News : Health Exchange Marketplace

Final Regulations on the Individual Mandate

Vice President of Benefits

Vice President of Benefits

In late August, the IRS issued final regulations on the individual mandate and Health Insurance Marketplace premium subsidies, both of which take effect in 2014.

The final regulations largely adopt the proposed regulations issued on February 1, 2013. Recall that while employers received a one-year delay from the shared responsibility penalty, individuals have received no similar delay. Starting in 2014, individuals who do not qualify for an exemption and have no health coverage will be subject to a $95 penalty for the year (half that amount for family members under age 18). The penalty increases significantly in 2015 and beyond.

Here are some highlights of the final regulations:

• Former employees who were once eligible for COBRA/state continuation or retiree coverage, but did not enroll in it and are not eligible for other employer-sponsored coverage, do not have minimum essential coverage (MEC) and can potentially qualify for a premium subsidy.
• For MEC purposes, a plan offered to an employee by an employer through a professional employer organization (PEO) or leasing company constitutes a plan offered to an employee on behalf of an employer.
• For purposes of determining subsidy eligibility, the characteristics used to identify the applicable plan include tobacco use, if relevant.
• The Nonappropriated Fund Health Benefits Program, provided to Department of Defense employees, is considered MEC.

The guidance on COBRA should be welcome news to many employers and COBRA qualified beneficiaries. People on COBRA often use group health plan benefits more than similarly situated active employees, resulting in adverse selection. Many who are offered COBRA may qualify for a premium subsidy in the Marketplace and thus be able to obtain coverage at a lower price tag than COBRA’s 102 percent of total cost. Keep in mind that the core employer COBRA requirements remain in force and will not go away in 2014 or any later year, absent additional legislation.


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Health Insurance Marketplace

Vice President of Benefits

Vice President of Benefits

In a little over 49 days the Health Insurance Marketplace will be open.  Millions of people that have struggled to find affordable health insurance without pre-existing conditions, riders, or exclusions will now have new options to choose from.

I have had several people ask me if their doctors would take the Government Insurance (Obama-care…if you will).  Many do not realize that Blue Cross Blue Shield of TN, Cigna, Humana, Coventry, and a new COOP called Community Health Alliance will be the insurance companies offering policies.

Open enrollment begins on October 1st and will run though March 31st.  If you apply for a policy before the middle of December, you can get a January 1st effective date.  This is the earliest effective date you will be able to get.

Many also do not realize that depending on their Household Income (HHI), they may qualify for subsidies that will reduce the amount of premium they will need to pay on a monthly or annual basis.  For example, a family with a HHI less than $94,200 may qualify for a subsidy.  I feel that the hardest thing for individuals to understand it their eligibility for the subsidy.  Many do not know that they may be disqualified from the subsidy if their employer offers them affordable coverage.  This simply means that you would not qualify for a subsidy if your portion of the “Employee Only” premium is less than 9.5% of your income.

In 2014, most small employers will be forced to change their plan designs due to Healthcare Reform.  Employers with less than 50 employees will not be able to have an individual deductible higher than $2,000.  Many employers renew at different times of the year.  That said, it may be the middle of the year before you find yourself in a situation where the employer had to make the health plan more rich, and consequently has to raise your contributions to help pay the additional premiums.  This may either take you past the 9.5% of income, or force the employer to drop the health plan entirely.

One thing is for sure; Full Service Insurance is certified and ready to help you and your employer navigate through this changing landscape.  The government has their website ready to assist those that want to go at this alone.  We suggest you work with certified specialists here at Full Service Insurance.

Make sure you check out our dedicated Health Insurance site by going to




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How can I get an estimate of costs and savings on Marketplace health insurance?

Vice President of Benefits

Vice President of Benefits

Until the Marketplace opens, you can use tools like the Kaiser Family Foundation calculator to get a rough estimate of how much health insurance may cost in 2014.

The Kaiser Family Foundation health insurance cost and savings calculator

The health insurance costs and savings calculator we link to below provides only an estimate. Your final premiums and costs may differ from the estimates, perhaps significantly, depending on where you live and the coverage you select. You’ll learn your final costs for specific plans when you apply in the Health Insurance Marketplace as soon as October 1, 2013.

Before you use the Kaiser Family Foundation calculator, there are a few important things to know:

  • The calculator provides a rough estimate of costs for insurance, based on national averages and factors that may not apply to you. It will give you an idea of what someone with circumstances like yours could pay for Marketplace insurance in 2014.
  • The calculator accounts for some factors that may determine plan costs in the Marketplace: age, family size, and tobacco use. Individual plans will weigh these factors differently to determine final prices.
  • The estimate doesn’t account for differences based on where you live, which will significantly affect Marketplace prices and offerings.
  • The prices are based on a plan in the Silver category. Plans in different categorieswill likely have higher or lower premiums.
  • You won’t be able to get your exact costs for a specific plan until you fill out a Marketplace application after October 1, 2013. Then you’ll see all of the plans available to you, compare features and prices side-by-side, choose a plan, and enroll. You should expect that your final cost will be different from the rough estimate provided here.

Background on the calculator

The calculator was created by the Kaiser Family Foundation, a non-profit research organization, for use by the general public. The Kaiser Family Foundation is solely responsible for the tool. The Kaiser Family Foundation has no connection with Kaiser Permanente or any health care provider.

