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How to Prevent and Deal with Surprise Medical Bills

January 24, 2020

Reminder – California law protects consumers from Surprise Medical Bills, sometimes also referred to as Balance Billing

You’ve prepared for your surgery. You’ve checked that your surgeon and hospital are in your health plan’s network. You’re ready to pay your required co-pay or shared co-insurance percentage. But after the surgery you get a bill from a doctor who isn’t in your network. This is a surprise bill which also often happens in connection with emergency services.

The law protects consumers from surprise medical bills like this when

A health plan member goes to an in-network facility such as a hospital, lab or imaging center, but services are provided by an out-of-network health provider.
A health plan member receives emergency services from a doctor or hospital that is not contracted with the patient’s health plan or medical group.

This consumer protection in California makes sure health plan members only have to pay their in-network cost sharing (co-pays, co-insurance or deductibles). Healthcare providers cannot bill consumers more than their in-network cost sharing.

What is a Surprise Medical Bill?

A surprise medical bill occurs when you go to a health care facility, like a hospital or a lab in your health plan’s network (a network is the group of healthcare providers who’ve agreed with your insurer to accept a set of discounted rates for services), and you end up with a doctor who is not in your health plan’s network and you are charged more than you would have to pay for an in-network doctor.

A surprise medical bill can also happen if you are taken to a non-contracted facility in an emergency, and the facility bills you for the remaining balance for the services you received that were not covered by your health plan.

What You Should Pay

Consumers who go to an in-network facility only have to pay for their health plan’s in-network cost sharing amounts.

If a consumer is taken to a non-contracted medical facility for emergency services, the consumer will only be required to pay in-network cost sharing amounts.

Here are some examples of when consumers have received surprise medical bills:

A consumer had a surgery at an in-network hospital or outpatient surgery center, but the anesthesiologist was not in their health plan network. Even though the consumer did not have a choice of who their anesthesiologist was, that healthcare provider sends a bill charging above the in-network cost to the consumer for their services after the surgery. This is a surprise balance bill.
A consumer goes to an in-network lab or imaging center for tests and the doctor who reads the results is not in their health plan network. that doctor then bills the consumer for their services, creating a surprise balance bill.
A consumer is taken to the nearest emergency room, however, the emergency facility is not contracted with the consumer’s health plan. The consumer later receives a bill from the emergency facility for the remaining balance of the bill that was not paid by their health plan. This is a type of surprise bill known as emergency balance billing.

What if I get a surprise bill?

If you get a surprise bill for more than your in-network cost share, file a grievance/complaint with your health plan and include a copy of the bill. Your health plan will review your grievance and should tell the provider to stop billing you. If you do not agree with your health plan’s response or they take more than 30 days to fix the problem, you can file a complaint with the Department of Managed Healthcare, the state regulator of health plans. You can also file a complaint by visiting www.HealthHelp.ca.gov or calling 1.888.466.2219.

We are pro-actively assisting our clients with these claims so feel free to contact us now to help work through this often frustrating billing issue with you or your employees!

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor if different, the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.

This publication is posted on the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. Readers should always seek professional advice before entering into any commitments.

The Time is Now to Prep for ACA REPORTING

January 17, 2020

Now that 2020 is here, start the year off right by preparing for important compliance deadlines. The deadline for the Affordable Care Act (ACA) filing season is on February 28, 2020. It is essential to take action so that you as an applicable large group employer don’t miss these important deadlines.

February 28, 2020 – Paper Filing to IRS.
March 2, 2020 – Employers need to distribute the 1095 tax forms to employees.
March 31, 2020 – E-File to IRS.

We know you just finished up with a busy enrollment season. Let MY-Employee Benefits Plus’ team handle it for you. We have the simple to use & easy to understand risk management tools that can help you stay in compliance both now and throughout the year. Contact us today

Live in California? Starting in 2020, are you aware that you may pay a financial penalty for not having health care insurance?

January 10, 2020

Even though the federal requirement for individuals to enroll in health insurance or be penalized has been removed, the state of California has introduced the same requirement, requiring all Californians to be enrolled in a health plan or be penalized effective 1/1/2020,

Here are three things California residents need to know:

1.Make sure you have health insurance coverage

The mandate, which takes effect on January 1, 2020, requires Californians to have “qualifying” health insurance coverage throughout the year. Many people already have qualifying health insurance, including employer-sponsored plans, individual coverage purchased through Covered CA or directly from health insurers, Medicare and most Medicaid plans.

