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Changes in Women’s Health Care Regarding Abortions

The Dobbs decision will have far-reaching implications for employees seeking abortion services and the health care professionals who provide them. Employers who may offer a broad range of reproductive health benefits through their employee benefit plans will also be asking many questions about continued coverage for and access to these abortion services.

Coverage for employees can be offered in one of two types of plan designs: fully-insured and self-insured coverage. With a fully-insured plan, the state-licensed insurer bears the risk of all claims incurred under the policy.

Employers who choose to self-fund their health benefits assume the risk of and pay claims incurred by their employees. These self-funded plans are administered under contracts with third-party administrators.

Employers offering fully-insured coverage

If a state should prohibit the delivery of abortion services within its borders, any insurance company licensed by the state to issue insurance policies to employers and individuals in that state will be unable to provide coverage for abortion services within that state. Many fully-insured plans operating in states where abortion services may no longer be legal may have in-network providers in other states and/or provide coverage for out-of-network services. These fully-insured carriers could possibly continue to pay claims for abortion services provided in states where abortion remains legal. To the extent state law precludes an insurance company within the state from issuing coverage for abortion services, the insurance company would have to comply with such restrictions, since insurance is generally regulated by state law.

For employers with fully-insured plans operating in states that prohibit insurance coverage for and access to abortion services, they will need to consider other options if they wish to continue providing assistance for these services. It is recommended that employers discuss options with their benefits consultants and legal counsel.

Employers offering self-insured coverage

Employers who offer self-funded health care benefits for abortion services should be able to continue to offer this coverage to their benefits-eligible employees regardless of whether any states may ban insurance coverage for abortion services. Because self-funded plans are governed by ERISA and ERISA has pre-emption provisions that override state law that relates to an employee benefit plan, coverage for abortion services could continue.

Even though self-funded employers may continue to offer coverage for abortion services under their group health plans, access to these services for employees working or residing in states where abortion services are prohibited will be restricted. Employers whose group health plans have in-network providers in multiple states can continue to provide coverage and access to abortion services from such providers in states where abortion services are legal.

If the employer’s self-funded group health plan has out-of-network coverage, employees could seek abortion services from an out-of-network provider. Some group health plans cover out-of-network care when there is no in-network provider in a service area at the in-network benefit level.

Here are some action steps an employer should consider:

  1. Communicate. Communicate with your broker/benefits consultant, third-party administrator, pharmacy benefit manager, and insurance company to understand what options may be available or to ensure that the current benefits will still be applicable depending on the state in which the employer is located.
  2. Consider the way in which your medical benefits are funded. If feasible, employers who offer fully-insured health plans, which are subject to state law limitations on abortion services, might consider a transition to self-insured coverage. This would warrant discussion with the broker/benefits consultant to make sure this is the right strategy.
  3. Review provider network access. If your group health plan has a limited provider network, i.e., an HMO or EPO, you may want to consider expanding in-network coverage or perhaps adding an out-of-network benefit that might give employees access to covered abortion services in states where such services remain available.
  4. Establish a Health Reimbursement Arrangement for abortion services. Taking great care to implement a health reimbursement arrangement (HRA) ensuring that it complies with the Affordable Care Act, ERISA, HIPAA, COBRA, and related regulatory guidance, employers, whether offering fully-insured or self-insured major medical coverage, can consider establishing an HRA that covers any unreimbursed expenses for medical care, as defined in Code section 213(d). The HRA would either need to be integrated with the employer’s medical plan or it would have to be structured as an Excepted Benefit HRA (EBHRA).
  5. Review. Review any group health plan documentation and other employee communications to ensure they align with whatever changes in benefits will result from the Dobbs decision.

Employers must be aware that ERISA requires that plan documentation reflect the benefits available to plan participants. Because benefits may change as a result of Dobbs, employers should ensure that they provide proper notice of any changes to reproductive health benefits under their group health plans.

