Employers with employees who may seek coverage through a public exchange should become familiar with the applications and the information they will need to provide as part of the Employer Coverage Tool.
In May 2013, the Department of Health and Human Services (HHS) issued a streamlined final application package to be used by individuals enrolling in health coverage through a public exchange, now referred to in the applications and other federal government materials as the Health Insurance Marketplace.
The HHS streamlined package of applications includes three versions:
- A five-page Application for Health Coverage & Help Paying Costs, which can be used by unmarried adults who are not offered health coverage from their employer, who do not have any dependents, who cannot be claimed as a dependent on someone else's tax return and who do not have items that can be deducted from their taxable income other than student loan interest.
- A five-page Application for Health Coverage, which can be used by anyone who wishes to enroll in a health plan offered in the Health Insurance Marketplace, but who is not eligible for federal premium tax credits, cost-sharing subsidies, Medicaid or CHIP coverage. Individuals unsure about their eligibility can also complete this version of the application, and they will be contacted for additional assistance regarding eligibility and enrolling in coverage.
- A 12-page Application for Health Coverage & Help Paying Costs, which can be used by single individuals, and those with a family, who are offered health coverage from an employer.
The long-version of the application includes an Employer Coverage Tool, which employers will be asked to complete to enable an applicant to answer specific questions in the application. The Employer Coverage Tool requests information on various elements of an employer's health plan eligibility, waiting periods, premiums for the lowest-cost, self-only health plan option, wellness program incentives, whether the plan meets the minimum value standards and what plan changes, if any, are contemplated for the new plan year.
Applicants are instructed to "take the Employer Coverage Tool on the next page to the employer that offers coverage to help you answer these questions." However, the employer's completed Employer Coverage Tool is not to be included when the application is submitted; instead, the applicant uses the information provided by the employer in the Employer Coverage Tool to respond to similar questions asked in the Health Coverage From Jobs section of the application.
Applicants are directed to "take the Employer Coverage Tool...
to the employer that offers coverage to help you answer these questions."
The information provided by an employer in the Employer Coverage Tool, and the applicant's related responses on the application itself, will be relevant to a determination of whether the applicant is eligible for federal premium tax credits and subsidies and, in turn, whether the employer is liable for penalties under the play-or-pay requirements (e.g., because the employer did not offer a full-time employee affordable, minimum value coverage). Particularly noteworthy information requested in the application or the Employer Coverage Tool includes the following:
- The applicant's before-tax wages and frequency of payment, which may be relevant to a determination of whether the applicant can qualify for federal subsidies and whether health coverage offered by the employer is affordable.
- The average number of hours worked each week by the applicant, which may be relevant to determining whether the applicant is a full-time employee (i.e., working 30-plus hours per week).
- If the applicant's income changes from month to month, the applicant is required to identify his or her "total income this year" and "total income next year (if you think it will be different)"—since the application will be submitted in the fall of 2013, the reference to "this year" appears to mean 2013, and "next year" is 2014.
- The applicant's eligibility for coverage, including whether any waiting period applies.
- Whether the employer offers a health plan that meets the minimum value standards, defined in the application to mean that "the total allowed benefit costs covered by the plan is no less than 60 percent of such costs."
- How much the applicant would be required to pay in premiums for self-only coverage under the lowest-cost health plan offered by the employer. In addition, if the employer maintains wellness program incentives, the applicant is asked to provide the premium that the applicant would pay if he or she received the maximum discount for any tobacco-cessation program and did not receive any other discounts based on wellness programs. This description of the impact of wellness program incentives is consistent with regulations recently released by the federal government defining affordability of coverage.
- What plan changes the employer will make to its group health plan for the new plan year (if known), such as the potential that the employer will not continue to offer coverage, or that the employer will start offering coverage or change the premium for the lowest-cost plan available.
The information provided in the application will be used to help determine the applicant's eligibility for federal premium tax credits or other federal subsidies for coverage in the Health Insurance Marketplace. In this regard, the application highlights that "you may qualify for a free or low-cost program even if you earn as much as $94,000 for a year (for a family of four)." Although the press release accompanying the revised applications is silent on this issue, it appears that the HHS-developed applications will be used in those states with a federally facilitated exchange (FFE), while states operating their own exchange will also have the option to use these applications.
Key Action Items
Employers with employees who may seek enrollment in the public Health Insurance Marketplace should become familiar with the content of the applications and with the information they will need to provide as part of the Employer Coverage Tool.
The application process will be an important step in the initial determination of an applicant's eligibility for federal premium tax credits and an employer's potential liability for penalties under the play-or-pay mandate. As such, ensuring that employees receive accurate and complete information up front regarding the health coverage offered to them could minimize the risk of misinformation being provided in the application, and the need for follow-up corrective communications by the employer.
The applications can be completed online, by telephone or on paper when the initial enrollment period for the Health Insurance Marketplace begins on Oct. 1, 2013. However, employers that anticipate that at least some of their employees will apply for coverage in the public Health Insurance Marketplace should begin reviewing the applications and Employer Coverage Tool as soon as possible.
Towers Watson is a global professional services company that helps organizations improve performance through effective people, risk and financial management. The above article was original published in the May 2013 issue of the firm's Health Care Reform Bulletin. © 2013 Towers Watson. All rights reserved. Republished with permission.
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