CONEXIS is one of the nation’s oldest and most trusted employee benefits administrators. We’ve been providing fully compliant administration services to employers nationwide since 1986. Today, we are proud to serve more than 25,000 organizations, ranging from small businesses to many of the nation’s largest employers.
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LETTER FROM THE EDITOR
Since our last issue, we have seen a flurry of news, trends, and compliance changes in the industry, many of which are discussed here. We couldn’t begin any discussion of health care benefits without mentioning the Supreme Court’s landmark decision upholding most of the Affordable Care Act (ACA). The decision to keep most of the Act’s provisions in place – with the exception of the state Medicaid provision – caught many people by surprise. The responsibility now lies with employers to implement all aspects of health care reform before the cutoff dates. Our lead feature discusses this in further detail.
Also in Compliance Corner, we summarize two recent IRS notices. The first provided long-overdue clarifications and guidance for health flexible spending accounts (FSAs) in the 2013 plan year. The other outlined 2013 inflation-adjusted amounts for health savings accounts (HSAs).
In News and Trends, we take a look at the growing trend of private exchanges, which will undoubtedly get even greater attention now with the Supreme Court’s ruling on health care. We also provide some important tips for retirement readiness.
Finally, we spotlight several new features within CONEXIS in Behind the Scenes. Read about the advanced measures CONEXIS uses to ensure privacy and security in encrypted email, the new enhancements we’ve made to our client and participant websites, and our Participant Advocacy Program. This program has had a dramatic effect on both our participant and CONEXIS employee satisfaction.
Until next time, thanks for reading.
Jason Culp Assistant Vice President of Marketing and Sales Operations
Affordable Care Act Mostly Upheld In a landmark ruling, the Supreme Court voted late last month to uphold most of the Affordable Care Act (ACA), including the individual mandate requiring all Americans to obtain health insurance or pay a penalty – setting off a chain reaction that is being felt throughout the benefits industry. The Court’s decision basically means business as usual for employers who need to take immediate action to comply with upcoming mandates.
Immediate Action Required With new urgency to implement health care reform changes before the cutoff dates, employers are urged to familiarize themselves with the provisions and requirements, if they have not already done so, and begin making the necessary changes required by 2014. Immediate attention should be given to:
Amend plans to comply with additional women’s preventive coverage requirements; effective on or after August 1, 2012.
Finalize summary of benefits and coverage for open enrollment periods beginning on or after September 23, 2012.
Amend health FSA plans to limit salary reductions to $2,500 for plan years beginning on or after January 2013; see our recent Compliance Flash for guidance.
Report value of health plan coverage on 2012 W-2s issued in January 2013.
Analyze comparative effectiveness research (CER) fee calculation methods; payable July 31, 2013 on average covered lives in 2012.
State Medicaid Expansion The Supreme Court also addressed the ACA’s provisions related to state Medicaid expansion to cover all people below a certain income level, and all but two justices concluded that the threatened loss of all federal Medicaid funding for program expansion violated the Spending Clause of the U.S. Constitution and exceeded federal authority. This ruling is significant and is the first time that a statute was held to be unconstitutional under the Spending Clause.
However, the Court noted that new federal funds could be withheld from states that do not expand their Medicaid program beyond coverage for the elderly, blind, pregnant women, and children; states just cannot lose federal funds currently received. Withholding future federal funds can impact the future of the Medicaid program and will require additional investigation. The Court’s decision may also have extensive impact on state and federal budgets as well as Medicare and Medicaid reimbursements.
Health Insurance Exchanges The time frame for having state-run exchanges is approaching quickly. Currently, 14 states and the District of Columbia have created a state exchange. States have until November 16, 2012 to submit plans to implement an exchange or exchange partnership for the 2014 coverage year.
Maximum Health FSA Elections in 2013 The IRS recently released Notice 2012-40 , which provided important clarifications and guidance related to maximum elections for health flexible spending accounts (FSAs) that become effective on January 1, 2013.
Taxable Year Definition A taxable year in Internal Revenue Code Section 125(i) refers to the plan year of the cafeteria plan. The elected health FSA salary reductions apply for this period.
Compliance with the $2,500 Salary Reduction Limit The $2,500 limit on health FSA salary reduction contributions applies on a plan year basis. Employers offering health FSA plans must take action and adopt the required cafeteria plan amendments to reflect the $2,500 limit. This can be done at any time through the end of calendar year 2014; however, the plan must operate as if the $2,500 cap is in effect for the 2013 plan year.
Relief for Contribution Mistakes For certain salary reduction contributions over the $2,500 limit, relief is available if due to a reasonable mistake and not intentional neglect. If applicable, the employer (or the employer’s agent) must address and correct the mistake.
Use-it-or-lose-it Rule Comments The Treasury Department and the IRS are considering modifications to the use-it-or-lose-it rule for health FSAs that currently requires leftover funds to be forfeited at the end of the plan year. A request for comments has been released to gather input regarding potential changes that would provide additional flexibility for unused funds. Comments must be submitted to the IRS by August 17, 2012 and should include reference to Notice 2012-40.
Please review Notice 2012-40 on the IRS website for further guidance. Within the Notice, you can also find the submission details for use-it-or-lose-it comments.
IRS Notice Outlines Inflation-adjusted Amounts for 2013 HSAs Earlier this year, the IRS released Rev. Proc. 2012-26 that outlined the 2013 inflation-adjusted amounts for health savings accounts (HSAs) as determined under Internal Revenue Code Section 223. HSA contribution limits, high deductible health plan (HDHP) out-of-pocket maximums, and HDHP minimum required deductibles for the 2013 calendar year all increased.