Employee communications should be prepared to clearly explain in plain language how coverage for abortion services may change and if continued to be offered, how employees can continue to access them.

Employees may have a lot of questions about their access to abortion services. In addition to any company communications, the employer should be prepared to tell employees about the details of coverage and access to abortion services benefits. Please contact our office if you have further questions or concerns.

American Rescue Plan Act – Individual Market Changes

The American Rescue Plan Act of 2021 (ARPA), signed into law by President Biden on March 11, 2021, makes health care coverage more accessible and more affordable to individuals and their families. Increased savings and lower premiums due to additional financial assistance will be available to current enrollees and eligible consumers who enroll in health care coverage certified by Connect for Health Colorado. The Exchanges may begin displaying the lower premiums as early as April.

The ARPA increases eligibility guidelines and eliminates the income eligibility ceiling for premium tax credits for 2021 and 2022. This means more Americans now qualify for financial help with Individual health care coverage purchased through Connect for Health Colorado.

The Centers for Medicare & Medicaid Services (CMS) projects that premiums for individuals enrolled in coverage through the Individual Marketplace will drop by $50 per person per month or $85 per policy per month. CMS also projects that four out of five enrollees will be able to find a plan for $10 or less per month after premium tax credits, and more than half of enrollees will be able to find a Silver plan for $10 or less. The U.S. Department of Health and Human Services (HHS) has created a fact sheet with more details.

Out-of-pocket maximum for group health plans announced for 2022

January 29, 2021
All states
The proposed 2022 out-of-pocket maximum (OOPM) for group health plans is outlined below:

 Maximum OOPM for 2022 plan year  Maximum OOPM for 2021 plan year
 Self-only: $9,100  Self-only: $8,550
 Family: $18,200  Family: $17,100

The OOPM is adjusted annually by the U.S. Department of Health and Human Services (HHS) and was released in the annual Notice of Benefit and Payment Parameters on Dec. 4, 2020. This represents about a 6.4% increase above the 2021 parameters of $8,550 for self-only coverage and $17,100 for other coverage.

The annual OOPM requirement applies to most non-grandfathered group health plans, regardless of whether the plan is fully insured or self-funded (ASO). It does not apply to grandfathered, transitional relief, and retiree-only plans. The OOPM includes copayments, deductibles, and coinsurance amounts associated with both medical and pharmacy covered benefits.

High-deductible plans with health savings accounts (HSAs) have different limits, including OOPM, deductible, and contribution limits. We are still awaiting Internal Revenue Service (IRS) final rules for 2022 HSA limits, historically released in May, and will communicate additional information once available.

Senate Bill 215 Passed

In Denver – With his signature, Gov. Jared Polis helped tens of thousands of Coloradans take a step closer to the quality health care they need by expanding access to more affordable health insurance.

Polis signed Senate Bill 20 – 215 into law, ensuring the continuation of the state’s successful reinsurance program as well as expanding subsidies for tens of thousands of Coloradans who purchase their insurance on the individual marketplace. State lawmakers approved the plan during their recent legislative session and Polis signed that plan into law.

“To say that this is a huge step forward for Colorado would be an understatement. Literally hundreds of thousands of people across the entire state will benefit,” said Adam Fox, director of strategic engagement of the Colorado Consumer Health Initiative. “Now more than ever, we all understand the health of all of us depends on the health of each one of us. Helping more Coloradans get access to quality health care isn’t just the right and moral thing to do, it is the smart thing to do.”

The law continues a federal fee on insurance carriers set to expire this year and reinvests that fee – with no cost to the state budget – in three ways:

  1. Continue Colorado’s successful reinsurance program, which lowered premiums for those purchasing on the individual market by 20 percent in its first year.
  2. Make insurance more affordable for individual-market consumers who don’t benefit from reinsurance, namely lower income Coloradans that receive federal subsidies under the Affordable Care Act.
  3. Create affordable health insurance options for people left out of the Affordable Care Act, including individuals in the “family glitch” and those who lack proper documentation.

