The past week has brought several developments of interest to employers who sponsor group health plans.
Effective Date for Individual Mandate Delayed For Some People
On June 26, 2013 the IRS unexpectedly issued a notice that gives individuals who are eligible for coverage under an employer-sponsored health plan, but who have not elected coverage under that plan, until the start of the 2014 plan year to enroll in the plan. Employees (and eligible dependents) who elect employer-provided coverage as of the start of the 2014 plan year will not be required to pay the individual shared responsibility penalty for the months in 2014 that they did not have coverage.
Employees who declined coverage for the plan year that starts during 2013 may still enroll in the exchange as of Jan. 1, 2014 and then move to the employer-sponsored health plan as of the start of the 2014 plan year if they wish to. However, as a result of this new notice, if the employee chooses to wait to obtain coverage through his or her employer until the start of the 2014 plan year the employee will not be penalized.
Employers still have the option to amend their Section 125 plan to allow currently covered employees/dependents to move to the exchange as of Jan. 1, 2014 and/or to enroll in the plan as of Jan. 1, 2014. (Employers considering allowing mid-year enrollment should verify that this is acceptable to their insurer or stop loss carrier.)
Notice 2013-42 is available here: http://www.irs.gov/pub/irs-drop/n-13-42.pdf
Spanish Version of Notice of Exchange is Now Available
The DOL has provided Spanish versions of the model notice regarding the exchange/health insurance marketplace. While employers are not specifically required to provide the Spanish version to Spanish-speaking employees, since the notice is supposed to be understandable by the average employee, providing the Spanish version where appropriate is advisable.
There are two Spanish model notices, one for employers who offer group health coverage and one for employers who do not offer coverage. This is the same approach as is used with the English versions.
The notice needs to be given to all employees by Oct. 1, 2013. Presumably this means that anyone on the employer's payroll as of Oct. 1 should receive the notice. The only employers exempt from this requirement are private employers who have annual dollar volume below $500,000. All not-for-profit and governmental employers must give the notice, regardless of size.
The Spanish version of the model notice for employers who offer health coverage is here: http://www.dol.gov/ebsa/pdf/FLSAwithplanssp.pdf
The Spanish version for employers who do not offer health coverage is here: http://www.dol.gov/ebsa/pdf/FLSAwithoutplanssp.pdf
U.S. Supreme Court Finds Part of DOMA Unconstitutional
On June 26, 2013 the U.S. Supreme Court held, in a 5 - 4 decision, that the federal Defense of Marriage Act (DOMA) is unconstitutional because it violates the Equal Protection clause. The part of DOMA that was found to be unconstitutional states that for purposes of all federal laws and regulations, "marriage" must be defined as a legal union between one man and one woman and "spouse" must be a person of the opposite sex who is a husband or wife. In contrast, several states, including New York, recognize same-sex marriages.
The Court basically said that because the states generally have the right to determine issues relating to family matters, and the state of New York had chosen to recognize and protect same- sex marriage, Congress did not have the right to overrule the state and disadvantage a group of people New York had chosen to protect.
It is important to understand that this decision simply says that if the state chooses to recognize same-sex marriages, the federal government must, too. This means that if the employee lives in a state that recognizes same-sex marriages, the same-sex spouse is now entitled to COBRA, FMLA protection, HIPAA special enrollment rights, FSA, HRA and HSA reimbursements and may pay premiums on a pre-tax basis. (The states that currently recognize same sex marriages are California, Connecticut, Delaware, the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington.) This decision does not mean that similar rights are available to domestic partners who are not "spouses" so, for instance, domestic partners who are not "spouses" still may not pay premiums on a pre-tax basis.
It appears that employers in states that recognize same-sex marriage may make changes to recognize the rights of same-sex spouses immediately, although they will have at least 25 days, and probably more time than that, to make needed changes. It is unclear whether this decision will apply retroactively (the agencies are expected to issue guidance on this). It is also unclear to what extent states will decline to recognize same-sex marriages performed in other states, which may raise issues for employers who have employees who move among states. We will provide additional information as it becomes available.
HHS ISSUES FINAL RULE ADDRESSING RELIGIOUS EMPLOYERS AND COVERAGE FOR CONTRACEPTION
On June 28, 2013 HHS issued a final rule that is intended to accommodate religious employers that have objections to covering contraception. The final rule is quite similar to the interim rule, as it totally exempts churches from the requirement to provide first dollar contraceptive coverage. However, the final rule uses a more straightforward definition of church, to allay concerns that certain related programs sponsored by the church might have caused it to lose the exemption.
Non-profit religious organizations that object to contraception on religious grounds will not be required to contract, arrange for, refer or pay for contraceptive coverage. Instead, the organization must self-certify its objection and provide the certification to its carrier or third party administrator. That carrier or third party administrator will then be required to provide first dollar contraceptive coverage to covered persons at no cost to the plan. The current self-certification form is to be used through 2013 renewals; a revised form will be used for 2014 and later plan years. The 2014 self-certification form may be found here: http://cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/cms-10459-certification.pdf
The carrier or third party administrator must provide participants a notice of the availability of separate payments for contraceptive services in connection with, but separate from, application materials provided as part of enrollment. A model notice may be found here: http://cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/cms-10459-enrollee-notice.pdf
The final rule provides that all private employers are required to provide first dollar contraceptive coverage, even if they object on religious grounds. A number of private employers have filed lawsuits challenging this requirement, but unless and until an applicable court rules this requirement is unlawful, employers that are not a church or a non-profit religious organization will be expected to meet this requirement.