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Category: What To Know

What is the Cadillac tax?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

The so-called Cadillac tax is an excise tax on high cost health plans offered by employers. Beginning in 2020, health plans that cost more than $10,200 for an individual or $27,500 for a family plan will be subject to the tax, which is 40% of the amount that exceeds those thresholds. For example, if a family plan costs $30,000, the employer that offers the plan would owe 40% of $2,500 ($30,000 minus $27,500), or $1,000 for each family it covers under that plan.

The tax was intended to be a disincentive for employers to provide overly rich health benefits, and the cost of the health plan is one measure of the level of benefits. However, some plans may cost more because they cover people with higher-than-average health care costs, including retirees, older workers and workers in high-risk occupations. The cost thresholds for plans that cover a significant number of individuals in any of those categories are higher.

My employer health plan has a wellness feature that requires me to pay a higher premium if I don’t meet certain health targets or if I don’t participate at all. I can’t afford the premiums if I don’t participate or miss the mark. Can I leave my employer-sponsored plan and get one on the health insurance Marketplace?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

It depends. If your premium contribution with the wellness penalty would be more than 9.86% of your income in 2019, then your employer plan would be considered unaffordable and you would be eligible to apply for premium tax credits in the Marketplace. This test applies whether you are actually penalized or not, and in advance of the penalty being applied (for example, if your employer gives you time to try to meet the health standard that triggers a penalty or reward).

Similarly, if your employer wellness program applies the penalty to the plan cost sharing (for example, people who don’t participate or who can’t meet the health targets have a higher deductible than would otherwise be the case), and if penalty is high enough to reduce the value of your plan below the “minimum value,” then you would be eligible to apply for premium tax credits in the Marketplace. Again, this test applies whether you are actually penalized or not and in advance of the penalty ever being applied.

My employer offers a workplace wellness program that increases premiums for employees who don’t participate. The program doesn’t require people to meet health targets or attend classes, but does require people to answer questions about personal health and lifestyle and to grant access to our medical records. Is this allowed?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

It is not clear.  In 2016 the federal government published new regulations setting requirements for workplace wellness programs that ask individuals to disclose personal health information or genetic information.  These types of “medical inquiries” are allowed in “voluntary” wellness programs.  The new regulation defined “voluntary” to include programs that apply penalties as large as 30 percent of the cost of the health plan (self-only coverage) if you don’t participate.  (If participation incentives also apply to your spouse, the maximum incentive is twice that amount for the two of you, together.)  However, a federal judge later ruled that these financial incentive standards were not justified by the federal government and vacated that part of the regulation for employer plan years beginning on or after January 1, 2019.

The regulation established other requirements that remain in effect for wellness programs that collect personal health information include:

  • The program must be “reasonably designed,” meaning there must be a reasonable chance that it could promote health and wellness.
  • The wellness program can access personal health information, but it cannot share identifiable information with the employer to use for employment purposes, such as hiring or promotion.
  • The wellness program that collects personal health information must either use information to design programs to address or treat employee health problems, or provide feedback to individuals about their risk factors.
  • Wellness programs that collect personal health information must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and restrictions on disclosure that apply.
  • Wellness programs cannot, as a condition of participating in the program or earning an incentive, require people to agree to the sale, exchange, sharing, transfer, or other disclosure of medical information (except to the extent otherwise permitted under a reasonably designed program.)

For more information about workplace wellness program rules, or to file a complaint, contact the Federal Equal Employment Opportunity Commission (EEOC) at https://www.eeoc.gov/contact/index.cfm

My employer offers a workplace wellness program that increases premiums for employees who can’t meet certain health targets, such as normal weight or blood pressure. Is this allowed?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

Yes, as long as your employer workplace wellness program meets certain requirements, it can increase your premium by as much as 30 percent of the cost of the health plan if you don’t participate or meet required health targets. (Or, if one of the health targets involves tobacco use, the penalty can be as much as 50 percent of the cost of the health plan.) Some of the key requirements include:

  • The health plan must offer you a reasonable alternative way to avoid the penalty (for example, it might require that you participate in an exercise program, or it might require you to meet a less stringent target level for the required health measures)
  • If you are unable to meet the health targets due to a medical reason, the health plan must offer you an alternative way to avoid the penalty that is medically appropriate for you
  • The health plan must give you at least one chance every year to be re-evaluated

We buy health coverage in our state Marketplace and our son attends college in a different state. We want to cover him on our policy. Can we do that?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

Yes, you can. One key consideration, though, will be whether he can access in-network services while he is away at school. Some insurers sell coverage in many states and offer a regional or national provider network. In addition, some health plans may have agreements with insurers in other states to cover their providers as though they were in-network. If you can’t find a plan that offers network providers in both states, you could consider buying a separate plan for your son.  You could also evaluate what out-of-network coverage, if any, your plan offers.

I live in different states during the year. My summer home is in a northern state; my winter home is in a southern state. Where do I sign up for health coverage? And if I sign up for a plan in one state, how do I find in-network health providers in the other state?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

You should buy coverage in the state where you officially reside. Most states consider you a resident if you intend to make that state your permanent home. So-called “snowbirds” may own a second home and live part of the year in another state, but their official state of residence is where they spend most of the year, where they pay taxes, where they register their cars, or are registered to vote.

If you are buying coverage in your state of residency but spend a significant amount of time in a different state, you may want to explore plans offered by insurers that use a national provider network so that you could find participating providers in more than one state. You could also explore insurers that arrange to cover as in-network other insurers’ network providers. (For example, some, though not all “multi-state” plans, and some, though not all “multi-state” plans have such agreements.) You could also evaluate what out-of-network coverage, if any, your plan offers.

I live in State A but my small business is in State B. I want to buy group coverage for my employees through the SHOP Marketplace. In what state should I buy health benefits?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

You should buy group coverage through the SHOP Marketplace in State B, where your business is located.  If your business is located in a HealthCare.gov state, there is no SHOP Marketplace website.  Instead, you should contact insurers directly or work directly with a broker to buy a small group policy.  Be sure to specify that you want a SHOP policy.

My income is very low, so I’m only required to pay about $30/month for my health insurance premium. The tax credit picks up the rest, which is more than 90 percent of the total premium. I’ve missed 4 premium payments in a row. Can the insurance company cancel my coverage even though they got 90 percent of the payment on time from the IRS?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

Yes.  A person receiving an advanced premium tax credit has a 90-day grace period to pay all premiums that are owed. If the amount owed for all outstanding premium payments is not paid in full by the end of the grace period, the insurer can terminate coverage.  The insurer would then have to return funds it received from the federal government for all but the first 30 days of the grace period.

I’m behind on my payments and trying to catch up, but meanwhile I got sick and so had to make more health care claims. Does my health plan have to pay them?

Written by HummingbirdinsAdmin on . Posted in Frequently Asked Questions.

If you are receiving advanced premium tax credits, the insurer is required to pay your claims during the first 30 days of the grace period.  After that, during the second and third month of the grace period, the insurer is allowed to hold your claims and only pay them if and when you get caught up in your premium payments.