Medicare Part D Notices Due Soon: Coming Up in Compliance

Medicare Part D notice must be provided to employees by October 15, 2018. Here’s everything you need to know.

The Basics

Every year, Medicare Part D requires employers, as group health plan sponsors, to disclose to  employees eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether prescription drug coverage on the employer’s health plan is creditable. It’s required that this this information be disclosed to eligible individuals by October 15, 2018. This marks the beginning of annual enrollment for Medicare Part D.

How do you do it?

Disclosures to CMS must be made on an annual basis or any time that a change occurs that impacts whether the prescription drug coverage is creditable. Employers should confirm whether prescription drug coverage on their health plan is creditable or non-creditable. Medicare Part D disclosure notices should be prepared for sending before October 15, 2018. To streamline the process, it helps to include the Medicare Part D notice in open enrollment packets that are provided to employees prior to October 15, 2018.

What is creditable coverage and who is eligible?

Prescription drug coverage is considered creditable if the actuarial value equals or exceeds the value of standard Medicare Part D prescription drug coverage. Actuarial determination measures whether the expected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit.

This creditable coverage disclosure notice must be provided to employees who are eligible under Medicare Part D  and are covered by, or apply for, prescription drug coverage under the employer’s group health plan. An individual is considered eligible under Medicare Part D if the employee is entitled to Medicare A or enrolled in Medicare Part B, or if the employee lives in the service area of a Medicare Part D Plan.

Dates and Deadlines

At the minimum, the disclosure notice for CMS creditable coverage must be provided at the following times:

  • Prior to the annual coordinated election period for Medicare Part D. This year that’s October 15 thru December 7;
  • Within 60 days following the start date for the plan year;
  • Within 30 days following the termination of the prescription drug plan;
  • Within 30 days following any change in the creditable coverage status of a prescription drug plan;
  • Prior to an individual’s initial enrollment period for Medicare Part D;
  • Prior to the effective date of coverage for any eligible individual that joins the plan;
  • When prescription drug coverage ends or any major change that impacts whether its creditable occurs; or
  • Upon the request of the beneficiary.

How to Deliver

Plan sponsors have three options in how they may provide their creditable coverage disclosure notices.

  • Disclosures notices may be provided separately;
  • Disclosure notices can be provided with other plan participant materials, if certain conditions are met; or
  • Disclosure notices can be sent electronically.

Generally, a single notice may be provided to the covered individual and all of his eligible dependents covered under the same plan. However, if any spouse or eligible dependent lives at a different address than where the participant materials were mailed, a separate notice must be provided.

CMS has indicated that health plan sponsors may use electronic disclosure under the Department of Labor (DOL) regulations. These regulations permit a plan sponsor to provide a creditable coverage disclosure notice electronically to plan participants that can access electronic documents at their place of work, provided that they have access to the sponsor’s electronic information system as part of their regular, daily work duties.

The DOL also requires that the plan sponsor use appropriate and reasonable means to ensure that the information is being properly transmitted and received; that notice is provided to the plan participants on the significance of the document; and that a paper version of the document is available upon request.

Additionally, if a plan sponsor opts to use electronic delivery, the sponsor must inform the plan participant that they are responsible for providing a copy of the electronic document to their eligible dependents covered under the plan.

The Boon Blog is your source for the latest in healthcare industry news and updates. You can keep up with the world of healthcare and all things Boon on our FacebookTwitter, and LinkedIn.

Posted in Uncategorized | Leave a comment

The Davis-Bacon Act: Everything You Need to Know about DBA Compliance

Compliance tops the list, when it comes to government contractors’ priorities. Construction contracts with the federal government are governed by the Davis-Bacon Act (DBA), so it’s best to brush up on your DBA basics. Read on to learn more about the DBA.

The primary function of the Davis-Bacon Act is to protect local communities from economic upheaval caused by federal government contracts. The DBA requires that workers employed on federal contracts be paid a local prevailing wage rate and fringe benefits. This applies to any contract valued in excess of $2,000 and levels the playing field by preventing outside contractors from coming into an area and underbidding local contractors and unions.

Compliance with the DBA

During the performance of the contract, employees must be paid at least once a week with full wages and the employers’ option of a) fringe benefits or b) cash, in lieu of those benefits. Companies are required to maintain basic records for all workers during the course of their work and for at least three years after. These records must contain:

  • The basic info of each employee (name, address, social security number);
  • Hourly rates of pay, including rates associated with fringe benefits and cash equivalents;
  • Daily/weekly number of hours worked;
  • Deductions made and actual wages paid;
  • Details on the fringe benefit plans and programs and documentation that the program has been communicated in writing to the workers.