“This is a monumental piece of legislation for Colorado and the nation,” said Healthier Colorado executive director Jake Williams. “The pandemic propelled us to create innovative solutions to healthcare affordability and ensure that people who have suffered the most from the economic downturn are not left holding the bill. We are not only the first state in the nation to provide a path forward for people without proper documentation to secure private health insurance so they can seek the care they need and deserve, but we found a way to support hardworking families by fixing a common barrier to care known as the family glitch. When Coloradans are healthy, so is our economy.”

Specifically, the new law will help all Coloradans by stabilizing the health insurance market. Also helped will be the 250,000 individuals and families who purchase their health insurance on the individual market through the continuation of the state’s reinsurance program. This bill will provide increased purchasing power for tens of thousands of Coloradans who receive financial assistance to help with the cost of their insurance coverage, but for whom coverage remains expensive and often carries high deductibles. In addition, Colorado is one of the first states to further expand financial assistance and coverage to thousands of Coloradans who have been left out of the Affordable Care Act including people in the “family glitch,” which ties what is considered affordable employer coverage to the cost of the employee, rather than factoring in the much higher cost of covering the entire family. Finally, Coloradans who lack proper documentation will also be helped.

“Given the tough budget situation created by COVID-19 and our restrictive and unfair tax policy this kind of bipartisan health care expansion is nothing short of amazing. The ability to take an existing fee already paid by the insurance industry and reinvest it where it will do the most good for the largest number of Coloradans is a powerful demonstration of Colorado’s commitment to the health of its residents,” said Erin Miller, Vice President of Health Initiatives at the Colorado Children’s Campaign. “With this bill, Colorado continues to lead the nation in implementing creative health insurance reforms to make coverage more affordable and accessible. The three-legged policy stool created by this policy held together a strong and diverse group of advocates and ensured this new law will benefit kids and families in all parts of our state, including those who have historically and repeatedly been left behind by our policies.”

2020 Employer Mandate

Employers must offer health insurance or pay a penalty

Employer mandate overview

Employers must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to the end of the month in which they turn age 26, or be subject to penalties. This is known as the employer mandate. It applies to employers with 50* or more full-time employees, and/or full-time equivalents (FTEs). Employees who work 30 or more hours per week are considered full-time.

Employer mandate requirements

Affordable coverage

Coverage is considered “affordable” if employee contributions for employee-only coverage do not exceed a certain percentage of an employee’s household income (9.86% in 2019 and 9.78% in 2020).

Based on IRS safe harbors, coverage is affordable if the cost of self-only coverage is less than the indexed percentage of the following:

  • Employee’s W-2 wages (reduced by any salary reductions under a 401(k) plan or cafeteria plan)
  • Employee’s monthly wages (hourly rate x 130 hours per month),
    OR
  • Federal Poverty Level for a single individual

In applying wellness incentives to the employee contributions used to determine affordability, assume that each employee earns all wellness incentives related to tobacco use, but no other wellness incentives.

Minimum value

A plan provides “minimum value” if it pays at least 60% of the cost of covered services (deductibles, copays and coinsurance). The U.S. Department of Health & Human Services has developed a minimum value calculator that can be used to determine if a plan provides minimum value.

Employer mandate penalties

This graphic summarizes the coverage requirements and the penalties that apply if any full-time employee purchases coverage on the Marketplace and receives a federal premium subsidy.

Overview of the coverage requirements and the penalties that apply if any full-time employee purchases coverage on the Marketplace and receives a federal premium subsidy.

Additional details on the Employer Mandate

Employer mandate coverage requirements since 2016

Employers with 50 or more full-time and/or FTE employees must offer affordable/minimum value medical coverage to their full-time employees and their dependents up to the end of the month in which they turn age 26, or they may be subject to penalties. The amount of the penalty depends on whether or not the employer offers coverage to at least 95% of its full-time employees and their dependents.

