The SHOP Exchange will begin its initial open enrollment on October 1, 2013. So what has been delayed?

To answer that question, we need to look at what the SHOP is supposed to do for small businesses. The SHOP Exchange is intended to give small employers with less than 50 employees more choices in selecting group health coverage for employees.

The key feature allows employers to offer different plan options from different insurance companies. This is a radical change from the current market in which an employer chooses one insurer and, maybe, a couple of different levels of deductibles and co-pays.

Of course, choices create complexity. How can a small employer ensure that each insurer is paid the correct premium for the coverage selected by each employee? That led to the second key feature of the SHOP Exchange known as “aggregating” the premium. The employer collects the premium owed to all the insurers chosen by employees and sends the total amount to the SHOP Exchange. The Exchange is responsible for doling out the amount of premium owed to each insurer.

These key features of the SHOP Exchange require employers and employees, insurers, and the Exchange to communicate electronically. After all, the Exchange is essentially a secure web portal for exchanging protected health information and selecting health coverage.

It is no surprise that the U.S. Department of Health and Human Services (HHS) concluded that all the new complex features of the SHOP Exchange could not be implemented before open enrollment begins on October 1, 2013. So HHS decided to delay the two key features of the SHOP Exchange until the 2015 plan year.

What does that mean?

For the 2014 plan year, the SHOP Exchange will look pretty much like the current market place, where employers select one insurer with coverage at different deductible and co-pay levels. Small employers should work with their insurance agent/broker to compare health coverage offered on and off the Exchange in order to select a plan that best fits the needs of its employees.

Disclaimer: The information above is general in nature and does not constitute legal or tax advice on the issues discussed. Please consult a lawyer or tax professional to discuss your company’s specific circumstances.  

Norma Shirk

Manager/Owner

Corporate Compliance Risk Advisor, LLC

norma.shirk@complianceriskadvisor.com

What Is an HRA?

Health Reimbursement Arrangements (HRAs) are Internal Revenue Service sanctioned programs that allow an employer to set aside funds to reimburse eligible employees for covered medical expenses. The use of an HRA can produce tax advantages and lower premium outlays.

Common Types

“Gap” HRA

EXAMPLE:  An employer increases the annual deductible on his plan from $1000 to $3500 in order to achieve considerable savings.  Since the employees are accustomed to paying just $1000, the employer agrees to use the savings to “cover the gap” the employee may experience.   In other words, the employee would pay the first $1000 and the employer would reimburse the employee for covered expenses from $1001 to $3500.  The employer benefits from reduced insurance costs, but the employees are also protected because they pay no additional money out.  This is the most straightforward and common type of HRA.

“Sandwich” HRA

EXAMPLE:  In order to combat a significant renewal increase, an employer increases the annual deductible on his plan from $2500 to $5000.  Even with the change in benefits, the employees will still have to pick up additional risk.   As an effort to keep the benefits as close to possible for the employees, he only asks that they pay an additional $500 a year which increases their total responsibility to $3000. 

In this scenario, the contributions would be divided in a “sandwich” type fashion such as:  Employee pays first $2000, employer pays next $2000, and the final $1000 would be paid by the employee.   Both the employer and the employee benefit from lower monthly premiums and neither party is guaranteed to have to cover a full $5000 deductible. 

“Comprehensive Purpose” HRA

EXAMPLE:  Employer sets a defined monthly amount to reimburse employees as each employee decides.  Some employees may choose to spend the money on dental benefits, another spends theirs on an individual insurance policy, and another employee may let theirs accumulate for a future accident or illness.

This type is much more complex and less common.  It’s designed to cover any out-of-pocket medical, dental, vision, insurance premium expense, co-pays, and deductibles.  It does not have to be paired with a HDHP.

HRA Plan Design Flexibility
HRAs are flexible.   Limits can be set on types of services reimbursed by an HRA.  Amounts contributed to an HRA can be in a lump sum or in increments throughout the year, and can be rolled over from year to year.  This varies in many ways from H.S.A.s and F.S.A.s.

Most businesses keep on-site records and files (both hardcopy and electronic) that are essential to normal operations. Some businesses also store raw materials and product inventory. The loss of essential records, files, and other materials during a disaster is commonplace and can not only add to your damage costs but also delay your return to normal operations. The longer your business is not operating, the more likely you are to lose customers permanently to your competitors.

