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To prepare for open enrollment, group health plan sponsors should be aware of the legal changes affecting the design and administration of their plans for plan years beginning on or after Jan. 1, 2021.
There are a variety of plan design changes to be aware of for plan years beginning on or after Jan. 1, 2021, including:
Contact Employers Select Insurance Services for more information about plan changes for the 2021 plan year.
Changes to a health plan’s benefits for the 2021 plan year should be communicated to eligible employees in advance of open enrollment. Plan participants may also need to be informed of some changes through an updated summary plan description or a summary of material modifications.
Employers that 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 summary of benefits and coverage (SBC).
Other notices, such as the Women’s Health and Cancer Rights Act (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.
Below is a list that summarizes the applicability of the benefits notices employers should provide. Note, the following chart is not exhaustive and only includes the notice title and its applicability.
For more details about a specific benefits notice or its requirements, speak with Employers Select Insurance Services.
The ACA requires applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees or pay a penalty.
This employer mandate provision is also known as the “employer shared responsibility” or “pay or play” rules.
The IRS recently updated its frequently asked questions (FAQs) on the pay or play penalties to include increased penalty amounts for the 2021 calendar year.
Two separate penalties can apply under the employer shared responsibility rules—the Section 4980H(a) penalty and the Section 4980H(b) penalty.
After 2014, the applicable per- employee dollar amounts of $2,000 and $3,000 are increased based on the premium adjustment percentage for the year. According to the IRS’ FAQs, for the 2021 calendar year, the adjusted $2,000 amount is $2,700, and the adjusted $3,000 amount is $4,060.
The IRS recently issued Revenue Procedure 2020-36 to index the contribution percentages in 2021 for determining affordability of an employer’s plan under the ACA.
Under the ACA, the affordability of an employer’s plan may be assessed in the following three contexts:
Although all of these provisions involve an affordability determination, the test for determining a plan’s affordability varies for each provision.
Further, although the individual mandate penalty no longer applies, some individuals may still need to seek this exemption for other purposes, such as eligibility for catastrophic coverage.
For plan years beginning in 2021, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:
The updated affordability percentages are effective for taxable years and plan years beginning Jan. 1, 2021. This is a slight increase from the affordability contribution percentages for 2020. As a result, some employers may have additional flexibility in setting their employee contributions for 2021 to meet the adjusted percentage.