By Carol Taylor
For employers and their employees, past and present, there may be a few issues that you need to consider before enrolling through products sold in the Federally-Facilitated Small Business Health Options Program (FF-SHOP).
Nestled among the multiple emails received last week from the regulatory agencies over the Patient Protection and Affordable Care Act (PPACA), under the heading of FAQ Updates on the SHOP, Agent-Broker – Other is FAQ 1955. The short FAQ announces that the Consolidated Omnibus Budget Reconciliation Act (COBRA) transactions will not be supported in the FF-SHOP Exchange for small businesses as of November 15, 2014, but will only be supported in a future release. The FAQ can be found here: https://www.regtap.info/faq_viewe.php?i=1995
For small employers that meet the requirements to offer COBRA continuation to their former employees or dependents, the FF-SHOP will not be an option, even if they qualify for the Small Business Tax Credit (SBTC). While the Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) work out the information technology on how to allow for these transactions, any tax credit the business would qualify for would be quickly negated with the $100 per day fine for each qualified beneficiary entitled to COBRA. So, if a family of four qualified for COBRA, that would be a $400 per day fine for each day they were not given notice, or for each day they were not allowed to enroll in that coverage. COBRA, which is enforced by the Department of Labor (DOL), has been around for several decades for employer groups that have more than 20 full-time equivalent employees working at least 50% of the days of the prior calendar year. Controlled organization rules also apply in determining the count. It is not likely the DOL will allow for any transitional relief for this issue given how long the laws have been in place.
This also brings into question whether this FAQ would also be applicable to states where “mini-COBRA” must be offered. These “mini-COBRA” rules apply to employers in states that have enacted continuation laws for groups that do not meet the federal requirements. These groups have fewer than 20 full-time equivalent employees. Not all states have these requirements, but many do and this will likely also be problematic for them to utilize the FF-SHOP initially. This will likely be a concern, even though no official word has been released yet from HHS or CMS, on this issue.
For employee consideration, a new COBRA model election notice was released several weeks ago to include a statement about options in the individual Marketplace. However, the federal or state continuation may be the persons’ best option versus going to the Marketplace for coverage. In many areas of the country, the individual Marketplace products have higher deductibles and out of pocket maximums than the group coverage. There is likely no deductible credit on the individual product, so if they have already met it this year on their group plan, they will start all over again. Also, there may be limited networks offered in the individual Marketplace products, or even a limited choice of insurance carriers.
It will likely be in the employers’ best interest to delay utilizing the FF-SHOP, at least until the issues have been worked out surrounding COBRA continuants.