By identifying the requirements of the DBA from the outset, it’s easy to set yourself up with strategies for compliance and, by extension, maximizing your competitiveness. Knowing key information, like the wage requirements, early on allows you to capture the highest level in profitability in the bidding process.

One of the critical strategies for successful compliance is putting forth an integrated effort. Bringing in legal, human resources, accounting, and other knowledgeable professionals cuts down on the likelihood of errors and gives you the full force of a capable team to ensure your compliance. At Boon, we’re 100 percent committed to this strategy. Boon offers comprehensive, legal, licensing, compliance, and accounting services, in addition to our friendly customer service and simple enrollment methods.

Annualization Basics

Annualization is the computation strategy used to determine the hourly rate of contribution that is creditable towards a contractor’s prevailing wage obligation on DBA covered projects. The concept of annualization is incredibly important because the amount of credit a contractor may claim can be just as crucial to determining DBA compliance as the particulars of a fringe benefit plan under the DBA.

Annualization was applied in the 1970s in health insurance plans that called for the same rate of contribution for all hours worked by laborers that were employed on both DBA covered projects and other, non-covered endeavors.

In practical application, annualization limits Davis-Bacon credits to an amount equal to the hourly cost of the fringe benefit averaged across all the hours an individual works during a year. This prevents individuals from using Davis-Bacon work as the exclusive source of funding for continuous benefits and compensation for all of an employee’s work.

Penalties Associated with the DBA

The Wage and Hour Division (WHD) of the Department of Labor is responsible for administering and enforcing the DBA. The WHD is notorious for being unwilling to negotiate and quick to drop the legal hammer to punish non-compliant contractors and any subcontractors that contractor is responsible for. Some examples of those penalties include:

  • Paying of back wages and fringe benefits to employees
  • Termination of the contract
  • Personal liability of company officials
  • Prohibition from all government contracts for a three-year period
  • Withholding payments due to the contractor

Developing a benefits plan that is flexible to your needs and keeps you compliant will allow you and your employees to save money, which keeps you competitive! That’s what we do at Boon.

Visit our website to learn more and catch us on Facebook, Twitter, and LinkedIn! Follow the Boon Blog for the latest in industry trends, updates, and news.

 

Posted in Uncategorized | Leave a comment

Downstream Compliance and Contractor Responsibility

Every year, the federal government spends more than $500 billion a year on contracts. More than 50 percent of that total works its way down to subcontractors.

Wow.

The business of government contracting is built upon the hard work of government contractors and the subcontractors that make these massive projects possible. It’s a partnership that is not only common but vital.

So what laws apply in these working relationships? The subcontractor is subject to the same laws and regulations as the prime contractor when that subcontractor enters into an arrangement with a federal contractor for any service that is necessary to the performance of any one or more government contracts.

The same rule applies to an arrangement that assumes, undertakes, or promises performance of any portion of the federal contractor’s obligation under one or more government contracts.

Additionally, the prime contractor is also responsible for the subcontractor’s compliance with the regulatory requirements.

Many subcontractors do not have access to the professionals that can design compliant and comprehensive healthcare solutions. As stated above, ultimately, the prime contractor is responsible for the overall compliance of all parties working under the prime contract. So, how are the prime contractor and its subcontractors to ensure their compliance?

By understanding the rules and working with professionals who know them.

Contractors have options on how they spend the fringe dollars afforded to them. Employers that provide health insurance typically experience more employee engagement, reduced absenteeism, and significantly lower healthcare costs overall.

For 35+ years, Boon has been providing our clients with efficient, knowledgeable, and purposeful solutions to address their compliance issues. We can keep you compliant from the top down, all while providing your employees accessible healthcare through flexible and meaningful healthcare plans.

The Boon Blog is your source for the latest in industry tips, information, and news. You can also keep up with all things Boon on our FacebookTwitter, and LinkedIn.

Posted in Uncategorized | Leave a comment

Boon Buzz: HSA/HDHP Limits Will Increase for 2019

The IRS limits for HSA contributions are set to increase for 2019. This also includes the limits for HDHPs.