  • Employers who fail to offer coverage to at least 95% of full-time employees and dependents may be subject to a penalty of $2,320 per full-time employee minus the first 30.
  • Employers who offer coverage may still be subject to a penalty if the coverage is not affordable or does not provide minimum value. This penalty is the lesser of either $3,480 per full-time employee receiving a federal subsidy for coverage purchased on the Marketplace, or $2,320 per full-time employee minus the first 30.

Employers must treat all employees who average 30 hours a week as full-time employees.

Dependents include children up to age 26, excluding stepchildren and foster children. At least one medical plan option must offer coverage for children through the end of the month in which they reach age 26. Spouses are not considered dependents in the legislation, so employers are not required to offer coverage to spouses.

Examples of the requirement to cover 95% of full-time employees

Assume each employer has 1,000 full-time employees who work at least 30 hours per week.

  • Employer 1 currently offers medical coverage to all 1,000 and their dependents. The company is considered to offer coverage since it offers coverage to more than 95% of its full-time employees and their dependents.
  • Employer 2 currently offers medical coverage to 800 full-time employees and their dependents. The company will need to offer coverage to 150 more full-time employees and their dependents to meet the 95% requirement to be treated as offering coverage.
  • Employer 3 has 500 full-time, salaried employees who are offered coverage and 500 full-time hourly employees who are not offered coverage. The company will need to offer coverage to at least 450 hourly employees (and their dependents) to meet the 95% requirement to be treated as offering coverage.
  • Employer 4 offers coverage to 950 full-time employees and their dependents. Only 600 of those employees actually enroll in coverage. The company is compliant no matter how many employees actually enroll in affordable coverage that offers minimum value.
Determining how many full-time employees an employer has

The regulations allow various calculation methods for determining full-time equivalent status. Because these calculations can be complex, employers should consult with their legal counsel.

  • Full-time employees work an average of 30 hours per week or 130 hours per calendar month, including vacation and paid leaves of absence.
  • Part-time employees’ hours are used to determine the number of full-time equivalent employees for purposes of determining whether the employer mandate applies.
  • FTE employees are determined by taking the number of hours worked in a month by part-time employees, or those working fewer than 30 hours per week, and dividing by 120.
Counting part-time and seasonal employees

Here are some considerations to help determine how part-time and seasonal employees equate to full-time and FTE employees.

  • Only employees working in the United States are counted.
  • Volunteer workers for government and tax-exempt entities, such as firefighters and emergency responders, are not considered full-time employees.
  • Teachers and other education employees are considered full-time employees even if they don’t work full-time year-round.
  • Seasonal employees who typically work six months or less are not considered full-time employees. This includes retail workers employed exclusively during holiday seasons.
  • Schools with adjunct faculty may credit 21/4 hours of service per week for each hour of teaching or classroom time.
  • Hours worked by students in federal or state-sponsored work-study programs will not be counted in determining if they are full-time employees.
Waiting periods to become eligible for coverage

Employers may not impose enrollment waiting periods that exceed 90 days for all plans beginning on or after January 1, 2014. Shorter waiting periods are allowed. Coverage must begin no later than the 91st day after the hire date. All calendar days, including weekends and holidays, are counted in determining the 90-day period.

Plans subject to the employer mandate

U.S.-issued expatriate plans meet the employer mandate.

Effective July 16, 2014, the employer mandate no longer applies to insured plans issued in the U.S. territories (Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and the Northern Mariana Islands). A territory may enact a comparable provision under its own law.

Employer mandate reporting

All applicable large employers are required to file an annual report that ensures compliance with the employer mandate. The reporting will include information on all employees who were offered and accepted coverage, and the cost of that coverage on a month-by-month basis.