The maximum annual contribution limit for individuals rose from $3,100 in 2012 to $3,250 in 2013; family coverage jumped from $6,250 to $6,450. HDHP minimum annual deductibles went from $1,200 to $1,250 for individual coverage and $2,400 to $2,500 for family coverage. The maximum out-of-pocket amounts increased from $6,050 to $6,250 for individual and $12,100 to $12,500 for family coverage.
Private Health Insurance Exchanges Growing According to a recent study conducted by J.D. Power and Associates, interest in private insurance exchanges is strong and growing. Survey results showed about 40 percent of employees in a group health plan would use this approach to find coverage.
Public vs. Private Public exchanges will offer federally funded health coverage under the Affordable Care Act, and states must begin operating public exchanges on January 1, 2014. Private companies (i.e., third party administrators or carriers) run private exchanges. Both exchanges create a marketplace where individuals can choose the plan that is right for them.
Private Exchange Potential The potential for customizable plan offerings and improved service is driving the growth of private exchanges – a growth that industry experts predict may signal a shift away from more traditional health insurance models to defined contribution plans.
Getting Retirement Ready With health care costs continuing to rise and baby boomers approaching that magic age, retirement preparation is top of mind for many Americans. Yet recent findings, as noted by Nationwide Financial’s Healthcare Costs in Retirement Consumer Study, reveal boomers are largely unprepared for retirement, uninformed about expenses, and unaware of the resources available to them.
By the Numbers Nearly half of working Americans have no retirement plan at all, the poll found. In fact, 73 percent of those nearing retirement age estimated their health care costs during retirement at $5,600 per year when the national average in 2011 was almost double that at $10,750.
You Can Help Introducing clients and participants to the advantages of FSAs and HSAs has benefits for both employers and their employees.
Dependent Care FSA: With this FSA, employees can offset some costs of taking care of dependent ailing parents (e.g., to pay for adult day care of dependent adults who live in their home for at least eight hours each day, and whom they can claim as a dependent on their income taxes). Employees increase their take-home pay because their contributions are tax-free, which can lower both their tax bracket and income tax. Employers then save money thanks to reduced FICA and FUTA taxes.
Health Savings Accounts (HSA): These accounts let employees pay for eligible health care expenses, including doctor visits and premiums, using tax-free dollars. But perhaps the greatest benefit of an HSA is the potential growth. Tax-free contributions, investment options, and “catch-up” contributions starting at age 55 can grow quite a nest egg, so HSA funds are available for medical expenses during retirement. For employers, HSAs can mean reduced premiums and payroll taxes. Plus, any contributions they make to employees’ accounts are excluded from FICA, unemployment, and workers’ compensation taxes.
Please note: FSA and HSA contributions are deducted before federal and most state taxes. Savings vary depending on the tax bracket. Employees are advised to check with their tax advisor for details regarding their state taxes and potential tax savings.
BEHIND THE SCENES
Ouida Peterson Receives Prestigious Honor Ouida Peterson, our Vice President of Education who passed away late last year, was honored recently by the National Association of Health Underwriters (NAHU) with their most prestigious award. The Harold R. Gordon Award, which recognizes the industry’s Person of the Year, was presented posthumously to Ouida at the NAHU Annual Convention in Las Vegas. The award was accepted by Ouida’s mother and aunt.
In addition to her post at CONEXIS, Ouida was an award-winning speaker who led more than 1,200 seminars, webinars, and continuing education classes during her career, as well as a charter board member of NAHU’s Education Foundation.
TLS Email Encryption Offers Streamlined Security One of the elements that sets CONEXIS apart is our commitment to security and privacy. The company offers security measures that meet and many times exceed industry requirements, and we’re always looking for ways to further improve the security and service to our broker partners, clients, and participants.
Email Encryption Sophisticated security processes, such as border gateway email encryption and secure envelopes for message retrieval, maintain security within the CONEXIS email system. Last year, the company introduced Cisco IronPort TLS, an industry-leading email encryption program. One of the advantages to using TLS is that emails are automatically encrypted, which eliminates the need for any secondary decryption methods. This streamlines the email process while maintaining privacy and security for the sender and receiver. Learn more by contacting your CONEXIS representative.
CONEXIS Participant Advocacy Program Sets a New Standard Walk through the CONEXIS call center, and you will find lots of smiling faces. Ask a participant about their phone call experience, and you will more than likely hear a glowing review. If that’s not what you would typically expect from a call center, well … that’s exactly the point.
CONEXIS has always made great customer service a priority, but recent changes have raised the bar even higher. Using the principles of advocacy, Dee Dee Clough, assistant vice president of our participant services department, began to change the culture of the call center shortly after joining the company in 2010.
“The advocacy program was designed so that our participant services advocates (PSAs) can provide the highest level of customer service while empowering and educating the participant along the way,” said Dee Dee. “When the participant ends the call with our PSA, we want them to be better educated on their plan and know that CONEXIS is here if they ever need us again. The program has been very successful based on the feedback received. I’m extremely proud of the way the call center has embraced this philosophy and the partnership we’ve forged with our internal training department. We have a solid foundation for continued growth.”
In less than six months, Dee Dee’s call center team exceeded their expected service goals across the board and increased quality by 10 percent. Call center supervisors also report a 35 percent decrease in the number of call escalations to management after advocacy training.
New CONEXIS Website Enhancements Staying in the loop with CONEXIS is easier than ever with the changes we’ve made to our secure client and participant websites. Clients and participants now receive emails when they submit support requests through our websites and after their issues have been resolved.
Client Website Changes The streamlined case management process on the client website makes entering cases a breeze. Now clients can easily select a product category and the reason for their inquiry by logging in to their secure website.
Participant Website Changes The new Message Center on our participant website makes it easy to find the status of support requests and get CONEXIS contact information. Participants can access the Message Center by logging in to their online account at mybenefits.conexis.com.