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To learn more about the Affordable Care Act

FAQs

If you have questions about the Affordable Care Act, you're not alone. TriNet has compiled some of the questions we get asked most frequently, along with answers, to help you better understand the impact.

Nondiscrimination Testing Regulations

Since the Affordable Care Act’s (ACA) nondiscrimination testing regulations aren’t yet published and their requirements are unknown, your organization doesn’t need to make changes at this time. You may set up different funding strategies for different worksite employee groups. TriNet is monitoring the regulations and will provide updates as soon as regulations are released to help you make the right benefits funding strategy decisions.
Yes. It’s possible the separate worksite employee classes/funding strategies you choose now may have to change during the 2012-2013 benefits plan year. This could happen only if the nondiscrimination regulations are published and require an effective date prior to the start of the 2013-2014 plan year, October 1, 2013. If this happens, TriNet will permit clients to submit new benefits funding strategies during a special Business Investment Strategy (BIS) period. Worksite employees whose premium deductions increase would then be given a limited Open Enrollment period as well.

Grandfathered Plans

A grandfathered plan is any group health plan or individual coverage that was in effect on March 23, 2010. A grandfathered plan can make some generally small, inflation-adjusting changes and still maintain grandfathered status. However, larger plan changes cause the plan to lose grandfathered status.

Grandfathered health plans are allowed temporary or permanent delays in compliance with some of the reform provisions in the ACA. Only one of TriNet’s health plans has grandfathered status, and that is the Core CIGNA International Plan.
Yes. TriNet and our insurance carriers designed the plans to meet the ACA requirements effective beginning on October 1, 2010. Worksite employees benefit from the changes that were implemented to comply with the ACA, such as 100% coverage of preventive health services, changes to the appeals process, and various patient protections, including coverage of emergency services and access to pediatric, obstetrical, and gynecological care.

W-2 Requirements

For the 2012 tax year, TriNet will report the total cost of company-sponsored health coverage on worksite employees’ W-2 forms; this amount will include both the company’s and the worksite employee’s contributions. The 2012 tax year W-2 will be issued in January 2013.
No. The total cost of company-sponsored health coverage will appear on worksite employees’ W-2 statements, but they will not be taxed on this amount.

MLR Requirements

A Medical Loss Ratio, or MLR, refers to the percentage of premium dollars that an insurance company spends on providing enrollees with health care and improving the quality of your care, versus how much is spent on administrative and overhead costs, including salaries or bonuses.

As part of the Affordable Care Act, Congress set MLR benchmarks for insurers to require that premium dollars are being spent appropriately. The MLR requirements set forth in the law requires health insurance companies to spend 80 to 85 percent of health care insurance premiums on healthcare versus administrative and overhead costs. The MLR requirement is calculated on a state by state basis. If an insurance company fails to meet the requirement for a calendar year, it will have to issue rebates by August 1st of the following calendar year to policyholders or subscribers to cover the shortfall.

Health insurance carriers must notify policyholders if they have fallen short of the MLR requirements and will be issuing rebates. TriNet will monitor the various insurance carriers providing coverage under the TriNet group health plan to ensure that the appropriate MLR requirements were satisfied. If not, TriNet will ensure that appropriate rebates are issued and used in accordance with applicable law, including ERISA and Department of Labor regulatory guidance. The rebate, if any, will either be used to reduce premium for the upcoming year or provided as a cash rebate to enrollees that are covered by the medical insurance on which the rebate is based.
The insurance carrier will send notification to participants in the TriNet group health plan only if it does not meet the MLR requirements. The notice for the 2011 calendar year will be sent no later than August 1, 2012. Enrollees will be directed to contact TriNet if they have any questions about how the rebate will be used.

If the insurance carrier meets or exceeds the MLR requirement, a notice will be included in the 2012-2013 benefits plan year certificate of coverage. Separate notification will not be sent directly to a participant if the carrier meets or exceeds the MLR requirement.

