For employers operating their group health and welfare plans beginning on or after Jan. 1, 2021, now is the time of the year to prepare for open enrollment. Typically, the focus for open enrollment is on evaluating the services and performance of vendors, renewing rates, and considering design changes. In addition to these items, employers need to address various legal requirements. This Benefits Brief provides an open enrollment checklist that covers these requirements for the 2021 plan year.
Inflation Adjustments in Annual Limits
Several annual limits apply to health and flex plans which may be adjusted each year for changes in the cost-of-living. The new amounts should be considered upon renewal.
|Health Plans -- Excluding HDHPs & Grandfathered Plans|
|Annual Out-of-Pocket Maximum||2020||2021|
|High Deductible Health Plans|
|Annual Out-of-Pocket Maximum|
|Health Savings Accounts (HSA)|
|Maximum Annual Contribution||2020||2021|
|Age 55 Catch-Up||$1,000||TBD|
|Flexible Spending Accounts (FSA)|
|Maximum Annual Contribution|
The above limits are all required to be followed except in the case of the medical FSA limit which is optional (employers can set a lower limit). There are a couple of items to highlight the maximum out-of-pocket limit for non-grandfathered health plans. First, the limit can be divided so a portion applies to the medical benefit and a portion applies to the prescription drug benefit. This may be needed if the plan has separate medical and prescription drug administrators. Second, if a plan has a family maximum out-of-pocket that is greater than the individual maximum out-of-pocket, there must be an embedded individual maximum out-of-pocket within the family limit so that no individual is subject to a maximum out-of-pocket greater than the individual amount. For an HDHP, however, the embedded maximum out-of-pocket can't be less than the minimum family deductible for HDHPs.
Preventive Care Benefits
Non-grandfathered plans must cover certain preventive care benefits at 100% with no participant cost-sharing. The list of required preventive care is updated periodically on the Healthcare.gov website. Employer group health plans must include any new items by no later than the beginning of the first day of the plan year starting one year after any new guidelines or recommendations are issued. For example, employer group health plans operating on a calendar year must offer the following new preventive care items with no participant cost-sharing as of January 1, 2021:
- Statins. Statins for certain older individuals with at least one risk factor for cardiovascular disease and related screenings for cardiac risk factors.
- Unhealthy Alcohol Use. Adults 18 years or older should be screened for unhealthy alcohol use and be provided with brief behavioral counseling interventions if engaged in hazardous drinking.
- Aspirin. Aspirin for certain older individuals to prevent cardiovascular disease and colorectal cancer.
- Obesity Screening and Counseling. Adults with a body mass index of 30 or higher should be referred or offered interventions.
- Expanded Cervical Cancer Screenings. Expanded screenings in more situations to align with USPSTF guidelines.
- Osteoporosis Screening. The USPSTF recommends screening for osteoporosis for some women 65 years and older and women younger than 65 years at increased risk of osteoporosis.
- Extension of Certain Well-Women Services. Extension of certain well-women services for adolescents.
- Skin Cancer Behavioral Counseling. Counseling regarding the minimizing of exposure to UV radiation for persons aged 6 months to 24 years with fair skin types to reduce their risk of skin cancer.
Annual Participant Notices
As you prepare with the open enrollment checklist do not forget about the required participant notices which must be furnished annually.
- Notice of Grandfathered Status. Plans that were in effect prior to the enactment of the ACA in 2010 are exempt from some of the insurance market reforms as long as they retain “grandfathered plan” status (that is, plans that have existed without major changes to their provisions since March 23, 2010, the date of the ACA's enactment). If your plan is still grandfathered, a notice of grandfathered status must be included in SPDs and other plan materials such as annual open enrollment materials. DOL’s Sample Notice
- Summary of Benefits and Coverage. The SBC is intended to provide information in a prescribed format to participants so they can easily compare the information to other plans for which they may be eligible, including coverage on the exchange. A template SBC is available on the DOL website. DOL’s SBC Template & Instructions
- Women’s Health and Cancer Rights Act. Each year participants must receive a summary of a health plan’s coverage for mastectomies and breast reconstructive services. DOL’s Sample Notice
- Medicare Part D Notice of Creditable or Non-Creditable Coverage. This annual notice must be provided before October 15th to any participant who is eligible for Medicare Part D prescription drug coverage along with any qualified beneficiaries. This includes COBRA participants, retirees, and their dependents and Medicare-eligible employees and their dependents. Since it is difficult for most employers to determine who should receive the notice, providing the notice to all employees facilitates compliance. CMS’ Sample Notices
- HIPAA Notice of Privacy Practices. Enrolled employees must be notified at least once every three years that they may request a new copy of the HIPAA notice of privacy practices. Alternatively, the notice can be reissued at least once every three years. An easy way to comply with this requirement is to notify participants annually, at open enrollment, that they may request a new copy of the notice at any time, free of charge, by contacting Human Resources. HHS’ Sample Notices
- CHIP Notice. Most states provide premium assistance subsidies under Medicaid or CHIP to help low-income individuals pay for employer coverage. The CHIP notice explains the subsidies. Employees who are eligible for employer health coverage must be provided with the CHIP notice annually if the employer maintains a group health plan in a state that provides premium assistance subsidies under Medicaid or CHIP. The CHIP notice is updated twice a year, and before distributing the notice, employers should check the DOL website for any revisions. DOL’s Sample Notice
- ACA Section 1557 Nondiscrimination Notice. Self-funded employer group health plans that are subject to the nondiscrimination requirements of Section 1557 of the ACA (typically, health care providers) must include a nondiscrimination notice and taglines in 15 foreign languages in significant communications and publications, such as annual open enrollment materials and SPDs. HHS’ Translated Resources for Covered Entities
- Wellness. If the employer offers a wellness program that is subject to the HIPAA/ACA wellness program rules and/or the ADA/GINA wellness program rules, there are participant notice requirements which must be satisfied annually, as well as when the wellness program is first rolled out. ADA’s Model Notice DOL’s Model Disclosure
Other Tips to Help Plan Ahead for Open Enrollment:
Lastly, here are a few more tips to help stay ahead by re-evaluating benefits and needs for a successful open enrollment season.
- Understand employee needs. Employees needs shift and change. Consider conducting a benefits survey and evaluating what may be most beneficial in terms of coverage.
- Be prepared to answer questions. Be prepared to answer all the questions relating to benefits, healthcare reform legislations and policy changes that affect your employees.
- Guide employees. Provide employees with resources early on so that they have enough time to review their benefits. Offer generous deadlines and be sure to send out reminders.
Have more questions about open enrollment? Contact Acrisure today.
Revenue Procedure Provides 2021 Adjusted HSA Amounts
Health Saving Accounts and Other Tax-favored Health Plans
Federal Tax Law for HSAs
Internal Revenue Code Section 223
Federal Notice Including Q&As on a Variety of HSA Topics
For additional information, please visit our website at Acrisure.com. Products or services identified herein may not be available in all jurisdictions. The information and descriptions contained herein (a) are not necessarily intended to be complete descriptions of all applicable terms, conditions, and exclusions of the policies referenced, (b) are provided solely for general informational purposes, and (c) should not be viewed as a substitute for legal, regulatory, or other advice on any particular issue or for any particular reason. The advice of a professional should always be obtained before purchasing any insurance product or service, and you should not rely on the information provided herein for the prevention or mitigation of risks or as a full and complete explanation of coverage under any insurance policy. While the information contained herein has been compiled from sources believed to be reliable, no warranty, guarantee, or representation, either expressed or implied, is made as to the correctness or sufficiency of any representation contained herein.
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This Benefits Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.