouse. To avoid or minimize the employer penalty, the group health plan needs to meet a 60 percent minimum value test and be affordable for the employee-only coverage.
Other Services designated as MEC
On the other hand, the HHS in coordination with the Treasury Department, has the authority to designate other health benefit coverage as MEC. It has developed a criterion according to which certain substantive and procedural requirements need to be met. Accordingly, certain additional types of existing health coverage designated as MEC includes the Medicare Advantage plans, the Foreign Health coverage, the Self-funded Student Health Insurance plans, the Refugee Medical Assistance and the AmeriCorps coverage offered to AmeriCorps volunteers (the domestic counterpart to the Peace Corps).
The regulations would also initially designate state high-risk pools as MEC, but HHS intends to review and monitor the extent and quality of this coverage, and reassess this designation in the future. For other types of health coverage not automatically designated as MEC, the regulation outlines a process under which a sponsoring organization could apply for MEC recognition.
Under the proposed regulation, an individual is treated as having MEC, for any calendar month, if the individual is enrolled in and entitled to receive benefits under a program or plan that is MEC for at least one day during the month.
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