| COMPLIANCE CORNER
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| Excessive Waiting Periods Eliminated for 2014
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| Public Health Service Act (PHSA) Section 2708, which was added by the Affordable Care Act, prohibits group health plans and insurers from applying a waiting period exceeding 90 days. The regulations apply to plan years beginning on or after January 1, 2014 for any individuals who are otherwise eligible to enroll in a plan based on the applicable terms and conditions. |
| There are certain instances in which this prohibition does not apply. Two of these include: |
- Excepted benefits such as a limited-scope dental plan that is otherwise exempt from the PHSA requirements.
- Plans that require specified hours of work per week as a condition of eligibility, and if an employee’s hours vary, it cannot be reasonably determined the employee will regularly meet the plan’s terms and conditions.
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| Some states may have a shorter time frame requirement for plans subject to those state insurance laws. For example, California Assembly Bill 1083 prohibits insurers and HMOs from applying waiting periods that exceed 60 days for fully-insured contracts issued for plan years beginning on or after January 1, 2014. |
| Prior to the beginning of the 2014 plan year, employers sponsoring group health plans should check with their insurance carriers for details to ensure compliance. Employers may also need to update enrollment materials, plan documents, and other employee communications to reflect any changes. |
| Carryover Feature May Increase FSA Appeal
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| Some employees have been wary of enrolling in a health flexible spending account (FSA) in the past because of the longstanding "use-it-or-lose-it" rule, which requires participants to forfeit any leftover funds in their accounts at the end of the plan year. Now, thanks to modifications announced by the U.S. Treasury Department and the Internal Revenue Service (IRS), a new rule allows employers to amend their health FSA plans so that participants can carry over up to $500 of unused funds into the following plan year. |
| This carryover feature may increase FSA appeal to both employees and employers. For employees, it offers greater protection of funds and added flexibility for unpredictable out-of-pocket health care costs, eliminating some risks associated with participation. For employers, it offers increased tax savings as participation increases as well as greater flexibility in FSA plan design, allowing employers to choose a carryover or a grace period extension. |
| For details of the new rule, including examples that illustrate adoption of the carryover, see Notice 2013-71 on the IRS website. For details to consider before amending cafeteria plan documents, check out our recent Compliance Update. |
| 2014 IRS Plan Limits
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| Inflation adjustments released by the IRS for the 2014 tax year affect more than 40 tax-related limits, including limits relating to salary reductions under health flexible spending accounts (FSAs), dependent care assistance, mass transportation fringe benefits, and more. |
| Highlights include: |
- The annual dollar limit on employee contributions to health FSAs remains unchanged at $2,500.
- The annual dollar limit on employee contributions to dependent care FSAs remains unchanged at $5,000 for a single person or married couple filing a joint income tax return and $2,500 for each married participant filing separate income tax returns.
- The monthly pre-tax limit for qualified parking benefits is $250 (a $5 increase from the 2013 limit of $245). The combined monthly pre-tax limit for transit passes and vanpooling expenses for 2014 is $130 (a $115 decrease from 2013). This decrease is due to expiration of the American Taxpayer Relief Act (ATRA) provision on December 31, 2013, unless Congress takes action to extend the ATRA provision.