The Centers for Medicare & Medicaid Services did not participate in the creation of this calculator. The Centers for Medicare & Medicaid Services does not warrant or guarantee the accuracy of estimates provided by the calculator.

Use the health insurance costs and savings calculator

If you’re ready to see the estimates, visit the Kaiser Family Foundation website and use the Kaiser Family Foundation’s health insurance costs and savings calculator.

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Individual Mandate FAQ


Beginning in 2014, the Affordable Care Act includes a mandate for most individuals to have health insurance or potentially pay a penalty for noncompliance. Individuals will be required to maintain minimum essential coverage for themselves and their dependents. Some individuals will be exempt from the mandate or the penalty, while others may be given financial assistance to help them pay for the cost of health insurance.

What type of coverage satisfies the individual mandate?

“Minimum essential coverage”

What is minimum essential coverage?

Minimum essential coverage is defined as:

  • Coverage under certain government-sponsored plans
  • Employer-sponsored plans, with respect to any employee
  • Plans in the individual market,
  • Grandfathered health plans; and
  • Any other health benefits coverage, such as a state health benefits risk pool, as
    recognized by the HHS Secretary.

Minimum essential coverage does not include health insurance coverage consisting of excepted
benefits, such as dental-only coverage.

How does “Minimum Essential Coverage” differ from “Essential Health Benefits”?

Essential health benefits are required to be offered by certain plans starting in 2014 as a component of the essential health benefit package.  They are also the benefits that are subject to the annual and lifetime dollar limit requirements.

This is different than minimum essential coverage, which refers to the coverage needed to avoid the individual mandate penalty.  Coverage does not have to include essential benefits to be minimum essential coverage.

What is the penalty for noncompliance?

The penalty is the greater of:

  • For 2014, $95 per uninsured person or 1 percent of household income over the filing threshold,
  • For 2015, $325 per uninsured person or 2 percent of household income over the filing threshold, and
  • For 2016 and beyond, $695 per uninsured person or 2.5 percent of household income over the filing threshold.

There is a family cap on the flat dollar amount (but not the percentage of income test) of 300 percent, and the overall penalty is capped at the national average premium of a bronze level plan purchases through an exchange.  For individuals under 18 years old, the applicable per person penalty is one-half of the amounts listed above.

Beginning in 2017, the penalties will be increased by the cost-of-living adjustment.

Who will be exempt from the mandate?

Individuals who have a religious exemption, those not lawfully present in the United States, and incarcerated individuals are exempt from the minimum essential coverage requirement.

Are there other exceptions to when the penalty may apply?

Yes.  A penalty will not be assessed on individuals who:

  1. cannot afford coverage based on formulas contained in the law,
  2. have income below the federal income tax filing threshold,
  3. are members of Indian tribes,
  4. were uninsured for short coverage gaps of less than three months;
  5. have received a hardship waiver from the Secretary, or are residing outside of the United States, or are bona fide residents of any possession of the United States.
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DOL Issues Guidance on Exchange Notice Requirements


The Patient Protection and Affordable Care Act (Affordable Care Act) includes a provision that requires employers to notify new hires and existing employees of certain information related to the Health Insurance Marketplace (formerly referred to as the Exchange) and subsidy eligibility in the event an employer does not offer coverage that is affordable or that has a 60 percent minimum value. The original effective date of this requirement was March 1, 2013. As reported in the Jan. 28, 2013 Health Care Reform Update, the timing of this requirement was delayed until late summer or early fall of 2013 based on guidance issued in FAQ Part XI.

On May 8, 2013, the Department of Labor (DOL) issued Technical Release 2013-02. The technical release provides temporary guidance regarding the new notice that employers are required to provide to employees, called the Notice to Inform Employees of Coverage Options. The release also addresses changes to the Model COBRA Election Notice.

Notice to Inform Employees of Coverage Options

The temporary guidance states that employers who are subject to the Fair Labor Standards Act (FLSA) are required to provide the notice beginning Oct. 1, 2013 to new employees within 14 days of an employee’s start date. The notice must also be provided to all existing employees no later than Oct. 1, 2013.

This requirement applies to all employees regardless of their eligibility for or enrollment in the medical plan. It’s also required if the employer doesn’t offer a health plan. The guidance provides various alternatives for delivering the notice.

Model language that may be used to satisfy the notice requirement is also included in the guidance. Two versions are provided based on the availability of an employer-sponsored health plan.

The temporary guidance will remain in effect until regulations or other guidance is issued.

The information contained in this article is for general use. Employers with questions regarding how to comply with the new notice requirement are urged to contact their legal counsel. The DOL provides guidance relating to the applicability of the FLSA, including an internet compliance assistance tool that is available at

Model COBRA Election Notice

The technical release also addresses changes to the model COBRA election notice. The notice is being revised to help make individuals who are eligible for COBRA aware of other coverage options available in the Marketplace.

No date was specified for implementing the revised COBRA notice. Absent regulations or guidance to the contrary, plan to implement the changes by Oct. 1, 2013. This date coincides with the beginning of the Marketplace open enrollment period.

To view all notices click on the link below


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