Waiting Period Limitation

Group health plans and insurers are prohibited from applying a waiting period that exceeds 90 days effective for plan years beginning on or after January 1, 2014. Government agencies have issued temporary guidance on how to comply with the waiting period requirement that will remain in effect until at least the end of 2014.
A waiting period is defined as the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective. The 90 day limit applies only to eligibility conditions that are based solely on the lapse of a time period. Other eligibility requirements, such as requiring an employee to be regularly scheduled to work a minimum number of hours, are permitted as long as they are not designed to avoid compliance with the 90 day waiting period limitation.
The temporary guidance did not specifically address how the 90 day limit would apply to plans that begin coverage on the first of the month following a waiting period. Therefore, in order to comply with the ACA, plans that use a first of the month requirement will need to ensure that the total waiting period for any employee that otherwise meets eligibility conditions will not exceed 90 days.
Yes. If your company is required to adjust its waiting period, TriNet will notify you during the Benefits Investment Strategy phase for the first plan year beginning on or after January 1, 2014.

Additional Medicare Tax

One of the ACA's provisions requires an additional Medicare payroll tax. This additional Medicare tax applies to an individual's wages and compensation above the threshold amounts below (together with those of a spouse if filing a joint return) received after December 31, 2012.
Filing Status Threshold Amount
Married Filing Jointly $250,000
Married Filing Separately $125,000
Single $200,000
Head of Household (with qualifying person) $200,000
Qualifying Widow(er) with dependent child $200,000
The rate is 0.9 percent, which is paid by the worksite employee. There is no "employer match" for the additional Medicare tax.
All types of wages that are currently subject to the existing Medicare tax are subject to the additional Medicare tax, only if they exceed the ACA-defined threshold (below) for an individual's filing status.
Filing Status Threshold Amount
Married Filing Jointly $250,000
Married Filing Separately $125,000
Single $200,000
Head of Household (with qualifying person) $200,000
Qualifying Widow(er) with dependent child $200,000
Yes, TriNet is required to withhold the additional Medicare tax from wages paid to any worksite employee in excess of $200,000 in a calendar year, without regard to the individual's filing status or wages paid by another company. An individual may owe more than the amount withheld by the TriNet, depending on the individual’s filing status, wages paid by another employer, compensation, and self-employment income.
No. Regulations require TriNet to withhold the additional Medicare tax on wages it pays to any worksite employee in excess of $200,000 in a calendar year. Worksite employees in this situation should consult with their tax advisors to determine if they can claim credit for any withheld additional Medicare tax against the total tax liability shown on their individual income tax returns (Form 1040).

General

As the plan sponsor, TriNet is required to provide all worksite employee communications required by ACA regulations. This is a burden you don’t have to worry about because you partner with TriNet.
Worksite employees have already received notification of certain ACA benefits plan changes, including coverage for adult children up to age 26, no lifetime limits on the value of benefits, new health care FSA reimbursement requirements for over-the-counter drug and medication purchases, and PCP designations. These notices, as well as additional ACA information, are included in the TriNet Benefits Guidebook and Summary Plan Description. To access TriNet’s Benefits Guidebook, sign on to HR Passport® and go to: Myself > My Benefits > Summary Plan Description.

TriNet and our insurance carriers will distribute a four page Summary of Benefits Coverage (SBC) and Uniform Glossary to worksite employees in accordance with the final regulations published in February 2012. The SBC and Uniform Glossary are designed to aid employees in making better health care decisions.

The SBC and Uniform Glossary will be distributed to:
  • participants and beneficiaries that are newly eligible for coverage beginning on the first day of the first plan year that begins on or after September 23, 2012 (TriNet benefits plan year beginning October 1, 2012), and
  • participants and beneficiaries before the first day of the first open enrollment period that begins on or after September 23, 2012.
Effective January 1, 2018, the "Cadillac tax" is an excise tax that will be imposed on plans (or administrators of self-funded plans) on the value of coverage exceeding thresholds of $10,200 per year for single coverage and $27,500 per year for family coverage. The thresholds will be indexed for inflation.

Amounts potentially subject to the excise tax include medical plans, amounts in flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) and company contributions to health savings accounts (HSAs). Dental, vision, life and disability insurance plans are excluded from the calculations.