The Internal Revenue Service (IRS) announced the inflation-adjusted limits on health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2019 on May 10, 2018. The Revenue Procedure 2018-30 details the following limits:

  • The maximum HSA contribution limit
  • The minimum deductible amount for HDHPs
  • The maximum “out-of-pocket” limit for HDHPs

Some dates to remember. On January 1, 2019 the increase in HSA contributions limits will go into effect. As for the HDHP limits, those increases will be effective for plan years beginning on or after January 1, 2019.

Now, let’s get to numbers. The HDHP Minimum Deductible for both self and family will remain unchanged; $1,350 for self-only and $2,700 for family. Another unchanged amount is the HSA catch-up contributions for those age 55 or older; from 2018 to 2019 the amount remains at $1,000.

For the HSA contribution limit, Self-only contributions jumped from $3,450 to $3,500 from 2018 to 2019. The Family limit made a $100 jump between 2018 and 2019; from $6,900 to $7,000.

The maximum out-of-pocket expense limit includes such things as deductibles, copayments, and other amounts that do not fall under premiums. This was the area of greatest increase, across the board. From 2018 to 2019 Self-only out-of-pocket increase from $6,650 to $6,750. The family limits increased by a factor of $200, increasing to $13,500 from the 2018 limit of $13,300.

What does this mean for employers? Due to these changes, employers that sponsor HSA and HDHP plans may look to adjust their plan design for the beginning of 2019. It’s recommended that employers communicate the HSA contribution limits to employees as part of the enrollment process and that all enrollment materials be updated to reflect the increased limits.

The Boon Blog is your source for the latest in industry news. You can keep up with the world of healthcare, industry updates, and all things Boon on our Facebook, Twitter, and LinkedIn.

Posted in Uncategorized | Leave a comment

Lawsuit Pushes Back Against DOL Rule

Eleven states, accompanied by the District of Columbia, have launched a lawsuit against the federal government. This suit is led by New York and the following states have signed on, as well: California, Delaware, Kentucky, Maryland, Massachusetts, New Jersey, Oregon, Pennsylvania, Virginia, and Washington. This group hopes the suit will push the Department of Labor to roll back a recent regulation to expand access to associated health plans (AHPs). These AHPs are generally cheaper but offer fewer benefits.

The regulation in question expands who can gain access to an association health plan. In practice, this would enable small businesses to join together when getting insurance. In a previous post here on the Boon Blog, we discussed the regulation and its potential impact in greater detail. You can check it out here.

In the lawsuit, states charge that this regulation is intended to move a large number of individuals and small employers into the large group market to avoid the core protections of the Affordable Care Act. The individual market allows people to obtain health insurance, if they are unable to access it through the government or their job. The small group market is used by small businesses to insure employees.

The Affordable Care Act’s essential health benefit requirements do not apply in the large group market. Further, the states participating in the suit allege that the final rule is unlawful because it operates in direct conflict with the statutory structure adopted by Congress in the ACA, to apply basic protections to individuals and small groups. The states claim that this will do harm as it will require them to devote additional resources to managing a high volume of fraudulent or inadequate plans offered by associations.

This is a rapidly developing issue, so keep up with the Boon Blog for the latest developments. You can also catch up on all things Boon on our Facebook, Twitter, and LinkedIn.

Posted in Uncategorized | Leave a comment

New SCA Fringe Rates for 2018/2019 Issued

The Wage and Hour Division has released the new fringe rates for 2018/2019.

The Wage and Hour Division’s All Agency Memorandum 227 sets the Service Contract Act (SCA) Health and Welfare Fringe Benefit rate for $4.48 per hour, an increase from the previous year’s fringe rate of $4.41 per hour. This new fringe rate became effective on July 11, 2018.

In addition, the All Agency Memorandum sets a Welfare Fringe Benefit rate of $4.18 per hour for contracts under the SCA that are also bound by EO 13706. This also represents a small increase with the health and welfare rate increasing from $4.13 per hour.

Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, requires that employers that contract with the federal government provide their employees with up to 56 hours of paid sick leave annually; this comes out to seven days paid sick leave. This rule applies to “new” government contracts entered into on or after the Executive Order’s effective date, January 1, 2017. This paid leave can also be applied to family care and any employee absences that occur as a result of domestic violence, sexual assault, and stalking.

These increased fringe rates already present many interesting considerations with respect to both providing meaningful benefits and with compliance. Most notably, under this new fringe rate, there is potential for a given contractor to have five different contracts with five different fringe rates.