What happens if an employee receives subsidized coverage

Each year, public Marketplaces should send notices to employers that may owe a penalty for not complying with the employer mandate. These notices will alert employers if any of their employees received a subsidy through the Marketplace.

Employers that receive these notices will have 90 days to file an appeal if they believe the eligibility determination was made in error. It’s important that employers maintain documentation and records to provide proof of compliance with the employer mandate.

Read more about the employer notice process from the Centers for Medicare and Medicaid Services.

Employer mandate penalty amounts and processes

Examples of employer penalties
The employer does not offer coverage to full-time employees
The penalty is $2,320 per full-time employee, excluding the first 30 employees. This example shows how the penalty would be calculated.
Employer Trigger Penalty
500 full-time employees

No coverage offered

 One employee purchases coverage on the Marketplace and is eligible for a federal premium subsidy $2,320 per full-time employee, minus the first 30 employees

500 – 30 = 470 employees

470 x $2,320 = $1,090,400 penalty
The employer offers coverage that does not meet the minimum value and affordability requirements

The penalty is the lesser of the two results, as shown in this example.

Employer Trigger Penalty
1,200 full-time employees

Employer offers coverage, but coverage is not affordable and/or doesn’t provide minimum value

 The penalty is triggered if one employee purchases coverage on the Marketplace and receives a federal premium subsidy

250 employees purchase coverage on the Marketplace and are eligible for a subsidy

 Lesser of $2,320 per full-time employee, minus the first 30 employees, OR $3,480 per full-time employee receiving a federal premium subsidy

1,170 x $2,320 = $2,714,400 penalty

250 x $3,480 = $870,000 penalty (lesser penalty applies)
Penalty assessment process

Here is a snapshot of the penalty assessment process:

Employer offers health coverage compliant with the employer mandate

  • The Marketplace should notify the employer if an employee receives subsidized coverage during this same plan year
  • Employer may gather facts for response or file an appeal within 90 days of Marketplace notification
Employer reports coverage offer and respective data during the applicable tax season
Marketplace reports Minimum Essential Coverage data on employees, including subsidy information
IRS sends Letter 226J, with an Employer Shared Responsibility Payment assessment based on the data they have processed

  • Employer sends Form 14764 (response to Letter 226J) with Form 14765 (lists employees receiving subsidized coverage) and any updated or corrected data to previously reported Forms 1095-C
IRS sends Notice 220J, confirming the final penalty amounts owed, which could state no amount is owed after final audit review.
How an employer will know if a penalty has been assessed

If an employee receives subsidized coverage, the employer should be notified by the public Marketplace. The employer will then be provided an opportunity to respond and appeal if the employee was offered coverage that meets the minimum value and affordability standards.

Once the IRS has received individual tax returns and employer reporting for a given calendar year, it may determine that an employer did not meet its employer mandate requirements and is subject to a financial penalty, known as the Employer Shared Responsibility Payment (ESRP). The IRS will send the employer an IRS Letter 226J.

How an employer can appeal a penalty assessment

Any employer who receives a 226J letter should take immediate action to respond to the IRS. The employer has 30 days to respond with documentation and corrected reporting data (if applicable). Doing this may help the employer reduce or eliminate the ESRP assessed.

After the employer responds with documentation of corrected data previously reported on the Forms 1095-C, the IRS will complete their review and send a Notice 220J to the employer. This notice confirms the final penalty amounts being charged, by month. The Notice 220J may also indicate that no penalty is being charged based on the IRS’s review of any data or documentation provided by the employer in response to the initial Letter 226J.

Read more about employers’ options on the IRS web page, Employer Shared Responsibility Payment Q&As, questions 55-58.

How penalties apply to companies with a common owner

Companies that have a common owner are combined for purposes of determining whether they are subject to the mandate. However, any penalties would be the responsibility of each individual company.

* Before January 2016, employers with 50-99 employees were not required to offer coverage, and employers with 100 or more complied if they offered coverage to at least 70% of their full-time or FTE employees.