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| See our helpful chart summarizing many of these important plan limits, and for details on all of the 2014 inflation adjustments, view Revenue Procedure 2013-35. |
| In addition, the IRS released standard mileage rates for 2014 in IR-2013-95. The adjusted rate is now 23.5 cents per mile for medical-related mileage (a decrease of one-half cent from the 2013 rate). Mileage when using a personal automobile to obtain medical care may be an eligible FSA, HRA, or HSA expense. |
| New HIPAA Regulations in Force
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| Now that the deadline for compliance with the new Health Insurance Portability and Accountability Act (HIPAA) has passed, it is up to employers to uphold its regulations. However, since the standard for breaches of protected health information (PHI) is lower and enforcement of privacy rights and protection greater, this may take some dedicated effort. |
| Under the final rule, which became effective on Sept. 23, 2013, an impermissible use or disclosure of PHI is "presumed to be a breach unless the covered entity demonstrates that there is a low probability that the protected health information has been compromised." This means covered entities (including business associates) should act as though a breach has occurred until they have investigated sufficiently to prove otherwise. The assessment must be documented and producible in court. |
| Under the previous rule, the unauthorized disclosure of unsecured PHI was considered a breach requiring notification only if a covered entity or business associate determined that there was a "significant risk of financial, reputational, or other harm" to affected individuals. |
| See the Federal Register for additional details. |
| NEWS AND TRENDS
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| Consumers Make Costly Health Plan Choices
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| Savvy benefit professionals already know what researchers from several universities recently reported. Without assistance, a high percentage of consumers unknowingly choose a higher cost health plan than needed. |
| The research study conducted six experiments asking people of varying education levels to choose the most cost-effective policy using websites modeled on Marketplace exchanges. Eighty percent failed to choose the most cost-effective option for their needs, resulting in average annual overspending of $611. |
| The study then identified several mechanisms to improve the chances of consumers choosing the best plans for their needs. Not surprisingly, these are similar to the techniques used to help employees understand their employer-sponsored health plans each year. These include: |
- Encouraging consumers to estimate first and peruse the plan choices second. Estimating medical services before choosing a plan tends to aid consumers.
- Helping consumers educate themselves about the basics of health insurance. Using tutorial links and online resources that explain coverage terms (e.g., deductibles, co-insurance, and co-payments) also aid consumers.
- Implementing smart tools. Simply adding a calculator to the process can help consumers; the study found it reduces the size of errors by more than $215.
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| Although the study didn’t point out promoting health FSAs to offset medical costs, it’s definitely another consideration when employees are estimating costs and making plan choices. Benefit professionals who don’t already use these tips may want to consider them in the future. |
| Some Employers Contemplate Extended Family Coverage
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| Thanks in part to advances in health care, people are living longer than ever before. While this is great news, it also comes with some challenges. According to Pew Research Social & Demographic Trends, about one in seven middle-aged adults (15 percent) is providing financial support to both an aging parent and a child — a large number of the U.S. workforce population. |
| As more employees enter the "sandwich generation", many are beginning to ask their employers the same question, "When are health care benefits going to be offered to extended families?" That’s because in many cases, the only option for those caring for an elderly parent is to rely on federal health care plans like Medicare or Medicaid, supplemental insurance, or pay for the medical costs out of pocket, which can be extremely costly. |
| Fortunately, insurance coverage options are broadening to meet the demand for extended family coverage. What’s more, employers that offer this type of coverage are finding it sets them apart from their competition — a benefit that attracts and retains employees. Northern Kentucky University already offers this benefit, and if the demand for extended family coverage continues, other organizations may soon be following suit. |
| BEHIND THE SCENES
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| A Closer Look at CONEXIS
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| Michael Close, president of CONEXIS, recently marked his 10th anniversary with our company. Looking back over his tenure, Michael commented on the tremendous transformation he’s seen take place during the past decade at CONEXIS. |
| "Since 2003, we’ve invested heavily in our infrastructure, including our proprietary system and our facilities. But most importantly, we’ve invested in our people, and we’ve created a company culture that makes us unique," said Michael. |
| He stated focusing our culture on a strong service commitment, which we call "service of unequalled excellence," set us apart in our business. It became clear to CONEXIS early on that clients changed benefit administrators because of service instead of a lower cost option. With the complex and highly regulated nature of our business, outstanding service is what’s important to clients. |