Under the new CA mandate, those who fail to maintain qualifying health insurance coverage could face financial penalty unless they qualify for an exemption. Generally, a taxpayer who fails to secure coverage will be subject to a penalty of $695 or 2% of income, whichever is greater, when they file their 2020 state income tax return in 2021. The penalty for a dependent child is half of what it would be for an adult.

To avoid a penalty, California residents need to have qualifying health insurance for themselves, their spouse or domestic partner, and their dependents for each month beginning on January 1, 2020. The open enrollment to sign up for health coverage with California insurers ends on January 31, 2020 for an effective date of February 1, 2020. Californians may then have to wait until next January 2021 to obtain coverage with some exceptions.

2.Exemptions available

Most exemptions from the mandate will be claimed when filing 2020 state income tax returns in early 2021. Additional exemptions from the mandate may be granted through Covered CA beginning in Jan 2020.

3.Financial assistance available To help Californians meet the requirement to have insurance coverage, the state, starting in 2020, will extend the limits of current federal financial assistance limits to qualifying individuals and families, dependent on their household size and income, through Covered CA. This new state financial assistance will be in addition to federal assistance some already receive through Covered CA.

2020 – New changes for employer-sponsored retirement plans – Overview of the SECURE Act

2020 – New changes for employer-sponsored retirement plans – Overview of the SECURE Act

January 3, 2020

The Secure Act, (the Setting Every Community Up for Retirement Enhancement Act of 2019) which became law in December 2019, implements the largest number of pension changes for employer-sponsored benefit plans in the last ten years. The changes touch various parts of the tax code impacting employers and plan sponsors. We will break the changes into ones that are important now and changes that will be important later.

Changes effective in 2020 – What’s important now…

1. Revised RMD rules

The required minimum distribution (RMD) rules under prior law required a participant with an account balance in a qualified plan or IRA to start taking taxable distributions soon after attaining age 70 1/2. To reflect increased life expectancy and strengthen retirement savings, the SECURE Act pushes the age at which participants/retirees are required to start drawing on their plan savings to age 72. Non-owners can generally delay RMDs until after they actually retire from the company (in the case of qualified plan balances). This change applies to anyone who attains age 70 1/2 after December 31, 2019.

2. Elimination of the “Stretch IRA”

The old provisions on post-death distributions from qualified plan accounts and IRAs allowed a non-spouse beneficiary (like a child) to take taxable distributions from an inherited account over their lifetime. This change eliminates the so-called “stretch IRA” and replaces it with a requirement to distribute the entire inherited account within ten years. The new rule applies to all inherited accounts resulting from deaths after December 31, 2019.

3. Electing Safe Harbor status for current plan year

A “safe harbor” 401(k) plan does not require participant deferral testing. In a plan that qualifies for safe harbor treatment, highly compensated employees/owners may defer up to their statutory limits (in 2020, $19,500 plus $6,500 if age 50 catch-up) without worrying about passing or failing nondiscrimination testing. Before 2020, a plan had to elect safe harbor status before the beginning of a plan year.

Now, for plan years beginning after December 19, 2019, a plan that is not currently safe harbor may elect to be a safe harbor plan by making a three percent nonelective contribution if it’s amended at least 31 days prior to the plan year end (i.e. by December 1, 2020 for a 2020 calendar year plan). Under the new rules, if this deadline is missed, a plan may still elect to be a safe harbor plan with a four percent nonelective contribution by amending prior to the end of the following plan year (i.e. amending the plan required by December 31, 2021 to make the plan safe harbor for 2020).

4. Deadline to adopt a qualified plan extended

Before the SECURE Act, a qualified plan had to be adopted no later than the last day of a company’s tax year if the company wanted to make tax-deductible contributions for that year. Starting with tax years beginning after December 31, 2019 (i.e., calendar tax years ending December 31, 2020), a new qualified plan may be adopted as late as the filing deadline for a company’s tax return. Example: ACME Inc. is a subchapter S corporation with a tax year ending December 31, 2020. ACME Inc. may adopt a qualified plan as late as March 15, 2021 for the 2020 tax year, or September 15, 2021 if on extension!

