November 2014

Employee Benefit Advisors blogged Oct 9, 2013 and July 7, 2014 about court cases that had been falling under the radar. EBA said “These cases could dismantle health care reform as we know it.”

Friday, Nov 7, 2014, the Supreme Court announced that they will take up the challenges to whether subsidies should be available to consumers in federally facilitated marketplace (FFM) states. The case argument is that the statute, which states that subsidies are only to be made available in exchanges “established by states,” prohibits consumers in FFM and partnership states from being able to access subsidies, as the federal government is overseeing any non-state-based exchange.

With the basis of both the employer and individual mandates on the line, and therefore, the primary enforcement mechanisms of the healthcare reform law, this case has significant potential to destabilize healthcare reform. A ruling by the Supreme Court striking down subsidies in federal exchanges could have far-reaching effects to the entire health reform structure. If consumers are unable to purchase affordable coverage without subsidies they would not be compelled by or subject to the individual mandate to purchase coverage, and if employees are unable to obtain subsidized coverage through the marketplace then employers would not be subjected to the employer mandate, as the employer mandate is only triggered when a large employer does not offer affordable coverage and an employee receives subsidized coverage, and therefore may drop coverage altogether in states using the federal exchange.

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall;
All the King’s horses, and all the King’s men
Cannot put Humpty Dumpty together again.

…so apropos

Thanks to the National Association of Health Underwriters for providing the substance of the blog.

For plan years beginning in 2015, employers may require an employee to satisfy a one-month orientation/evaluation period in addition to a 90 day waiting period before he or she becomes eligible for benefits. The orientation period must be a reasonable and bonafide employment-based condition of eligibility in a position that is otherwise eligible for coverage and not a deliberate attempt to avoid the 90-day maximum waiting period. This period must be used for the employee and the employer to evaluate each other and to engage in orientation and training. This applies to grandfathered and non-grandfathered plans alike, as well as to self-insured and insured plans. 

The orientation period starts on the employee’s start date, and all calendar days count, including weekends and holidays.  One month is determined by adding one calendar month to the employee’s start date and subtracting one day. For example, if an employee starts working on May 3, the last permitted day of the orientation period is June 2.  Special rules apply if there is not a corresponding date in the next calendar month.

While an employee could conceivably be on the payroll for 120 days before becoming eligible for benefits, the maximum waiting period is still considered to be 90 days, because it does not begin until the day following completion of the orientation period.

Large employers should be aware that utilizing a one-month orientation period and a 90-day waiting period could cause them to be in violation of the employer play-or-pay mandate. The play-or pay mandate requires an employee to be covered by the first day of the fourth full calendar month of employment. For example, an employee who starts work on January 6 must be covered by May 1. If the employer starts coverage on May 6–one month plus 90 days after the date of hire–it would be in compliance with the 90 day requirement, but in violation of the play-or-pay mandate.

Information provided by ErisaPros.