Talk about a compliance minefield!

Our comprehensive compliance services navigate this changing landscape and guard against potential compliance pitfalls so that you don’t have to. Our ability to create flexible plans that are customized to the fringe keeps you compliant and covered in the most cost-efficient way.

The Boon Blog is your resource for the latest in industry updates. You can also catch up with Boon on Facebook, Twitter, and LinkedIn!

Posted in Uncategorized | Leave a comment

DOL Finalizes Rule to Expand Association Health Plans

On June 19, the Department of Labor (DOL) released a final rule that makes it easier for small employers to join together to purchase health insurance.

By forming these benefit arrangements, called Association Health Plans or AHPs, small employers can work around certain Affordable Care Act reforms that apply to the small group market. The goal of this rule is to offer small employers more affordable health insurance options. Also according to the DOL, the changes expand access to affordable, high-quality health insurance coverage.

Sound too good to be true? It just might be.

Critics of the rule worry about potential risks to consumers and market stability. In exchange for these lower premiums, AHPs may cover fewer benefits. Most of these AHPs will not be subject to the ACA’s essential health benefits reform. That reform requires small group plans to cover a core set of items and services, such as mental health and maternity and newborn care.

We recommend that employers carefully review the AHP’s benefit design to make sure it’s the right fit for their workforce. Employers should also be mindful of the fact that AHPs are regulated at the federal and state level and the availability of these plans will rely on how a particular state approaches these kind of regulations.

So, where did this final rule come from?

In October 2017, President Trump signed an executive order directing the DOL to consider regulations that would permit more employers to form AHPs in order to expand access to affordable health coverage.

As it stands, the criteria that is required for a group of employers to sponsor a single ERISA plan is very limiting. Under these current rules, the size of each participating employer determines whether the coverage is subject to the small group or large group market rules.

What are AHPs exactly?

AHPs are a type of multiple employer welfare arrangement that has, historically, been taken advantage of and has a history of defrauding customers. The Affordable Care Act has provisions in place that target these abuses, like improved reporting and stronger enforcement.

As mentioned previously, there are concerns that expanding AHPs will result in potential customer fraud. In their final rule, the DOL notes that it is relying on the close cooperation of state regulators to guard against fraud and abuse.

How will the final rule work?

This reform provides small employers, with a greater ability to join together and gain many of the regulatory advantages enjoyed by large employers.

The rule allows employers to join together to form an AHP that is a single ERISA plan if either of these requirements is satisfied:

  • The employers are in the same trade, industry, and profession
  • The employers have a principal place of business within a region that does not exceed boundaries of the same state or metro area.

The rule also allows working owners that don’t have other employees to join AHPs.

When it comes to distinguishing single plan AHPs from commercial insurance arrangements, the final rule requires that the following conditions be satisfied:

  • The primary purpose of the group may be to offer health coverage to its employees; but, the group also must have at least one substantial business purpose unrelated to offering health coverage or other employee benefits.
  • Each employer member of the group or association participating in the group health plan must be the employer of at least one employee who is a plan participant
  • The group has a formal organizational structure with a governing body and has bylaws or other similar indications of formality
  • The group’s member employers control its functions
  • Only employees of the current employer members may participate in the group health plan sponsored by the association
  • The group is not a health insurance issuer or owned or controlled by an issuer

The final rule also requires AHPs to comply with certain consumer protections and anti-discrimination protections that apply to the large group market. AHPs under this rule will not be able to charge employers different rates based on the health status of their employees.

This rule does not affect existing AHPs that are allowed under the DOL’s current rules. These plans can either continue on as they are or elect to follow the new requirements.

What are the dates to remember?

Sept. 1, 2018: Fully insured plans may begin operating under the new rule.

Jan. 1, 2019: Existing, self-insured AHPs may begin operating under the new rule.

Apr. 1, 2019: New, self-insured AHPs may begin.

Compliance continues to be key.

One of the major stumbling blocks for government contractors is compliance. Keeping up with rules, regulations, and changes is difficult. Especially, once you begin factoring in multiple organizations and the needs of all those employees.

The Boon solution is our flexible, customized employee benefit plans that place the emphasis on compliance. We’ve got 35+ years of expertise and the resources to address any compliance issues that may arise!

Trust the Boon Blog as your resource for industry updates. You can also catch us on Facebook, Twitter, and LinkedIn.

Posted in Uncategorized | Leave a comment