This is important even if you already have a plan. Assume your currently sponsor a 401(k) plan and the company taxes are on extension for the year ending December 31, 2020. After receiving and reviewing your 2020 data in April of 2021, your Third Party Administer determines that you would benefit from adding a cash balance pension plan in 2020 with its often very favorable contribution structure. The SECURE Act now makes it possible to retroactively adopt the cash balance pension plan and make the more favorable deductible contributions!

5. Increase in the Qualified Automatic Contribution Arrangement (QACA) auto deferral limit to 15%

For 401(k) plans that have adopted a qualified automatic enrollment feature, the SECURE Act increases the maximum permissible default rate from 10% to 15% for plan years beginning after December 31, 2019. This new 15% automatic enrollment maximum default rate can only apply during plan years following the participant’s first year of participation in the plan. Employers who employ these strong savings strategies for their employees may find this increase a welcome change. Of course, they would need to start working with their plan providers to develop systems that can accommodate the new law.

Other Changes effective in 2020…

A new small employer tax credit is available for adding the automatic enrollment arrangement mentioned above
An increased tax credit is available for start-up plans
A plan may allow individuals to take in-service (while being employed) distributions up to $5,000 following the birth or adoption of a child
Plans that offer specific annuity investments may allow participants to take them as in-service distributions if the plan stops offering annuities as investment options
Defined benefit plans may allow in-service distributions at age 59 1/2

After 2020, what will be important later…

Pooled Employer Plans, PEP’s, Open Multiple Employer Plans

The idea that has been proposed for quite a few years is now here. It is only allowed for 401(k)-type plans. The driving important concept behind Pooled Employer Plans (PEPs) is that unrelated employers can come together into a single plan to lower individual employer responsibilities and costs, but without sacrificing plan design and features. This provision has potential to change the defined contribution landscape for many years to come. Check back for more information on PEPs as we get closer to the January 1, 2021 effective date for these plans.

CONCLUSION

The new SECURE Act is a new law that presents many areas where a retirement plan sponsor should pro-actively review, potentially amend, and actively communicate to its participants these changes as it pertains to their existing retirement plan. This article covers only some of them. We are currently applying our expert perspective to reviewing our current client’s retirement plans. Contact us today to explore how we can pro-actively walk through the process with your company’s plan.

Understanding California Senate Bill (SB) 1375: New state law changes the definition of small employer and employee

March 2019

California Senate Bill (SB) 1375 stops Californians from purchasing health plans that offer fewer benefits and protections than those that comply with the Affordable Care Act (ACA or also known as Obamacare).

This new state law changes the definition of “eligibility” for small employer health plans and employees and prevents small businesses and self-employed individuals with no employees from enrolling in a group health plan. The law prohibits employer group plans from being issued, marketed, or sold to a sole proprietorship or partnership (and their spouses), without eligible “common law” employees. What is more important is these are prohibited through any arrangements including an offering through an association.

Therefore, the newly signed legislation will prohibit the formation of new “association health plans” in California. Certain association health plans did receive exemptions from the new law.

It also means that only individual health plans can be sold to any entity without employees, and individuals must purchase health coverage in the individual market if they wish to obtain health insurance.

Don’t suffer from 401(k) Compliance in 2019? Avoid These 5 Mistakes.

February 2019

Many companies continue to make 401(k) compliance mistakes, often unknowingly, and some being simple payroll mistakes that happen multiple times a year. If left unfixed, these very mistakes can have some serious and costly ramifications, both in terms of compliance risk, as well as additional & needless work during your annual audit. Fortunately, they are not impossible to avoid. Here are 5 of the biggest 401(k) compliance mistakes we see plan sponsors make that can be avoided or diligently corrected.

1. Missed Deferral Opportunity

A missed deferral opportunity (MDO) occurs when an eligible employee intends to make a deferral, but an administrative error prevents them from doing so. Fixing missed deferral opportunities can be really expensive. When these occur, you may have to compensate the employee for the amount they would have deferred, the employer match they would’ve been credited, and potentially the investment gains that would have resulted had the deferral been made on time. So, as you can imagine, the longer time goes by for these to accumulate, the more costly they can be. Make sure you have an established process in place that avoid this from happening as well as backup solution that can catch the error before much time passes, therefore limiting your potential liability.