| This cultural shift led us to launch new services and initiatives that furthered our pledge to satisfying the needs of our customers with the best benefits administration services available. "For example, we introduced the CONEXIS Card System and the CONEXIS Elite Visa® Benefit Card, our proprietary benefit card and processing system with advanced features that makes paying for account-based plan expenses easier than ever before," Michael said. "And with 24/7 access to real-time information — including an enhanced mobile app, mobile website, and alerts — it’s easy for employees and retirees to take control of their health care using our services. Innovations like these have helped CONEXIS evolve and mature into the national industry leader we are today." |
| Michael stated that he’s particularly proud of his leadership management team and how those individuals have not only grown, but also thrived in a challenging, and ever-evolving industry. "Together, we foster an environment where our people operate as one team to accomplish our goals and objectives for our partners, clients, and participants." |
| "Our success these past 10 years boils down to our team members — those 450 people that make this company successful at every level. Every position counts," he emphasized. |
| CONEXIS Congratulates Newest CFC Instructor
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| Just a few months shy of celebrating 10 years with CONEXIS, Bob Wojciechowski, manager of partnership solutions, is celebrating another professional milestone. And that’s recently attaining the Certified in Flexible Compensation Instructor (CFCI) designation. |
| Those within the benefits industry know this is not an easy thing to do. Candidates have to achieve a Certified in Flexible Compensation (CFC) designation, which includes at least 36 months of industry experience and at least 25 continuing education units in certain topics within flexible compensation. |
| CFCs who then want to train future designees by becoming an instructor (like Bob) must have one year as a CFC (Bob has six years) with at least five years of industry experience (Bob has 27 years). CFC instructors must also have at least 45 continuing education units involving all aspects of the flexible compensation field. |
| Bob is now the third CFCI in our company. He joins Robyn Howard, assistant vice president of product development and management, and Jennifer Shaub, director of product development and management. |
| "I look forward to supporting Robyn and Jennifer by helping our current CFCs renew and maintain their designations every three years, as well as training our future CFCs within CONEXIS," said Bob. Additionally, Bob plans to continue to renew his designation as required, so that he can continue to do what he loves, which is helping train our team members so those we serve benefit from account-based plans. |
| CONEXIS proudly congratulates Bob on his accomplishment! |
| Rolling Up Our Sleeves to Give
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| Once again, CONEXIS team members rolled up their sleeves, both literally and figuratively, to give to those in need. |
| Carter BloodCare |
| For the fifth consecutive year, CONEXIS partnered with Carter BloodCare, a local blood bank, to host two employee blood drives. According to Lynzie Duran, human resources coordinator, both drives were a big success. |
| "Our team members gave enough blood to be instrumental in saving 150 lives within our community," said Lynzie, who organizes these events with Carter BloodCare. "I love helping with something that can make such a difference." |
| She’s not alone. Some employees have even made a commitment to give at every drive. Stan Burks, senior account manager in our client services department, is one of them. "Donating was never high on my priority list until my relative was in the hospital. I heard one of the nurses ask how much more of my relative's blood type they had available, and the response was not good," he said. |
| Thankfully, his relative ended up not needing further transfusions, but it was then that Stan decided to give blood whenever he could. "Giving blood is so easy, and the reward of knowing that you’ve helped someone you’ve never even met is so great," Stan added. |
| Texas Wounded Warriors Foundation |
| Team members also rolled up their sleeves this year to raise money for the Texas Wounded Warrior Foundation, an organization that helps injured combat veterans assimilate back into daily life once home. And since many of our team members have served in the armed forces, or have a family member serving in the military, this fundraising project was truly a labor of love. |
| "We held numerous fundraising events, including a bake sale and several breakfasts, candy-grams, and raffles. We wrapped up our fundraising with the biggest event of them all — Operation Drumstick — our annual Thanksgiving luncheon where we collected donations at the door," said Rachael Carpenter, administrative assistant. |
| There was also an executive turkey contest, after which the executive collecting the most in donations wore a turkey costume while serving turkey at the luncheon. "The executive who proudly donned that outfit was Eva Boucher, our senior vice president and chief compliance officer," Rachael shared. |
| "We were determined to make Operation Drumstick as successful as in years’ past," added Linda Asseff, senior executive assistant. "And I’m happy to say in only three weeks, we raised more than $6,000 for a fantastic foundation and its continuing outreach to the wounded heroes in our community." |
