Delayed Application of Nondiscrimination Rules for Fully Insured Plans
(The following information comes from our Healthcare Reform Advisory Committee partners at Polsinelli Shutghart.)
On December 22, 2010, the Internal Revenue Service issued IRS Notice 2011-1, through a joint agreement with the Treasury Department, the Department of Labor and Department of Health and Human Services, which delays the effective date for compliance and enforcement of new rules that prevent fully insured group health plans from providing discriminatory coverage, in eligibility or benefits, in favor of highly compensated individuals, in accordance with the Patient Protection and Affordable Care Act (the “Affordable Care Act”). Although these nondiscrimination standards have applied to self-insured group health plans for a number of years, the Affordable Care Act provided that the nondiscrimination rules would apply to non-grandfathered, fully insured plans effective as of the first plan year beginning after September 23, 2010. Failure to comply with the nondiscrimination rules exposes a fully insured plan to an excise tax, civil money penalty of $100 per day/violation, or other civil action.
For many employers, the impact of these new nondiscrimination standards have been the most significant issue and impact of the Affordable Care Act during the pending health insurance renewal season. However, the challenge for many has also been related to the fact there is still no definitive guidance on how to apply these new rules within myriad circumstances.
Through the release of IRS Notice 2011-1, the regulators have acknowledged the importance of these issues and identified need for appropriate guidance for compliance purposes. Accordingly, Notice 2011-1 provides that the required compliance effective date to comply with Section 2716 of the Public Health Services Act, or PHSA (where the nondiscrimination rules technically exist) and/or application of Internal Revenue Code Section 4980D (relating to the monetary civil penalty provisions) are permanently delayed pending the release of additional regulations or administrative guidance, and any required compliance effective date will not apply, “until plan years beginning a specified period after issuance.”
What This Means to Fully Insured Employer Group Health Plans
An employer or other plan sponsor of a fully insured group health plan does not have to comply with required nondiscrimination provisions of the Affordable Care Act, as set forth within Section 2716 of the PHSA, until further guidance is issued. This is true even if the group health plan is already subject to other provisions of the Affordable Care Act (e.g., removal of lifetime limits on coverage, allowance of enrollment by children to age 26, etc.) on or after September 23, 2010, and regardless of whether the plan is or is not deemed to be a “grandfathered plan.” The employer also need not file IRS Form 8928 with respect to excise taxes that might otherwise be imposed. Note, however, this extension has no impact on self-insured group health plans that must continue to comply with Internal Revenue Code Section 105(h) and other applicable laws. This is also not a permanent extension or repeal. As such, employers should continue to evaluate the impact of these new nondiscrimination standards and their long-term impact to the organization as a whole.
Power Group and GroupSource partner to form PowerSource
Good news! Another way we can save our clients money. Below is a press release about our latest tool to make our clients better.
As always, please contact me with any questions you might have.
Have a great week!
Allan Gardner
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Power Group, the fastest growing insurance brokerage in the Midwest, has formed yet another partnership designed to accelerate that growth even more. Power Group has joined with GroupSource, an aggressive group purchasing provider with clients throughout the U.S. and headquartered in Lenexa, KS, to launch a joint venture: PowerSource.
“Every day we help struggling businesses survive, and thriving businesses jump to the next level,” said GroupSource CEO Ross Conner. “In this economy people need hard-dollar, measurable savings. Our clients are already benefiting by our exclusive contracts and vendor audits. Implementing proven and proprietary cost reduction solutions for insurance and financial services through PowerSource will drive even more cost out of operating budgets. That makes a significant, positive impact on their bottom line.”
Power Group Vice President Gary Davis agreed, saying, “Power Group’s mission is to make our clients better. Joining forces with GroupSource enables us to bring even more value to our clients. This contract immediately improves our clients’ ability to handle the healthcare reform changes that are on the way.”
PowerSource is an expansion of the group purchasing model and will add proprietary insurance and financial products to the discounted business supplies and services already offered by GroupSource. PowerSource will give current Power Group clients access to steep discounts on everything from office equipment & uniforms to temporary staffing & printing services.
Power Group Companies is a full service insurance agency specializing in employee benefit consultation, risk management, and COBRA & FSA administration. Power Group has more than 2000 clients in the Greater Kansas City Area, and has been serving the Midwest for more than 30 years.
GroupSource is a Lenexa, Kansas, based corporation founded in 1996. As a group purchasing organization, GroupSource uses collective leverage to help its member reduce hard dollar costs for supplies and services. GroupSource services customers in 42 states across the country and supports customers, large and small, from all business industries including healthcare, accounting, legal, construction, higher education, banking, and many others.
Power Group and GroupSource partner to form PowerSource
Power Group, the fastest growing insurance brokerage in the Midwest, has formed yet another partnership designed to accelerate that growth even more. Power Group has joined with GroupSource, an aggressive group purchasing provider with clients throughout the U.S. and headquartered in Lenexa, KS, to launch a joint venture: PowerSource.
“Every day we help struggling businesses survive, and thriving businesses jump to the next level,” said GroupSource CEO Ross Conner. “In this economy people need hard-dollar, measurable savings. Our clients are already benefiting by our exclusive contracts and vendor audits. Implementing proven and proprietary cost reduction solutions for insurance and financial services through PowerSource will drive even more cost out of operating budgets. That makes a significant, positive impact on their bottom line.”
Power Group Vice President Gary Davis agreed, saying, “Power Group’s mission is to make our clients better. Joining forces with GroupSource enables us to bring even more value to our clients. This contract immediately improves our clients’ ability to handle the healthcare reform changes that are on the way.”
PowerSource is an expansion of the group purchasing model and will add proprietary insurance and financial products to the discounted business supplies and services already offered by GroupSource. PowerSource will give current Power Group clients access to steep discounts on everything from office equipment & uniforms to temporary staffing & printing services.
Power Group Companies is a full service insurance agency specializing in employee benefit consultation, risk management, and COBRA & FSA administration. Power Group has more than 2000 clients in the Greater Kansas City Area, and has been serving the Midwest for more than 30 years.
GroupSource is a Lenexa, Kansas, based corporation founded in 1996. As a group purchasing organization, GroupSource uses collective leverage to help its member reduce hard dollar costs for supplies and services. GroupSource services customers in 42 states across the country and supports customers, large and small, from all business industries including healthcare, accounting, legal, construction, higher education, banking, and many others.