2. Late Deposits

Late deposits are one of the most common errors that are discovered usually during the annual 401(k) audit. The Department of Labor (DOL) mandates that 401k deposits must be made “as soon as administratively feasible.” The DOL also indicates that this time limit can be further defined based on the pattern of how quickly you have demonstrated to make these deposits over time in the past. If auditors determine that you have not made these deposits as soon as possible or as quickly as your pattern of deposits has indicated in the past, you potentially could be made to compensate your employees for earnings they would have had if the deposits had been made on time. This could require you to file Form 5330. Don’t we have enough forms to file already?

3. Invalid Deferrals

When an ineligible employee is accidently enrolled in the 401(k) plan, that is considered an invalid deferral. When this happens and some of an employee’s paycheck is withheld and deposited into the plan, you will have to run a payroll reversal with the recordkeeper to refund the withholding to the employee. Luckily, there is not currently a compliance penalty for invalid deferrals; they are basically just an administrative pain. However, if the error is not discovered right away or if processing the correction takes too long, the employee can become unhappy with the company. This often results in a complaint being filed with the DOL, which could potentially trigger an audit.

4. Defaulted 401(k) Loan

This mistake can be frustrating but more importantly be very expensive. If a participant’s loan goes into default as a result of you not setting up the repayment withholdings properly or not at all, your company could be responsible for paying back the entire loan amount as a distribution. The participant may be responsible for the 10% early distribution penalty, but after paying that, they get to keep the amount of the loan that the company had to pay out to them as a result of the repayment error. Essentially, they get free money while your company pays back their loan. One that might be perceived as a nice gesture by the participant, but one that could be expensive, so you and the company should have safeguards to avoid it.

5. Failure to Send Notice

This final mistake is not often caught, but it can get you in big trouble. At certain times of the plan year or after certain plan events, there are certain notices that have to be sent. These are notices like the QDIA notices, eligibility alerts, and summary annual reports. If they are not sent out on time, or not sent out at all, even worse, that could mean big fines if the DOL audits your plan. Check and make sure you supply your recordkeeper with current up-to-date census data and implement a process for ensuring and documenting that these types of required notices are sent out on time.

CONCLUSION

Although there are other mistakes that could increase company liability, these are 5 of the most common mistakes dealing with 401(k) plan compliance that plan sponsors should avoid. If you would like to learn more about how to avoid these mistakes and implement processes to assure that these mistakes are not something that you have to worry about, contact us today.

DOL issues proposed regulations expanding Association Health Plans (AHPs)

February 2018

The Department of Labor (DOL) has released a proposed rule (Notice of Proposed Rulemaking, NPRM) that would allow more employers to form association health plans (AHPs) and more self-employed workers to participate. The rule was developed in response to President Trump’s Executive Order 13813, which prioritized the expansion of AHPs, short-term, limited-duration insurance, and health reimbursement arrangements (HRAs).

The new rules would treat qualified AHPs as large group health plans, allowing them to avoid some small group regulations such as coverage for essential health benefits and more importantly the modified community age rating. The new rules would also allow AHPs to be offered through self-insured arrangements, however, under the proposed regulations, states would continue to have the right to regulate self-insured AHPs as Multiple Employer Welfare Arrangements (MEWAs). The NPRM also suggests that AHPs will still be subject to other applicable state insurance laws.

Commonality of Interest

Under existing association plan rules, employers must meet a narrow “commonality of interest” test to form an AHP in order for it to be treated as a large group health plan. There are a very few groups that actually meet this strict test currently.
The DOL is proposing to expand this definition of “commonality of interest” so more employers would be able to form large group AHPs. The NPRM proposes two different types of AHPs: 1. Businesses in the same trade, industry, or profession. 2. Businesses located in the same state of a common metropolitan area. Most sole proprietors and independent contractors would also be allowed to join an AHP even if they don’t have any other employees.

Organizational Requirements

Existing rules require that an association exist for other business purposes before it can sponsor a health plan for member employers. The proposed rules would allow an association to exist solely for the purpose of offering health coverage, as long as an association set up to sponsor an AHP is controlled by its employer members and has a formal organizational structure ( including a governing body, with bylaws, etc).

Conclusion

It is important to note that nothing has changed yet, and the new AHPs will not be available for a while.
But once the formal guidance regarding the expansion of AHPs arrives, it may provide employers with new choices that will hopefully allow them to leverage their combined negotiating power, economies of scale, and the greater flexibility in benefit design to offer lower-cost health coverage that delivers real value.

