2024 Open Enrollment Checklist
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To get ready for open enrollment, employers who sponsor group health plans should be aware of the legal changes affecting the design and administration of their health plans for plan years beginning on or after Jan. 1, 2024. These changes include limits that are adjusted for inflation each year, such as the Affordable Care Act’s (ACA) affordability percentage and cost-sharing limits for high deductible health plans (HDHPs). Employers should review their health plan’s design to confirm that it has been updated, as necessary, for these changes. In addition, any changes to a health plan’s benefits for the 2024 plan year should be communicated to plan participants through an updated summary plan description (SPD) or a summary of material modifications (SMM). Health plan sponsors should also confirm that their open enrollment materials contain certain required participant notices, when applicable, such as the summary of benefits and coverage (SBC). Some participant notices must also be provided annually or upon initial enrollment. To minimize costs and streamline administration, employers should consider including these notices in their open enrollment materials. Plan Design Issues
Notices to Include
PLAN DESIGN CHANGES ACA Affordability Standard Under the ACA’s employer shared responsibility rules, ALEs are required to offer affordable, minimum value health coverage to their full-time employees (and dependent children) or risk paying a penalty. The employer shared responsibility requirements are also known as the “pay or play” rules. Under the ACA, an ALE’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5% of the employee’s household income for the taxable year (as adjusted each year). On Aug. 23, 2023, the IRS announced that the affordability percentage will decrease to 8.39% for plan years that begin in 2024. This is a substantial decrease in the affordability percentage and the lowest this percentage has ever been set. As a result, many employers may have to significantly lower their employee contributions for 2024 to meet the adjusted percentage.
Out-of-Pocket Maximum Limits Non-grandfathered health plans are subject to limits on cost sharing for essential health benefits (EHB). The annual limits on total enrollee cost sharing for EHB for plan years beginning on or after Jan. 1, 2024, are $9,450 for self-only coverage and $18,900 for family coverage. With this in mind, employers should consider these next steps:
Preventive Care Benefits The ACA requires non-grandfathered health plans to cover certain preventive health services without imposing cost-sharing requirements (e.g., deductibles, copayments or coinsurance) when the services are provided by in-network health care providers. The recommended preventive care services covered by these requirements include the following:
Health plans are required to adjust their first-dollar coverage of preventive care services based on the latest preventive care recommendations. In general, coverage must be provided for a newly recommended preventive health service or item for plan years beginning on or after the one-year anniversary of when the recommendation was issued. More information on the recommended preventive care services is available at www.HealthCare.gov. Impact of Ongoing Litigation Currently, a key portion of the ACA’s preventive care mandate is the subject of a legal dispute. On March 30, 2023, the U.S. District Court for the Northern District of Texas ruled that preventive care coverage requirements based on an A or B rating by the USPSTF on or after March 23, 2010, violate the U.S. Constitution and blocked enforcement of those requirements. However, the 5th Circuit Court of Appeals has put enforcement of the District Court’s ruling on hold pending the case’s appeal. The 5th Circuit is expected to issue a decision on the merits of the case by the end of 2023. It is uncertain whether the District Court’s ruling will be reversed or upheld by the 5th Circuit. For now, non-grandfathered health plans and issuers should continue to cover, without cost sharing, the full range of preventive care services required by the ACA, including items or services that have an A or B recommendation by the USPSTF. Considering these developments, employers should consider taking the following steps:
Coverage for COVID-19 Vaccines, Testing and Treatment Because the COVID-19 public health emergency has ended, health plans are no longer required to cover COVID-19 diagnostic tests and related services without cost sharing or other medical management requirements. Health plans are still required to cover recommended preventive services, including COVID-19 immunizations, without cost sharing, but this coverage requirement can now be limited to in-network providers. Also, for plan years ending after Dec. 31, 2024, an HSA-compatible HDHP is no longer permitted to provide benefits for COVID-19 testing and treatment without a deductible (or with a deductible below the minimum deductible for an HDHP). As such, employers should take these steps:
Health FSA Contributions The ACA imposes a dollar limit on employees’ pre-tax contributions to a health FSA. This limit is indexed each year for cost-of-living adjustments. An employer may set their own dollar limit on employees’ contributions to a health FSA, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year. For plan years beginning in 2023, the health FSA limit is $3,050. For plan years beginning in 2024, the health FSA limit increases to $3,200. In addition, the IRS recently issued a memorandum on FSAs that provides helpful reminders about the strict substantiation requirements for these tax-advantaged accounts. This memorandum clarifies that health FSA expenses are not considered properly substantiated if employees self-certify expenses, if the plan uses sampling, if only amounts over a certain level are substantiated or if charges from favored providers are not substantiated. Moving forward, employers should consider these next steps:
HDHP and HSA Limits for 2024 Employers offering HDHPs compatible with HSAs to employees should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2024 limits. The IRS limits for HSA contributions, HDHP minimum deductibles and HDHP maximum out-of-pocket expenses will all increase for 2024. The HSA contribution limits will increase effective Jan. 1, 2024, while the HDHP cost-sharing limits will increase effective for plan years beginning on or after Jan. 1, 2024. Looking ahead, employers should follow these steps:
The following table contains the HDHP and HSA limits for 2024 as compared to 2023. It also includes the catch-up contribution limit that applies to HSA-eligible individuals age 55 and older, which is not adjusted for inflation and stays the same from year to year.
HDHP Design Option – Telehealth At the beginning of the COVID-19 pandemic, Congress temporarily relaxed the rules for HDHPs to allow them to provide benefits for telehealth or other remote care services before plan deductibles were met without jeopardizing HSA eligibility. This relief has been repeatedly extended and currently applies for plan years beginning before Jan. 1, 2025. This means that HDHPs may waive the deductible for any telehealth services for plan years beginning in 2023 and 2024 without causing participants to lose HSA eligibility. This provision is optional; HDHPs can continue to choose to apply any telehealth services toward the deductible. Going forward, employers can take these steps:
Mental Health Parity – Required Comparative Analysis for NQTLs The Mental Health Parity and Addiction Equity Act (MHPAEA) requires parity between a group health plan’s medical/surgical benefits and its mental health or substance use disorder (MH/SUD) benefits. These parity requirements apply to financial requirements and treatment limits for MH/SUD benefits. In addition, any nonquantitative treatment limitations (NQTLs) placed on MH/SUD benefits must comply with MHPAEA’s parity requirements. For example, NQTLs include prior authorization, step therapy protocols, network adequacy and medical necessity criteria. MHPAEA requires health plans and issuers to conduct comparative analyses of the NQTLs used for medical/surgical benefits compared to MH/SUD benefits. This analysis must contain a detailed, written and reasoned explanation of the specific plan terms and practices at issue and include the basis for the plan’s or issuer’s conclusion that the NQTLs comply with MHPAEA. Plans and issuers must make their comparative analyses available upon request to specific federal agencies or applicable state authorities. Considering this information, employers should take the following steps:
Open Enrollment Notices Employers who sponsor group health plans should provide certain benefits notices in connection with their plans’ open enrollment periods. Some of these notices must be provided at open enrollment time, such as the SBC. Other notices, such as the WHCRA notice, must be distributed annually. Although these annual notices may be provided at different times throughout the year, employers often choose to include them in their open enrollment materials for administrative convenience. In addition, employers should review their open enrollment materials to confirm that they accurately reflect the terms and cost of coverage. In general, any plan design changes for 2024 should be communicated to plan participants either through an updated SPD or an SMM. Summary of Benefits and Coverage The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees each year at open enrollment or renewal time. Federal agencies have provided a template for the SBC, which health plans and issuers are required to use. With this in mind, employers should consider these next steps:
Medicare Part D Notices Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D-eligible individuals covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals about whether their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the plan and each year before Oct. 15 (when the Medicare annual open enrollment period begins). Model notices are available on the Centers for Medicare and Medicaid Services’ website. Annual CHIP Notices Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual CHIP notice about the available assistance to all employees residing in that state. The U.S. Department of Labor (DOL) has provided a model notice. Initial COBRA Notices COBRA applies to employers with 20 or more employees who sponsor group health plans. Group health plan administrators must provide an initial COBRA notice to new participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD. A model initial COBRA notice is available from the DOL. SPDs Plan administrators must provide an SPD to new participants within 90 days after plan coverage begins. Any changes made to the plan should be reflected in an updated SPD booklet or described to participants through an SMM. Also, an updated SPD must be furnished every five years if changes are made to SPD information or if the plan is amended. Otherwise, a new SPD must be provided every 10 years. Notices of Patient Protections Under the ACA, group health plans and issuers that require the designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Additionally, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for such care. If a health plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant. If an employer’s plan is subject to this notice requirement, they should confirm that it is included in the plan’s open enrollment materials. This notice may be included in the plan’s SPD. Model language is available from the DOL. Grandfathered Plan Notices If an employer has a grandfathered plan, they should make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as SPDs and open enrollment materials. Model language is available from the DOL. Notices of HIPAA Special Enrollment Rights At or before the time of enrollment, an employer’s group health plan must provide each eligible employee with a notice of their special enrollment rights under HIPAA. This notice may be included in the plan’s SPD. HIPAA Privacy Notices The HIPAA Privacy Rule requires covered entities (including group health plans and issuers) to provide a Notice of Privacy Practices (or Privacy Notice) to each individual who is the subject of protected health information (PHI). Health plans are required to send the Privacy Notice at certain times, including to new enrollees at the time of enrollment. Also, at least once every three years, health plans must either redistribute the Privacy Notice or notify participants that the Privacy Notice is available and explain how to obtain a copy. Self-insured health plans are required to maintain and provide their own Privacy Notices. However, special rules apply for fully insured plans, where the health insurance issuer, not the plan itself, is primarily responsible for the Privacy Notice. Special Rules for Fully Insured Plans The plan sponsor of a fully insured health plan has limited responsibilities with respect to the Privacy Notice, including the following:
A plan sponsor's access to enrollment information, summary health information and PHI that is released pursuant to a HIPAA authorization does not qualify as having access to PHI for plan administration purposes. WHCRA Notices Plans and issuers must provide a notice of participants’ rights to mastectomy-related benefits under the WHCRA at the time of enrollment and on an annual basis. The DOL’s compliance assistance guide includes model language for this disclosure. SARs Plan administrators required to file a Form 5500 must provide participants with a narrative summary of the information in the Form 5500 called a summary annual report (SAR). A model notice is available from the DOL. Group health plans that are unfunded (that is, benefits are payable from the employer’s general assets and not through an insurance policy or trust) are not subject to the SAR requirement. The plan administrator generally must provide the SAR within nine months of the close of the plan year. If an extension of time to file the Form 5500 is obtained, the plan administrator must furnish the SAR within two months after the close of the extension period. Wellness Program Notices Group health plans that include wellness programs may be required to provide certain notices regarding the program’s design. As a general rule, these notices should be provided when the wellness program is communicated to employees and before employees provide any health-related information or undergo medical examinations. These notices are required in the following situations:
ICHRA Notices Employers may use individual coverage HRAs (ICHRAs) to reimburse their eligible employees for insurance policies purchased in the individual market, or for Medicare premiums. Employers with ICHRAs must provide a notice to eligible participants about the ICHRA and its interaction with the ACA’s premium tax credit. In general, this notice must be provided at least 90 days before the beginning of each plan year. Employers may provide this notice at open enrollment time if it is at least 90 days prior to the beginning of the plan year. A model notice is available for employers to use to satisfy this notice requirement. LINKS AND RESOURCES
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This Compliance Overview 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. ©2023 Zywave, Inc. All rights reserved. [b_disclaimer] |