Protecting Company Documents and Equipment
To reduce your vulnerability, determine which records, files, and materials are most important; consider their vulnerability to damage during different types of disasters (such as floods, hurricanes, and earthquakes) and take steps to protect them, including the following:

• Raising computers above the flood level and moving them away from large windows;
• Moving heavy and fragile objects to low shelves;
• Storing vital documents (plans, legal papers, etc.) in a secure off-site location;
• Regularly backing up vital electronic files (such as billing and payroll records and customer lists) and storing backup copies in a secure off-site location;
• Securing equipment that could move or fall during an earthquake; and
• Prior to hurricanes, covering or protecting vital documents and electrical equipment from potential wind driven rain, which may breech the building envelope through windows, doors, or roof systems.

Additional Tips to Secure Your Business

• Make sure you are aware of the details of your flood insurance and other hazard insurance policies, specifically which items and contents are covered and under what conditions. Check with your insurance agent if you have questions about any of your policies.
• When you identify equipment susceptible to damage, consider the location of the equipment. For example, equipment near a hot water tank or pipes could be damaged if the pipes burst during an earthquake, and equipment near large windows could be damaged during hurricanes.
• Assign disaster mitigation duties to your employees. For example, some employees could be responsible for securing storage bins and others for backing up computer files and delivering copies to a secure location.
• You may want to consider having other offices of your company or a third party service provider perform some administrative duties, such as maintaining payroll records or providing customer service.
• Estimate the cost of repairing or replacing each essential piece of equipment in your business. Your estimates will help you assess your vulnerability and focus your efforts.
• For both insurance and tax purposes, you should maintain written and photographic inventories of all important materials and equipment. The inventory should be stored in a safety deposit box or other secure location.
• Periodically evaluate the building envelope to make sure that wind and water are not able to penetrate the building. Do regular maintenance and repairs to maintain the strength of the building envelope.

For guidelines on developing an emergency action plan to protect your employees and business during a disaster, visit the HR360 section onPlanning for Workplace Emergencies.

Which employers are subject to the new posting requirement?
Private-sector employers whose workplaces fall under the National Labor Relations Act, including both union and non-union workplaces, will be required to post the employee rights notice where other workplace notices are typically posted. Very small employers whose annual volume of business is not large enough to have more than a slight effect on interstate commerce may not be required to comply with the posting requirement, including:

• Certain retail employers with gross annual volume of business under $500,000;
• Certain non-retail employers with direct or indirect annual outflow (goods sold or services provided by the employer out of state) or inflow (goods or services purchased by the employer from out of state) below $50,000; and
• Certain other small employers whose gross annual volume of business meets certain standards as provided in the final rule (see pages 54047-54048).

What information will be included in the notice to employees?
The notice states that employees have the right:

• To act together to improve wages and working conditions;
• To form, join and assist a union;
• To bargain collectively with their employer; and
• To choose not to participate in any of the preceding activities.

The notice also provides examples of unlawful employer and union conduct and instructs employees how to contact the NLRB with questions or complaints.

How can employers obtain the required notice to be posted in the workplace?
The NLRB will provide copies of the notice on request at no cost to employers beginning on or before Nov. 1, 2011. These can be obtained by contacting aNLRB regional office. Employers can also download the notice from the NLRB website (http://www.nlrb.gov/) and print it out in color or black-and-white on one 11-by-17-inch paper or two 8-by-11-inch papers taped together. Translated versions will be available, and must be posted at workplaces where at least 20% of employees are not proficient in English.

What about electronic communication?
In addition to the physical posting, the final rule requires every covered employer to post the notice on an internet or intranet site if personnel rules and policies are customarily posted there. Employers are not required to distribute the posting by email, Twitter or other electronic means.

Can an employer be fined for failing to post the notice?
The NLRB does not have the authority to impose fines. Failure to post the notice may be treated as an unfair labor practice. The NLRB investigates allegations of unfair labor practices made by employees, unions, employers, or other persons, but does not initiate enforcement action on its own.

Where can I find additional information about this new requirement?
The NLRB has provided a fact sheet with further information about the rule that may be viewed by clicking here. You may also read the final rule in its entirety here. Other federal notices required to be displayed in the workplace are featured in the HR360 Federal Poster Requirements section.