2018 Premiums impacted by ACA’s new age-banded rating ruling for children

January 2018

If you are a business owner with 100 or less employees (considered a small group in California), new regulations took effect on January 1, 2018, that will impact premiums for your employees who have children up to age 20 years old. This change for your employees with dependents could raise their rates at renewal significantly, and should be taken into account as you engage your 2018 renewal process and explore real ideas and options that are available.

The New Rule: multiple age band rates for children

Regulations issued by the Centers for Medicare and Medicaid Services as directed by the Affordable Care Act (called the ACA or also known as Obamacare, whose provisions are still in effect for 2018), the single age band cost for all children ages 0 to 20 years will no longer be used.

Instead, the new rule splits the one age rate band and establishes the following:

– A single age rate band for children age 0 through 14

– 1 year age rate bands for children/individuals ages 15 through 20

The other age ratings will remain the same:

– 1 year age rate bands for individuals 21-63

– A single age rate band for individuals age 64+

This change will take effect for new, renewed, or amended small group plans effective on or after January 1, 2018.

Under the regulations, when determining the premium for family coverage under a per-member rating system, the total premium is determined by adding the cost for each family member. With respect to family members under the age of 21, the premiums for no more than the three oldest covered children must be taken into account in determining the total family premium.

For small group plans, the rate for the family is based on the combined ages of the employee, spouse, all dependents 21 and older, and up to three oldest dependents 20 or younger as mentioned above. The premium is still determined on the employer’s principal business ZIP code.

Is your company affected?

The new rule applies to Small Group health plans. Remember that in California, an employer with between 1 and 100 employees will be covered by a Small Group health plan as defined by SB125.

SB125 revises the definition of a small employer, for plan years commencing on or after January 1, 2016 (both new and renewing), to be at least one, but no more than 100 employees. It is important to note that this number is reached when counting both full-time and full-time equivalent employees as specified under the Affordable Care Act. The other existing portions of the California small employer definition remain and must also be used to determine employer eligibility in the small employer market. Contact us for further information or to start a conversation.

What to consider when looking into and purchasing medical insurance- The 5 P’s!

December 2017

Whether you’re a one-man business or you’re between jobs, you should never be without the proper insurance benefits. Benefits such as health insurance are essential not only because it is now mandatory but also because it is vitally important to securing the well-being of you and your family and protecting against the loss of hard-earned assets.

Every individual & families health insurance needs are unique, so use the 5 P’s in your initial evaluation of coverages available to start the conversation.

The 5 P’s of Health Insurance:

1. Physicians

– What Physicians are important to you?

– What other doctor are important to you and how

do you want to be able to access care with them?

2. Prescriptions

– What prescription medications do you currently

take?

– How are you currently paying for them now and

how much are they currently costing you?

3. Current Plan

– What are your health care needs now or how

often do you plan to utilize healthcare in the

next year?

– What health plan do you have now?

– What are your current plan costs, copayments,

and coverage details?

4. Other Persons

– Are there other persons who you will need to be

covered with you?

– If so, do they have different healthcare needs

than you or need access to different care?

5. Particulars you desire

– Is there something else specific you or a family

member are looking for in a health plan?

Although they are not all-inclusive and there are other parameters to consider when choosing the right health insurance option, the 5-P’s give you a good point from which to start a conversation about finding a solution!

Good News for California insured…what healthcare providers who are out of your health plans network can charge you!

November 2017

Recent legislation passed by the state of California known as California Assembly Bill 72 goes into effect July 1, 2017.

CA AB 72 requires the following changes:

AB72 applies to you if you receive services from an In-Network Facility where you receive non-emergency services by an Out-of-Network professional. This new state law protects you. You will pay no more than the same cost sharing that you would pay for those same non-Emergency Covered Services received from an In-Network professional.

This new state law provides great consumer protection against a long time practice known as “balance billing”. These non-contracted professionals used to bill us the difference between our health plans contracted amounts and what they choose to charge for a specific procedure. You are protected against this now. You will only owe the In-Network cost sharing amounts for such non-Emergency services.

Disclaimer: This is not intended to be legal advice or opinion. You should should consult the specifics of your healthcare plan directly or review your specific plan’s Evidence of Coverage (EOC) or Summary of Benefits Description. These sources will verify your cost share amount when accessing healthcare.