If you’ve ever shopped around for insurance, you’ve likely been asked if you want to bundle your policies—in other words, combine your home or renters, auto and life insurance policies with the same carrier. Although you have the option to shop around individually for each policy, it almost always makes sense to have the same carrier cover as many of your policies as possible.
Benefits of Bundling
- The discount—Most policyholders bundle their policies because of the promise of a discount. The amount varies by provider but can generally range between 5-25 percent.
- The option of a single deductible—With bundled policies, your deductible may be cheaper in the event of a claim that affects multiple policies. For example, if your home and auto policies are with two separate carriers, and a hailstorm damages your home and your car, you’re responsible for paying both your home and auto deductibles before receiving payment. But if you bundle your policies, your provider may offer you the option to pay only the higher of the two deductibles.
- Less chance of being dropped—If you’ve made claims or gotten tickets, having your policies bundled with one provider can decrease the chance of them dropping you.
When it Doesn’t Pay to Bundle
It isn’t always better to bundle your policies with one insurance carrier. Here’s when it may be better to split them up:
- If you have tickets or past claims that make your auto insurance expensive—In this case, it may be cheaper overall to buy each policy from separate providers.
- When premiums increase—Bundling discourages people from price shopping, which makes it easier for providers to increase their rates. Most assume that you won’t go through the effort of shopping around when your policies renew.
- If policies aren’t technically bundled—Some carriers may insure you with an affiliated company. Although you may get a discount with that company, you’ll lose the convenience of paying your premium with one familiar provider.
A Few Tips to Consider
Although discounts are the main reason people bundle their insurance policies, never assume that bundling is the cheapest option. Your needs and circumstances will dictate whether you should combine your policies with one carrier. Consider the following tips:
- Shop for new coverage when your policies renew, and ask for the price of the individual premiums as well as the price of the bundled premium so you can decide whether it is worth it. Just make sure you compare the same coverage when shopping for quotes from each carrier.
- Ask if the provider uses a third-party insurance company. Remember that you may save money but lose the convenience of dealing with one provider and a combined bill.
- Ask an independent insurance agent to get prices from multiple companies so you don’t have to do the legwork. An agent that is loyal to a particular carrier may be able to offer discounts that you can’t get alone.
With multiple factors contributing to the price of your insurance premiums, it is important to shop around in order to get the best rate for your insurance needs. Feel free to contact Scurich Insurance to determine if bundling is right for you and help you take advantage of all available discounts.
On Aug. 3, 2018, the Departments of Labor, Health and Human Services (HHS) and the Treasury (Departments) published final regulations amending the definition of short-term, limited-duration insurance for purposes of the Affordable Care Act (ACA). These regulations:
- Provide a maximum coverage period of up to 12 months; and
- Amend the notice to provide additional specificity, including a list of benefits that might not be covered.
In addition, the final regulations allow short-term, limited-duration insurance to continue for up to 36 months in total, taking into account renewals or extensions.
As a result of these final regulations, issuers can now offer short-term, limited-duration insurance policies that last up to 12 months. According to the Departments, this will provide consumers with more affordable options for health coverage.
Short-term, limited-duration insurance is a type of health insurance coverage that is designed to fill temporary gaps in coverage when an individual is transitioning from one plan or coverage to another plan or coverage. Specifically, existing regulations defined short-term, limited-duration insurance as “health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer’s consent) that is less than 12 months after the original effective date of the contract.”
Although short-term, limited-duration insurance is not an excepted benefit, it is specifically exempt from the definition of “individual health insurance coverage” and, therefore, is not subject to the ACA’s market reform requirements. However, the Departments have become aware that short-term, limited-duration insurance is being sold as a primary form of health coverage, in some instances.
2016 Final Regulations
On Oct. 31, 2016, the Departments published final regulations revising the definition of short-term, limited-duration insurance for purposes of the exclusion from the definition of individual health insurance coverage. Under this revised definition, short-term, limited-duration insurance coverage was required to be less than three months in duration, including any period for which the policy may be renewed. The final regulations eliminated the ability for the coverage period to take into account extensions made by the policyholder “with or without the issuer’s consent.”
In addition, a notice must be prominently displayed in the contract and in any application materials provided in connection with enrollment in short-term, limited-duration insurance coverage with the following language:
THIS IS NOT QUALIFYING HEALTH COVERAGE (“MINIMUM ESSENTIAL COVERAGE”) THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON’T HAVE MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.
The revised definition of short-term, limited-duration insurance applied for policy years beginning on or after Jan. 1, 2017. However, HHS stated that it would not take enforcement action against an issuer with respect to the sale of short-term, limited-duration insurance before April 1, 2017, on the ground that the coverage period is three months or more, provided that the coverage:
- Ends on or before Dec. 31, 2017; and
- Otherwise complies with the definition of short-term, limited-duration insurance in effect under the final regulations.
States were also permitted to elect not to take enforcement actions against issuers with respect to this type of coverage sold before April 1, 2017.
2018 Final Regulations
Following the 2016 final regulations, there was concern that shortening the permitted length of short-term, limited-duration insurance would drastically reduce affordable coverage options for consumers. As a result, the Departments issued the 2018 final regulations to lengthen the maximum period of short-term, limited-duration insurance, in an effort to provide more affordable consumer choice for health coverage.
These final regulations were issued as a result of the following recent developments:
- On Oct. 12, 2017, President Donald Trump issued Executive Order 13813, which directed the Departments to consider proposing regulations or revising guidance to expand the availability of short-term, limited-duration insurance by allowing it to cover longer periods and be renewed.
- On Dec. 22, 2017, President Trump signed a tax reform bill, called the Tax Cuts and Jobs Act, into law, which reduces the ACA’s individual mandate penalty to zero, effective beginning in 2019.
In light of these developments, the final regulations amended the definition of short-term, limited-duration insurance so that it may offer a maximum coverage period of less than 12 months after the original effective date of the contract, consistent with the original definition (that is, the final rule expanded the potential maximum coverage period by nine months). Under this definition, the expiration date specified in the contract takes into account any extensions that may be elected by the policyholder without the issuer’s consent, provided that it has a duration of no longer than 36 months in total (taking into account renewals or extensions).
In addition, the final rule revised the required notice that must appear in the contract and any application materials, due to concern that short-term, limited-duration insurance policies lasting almost 12 months may be more difficult to distinguish from ACA-compliant coverage (which is typically offered on a 12-month basis). Accordingly, one of two versions of the following notice must be prominently displayed (in at least 14-point type) in the contract and in any application materials provided in connection with enrollment:
This coverage is not required to comply with certain federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of pre-existing conditions or health benefits (such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services).
Your policy might also have lifetime and/or annual dollar limits on health benefits. If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage. Also, this coverage is not “minimum essential coverage.” If you don’t have minimum essential coverage for any month in 2018, you may have to make a payment when you file your tax return unless you qualify for an exemption from the requirement that you have health coverage for that month.
Due to the elimination of the individual mandate penalty beginning in 2019, the final two sentences of the notice are only required to be included with respect to policies that have a coverage start date before Jan. 1, 2019.
The notice should be in sentence case (rather than all capital letters), and may contain any additional information, as required by applicable state law.
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, 2019. Employers should review their plan documents to confirm that they include these required changes.
In addition, any changes to a health plan’s benefits for the 2019 plan year should be communicated to plan participants through an updated summary plan description (SPD) or a summary of material modifications (SMM).
Health plan sponsors should also confirm that their open enrollment materials contain certain required participant notices, when applicable—for example, the summary of benefits and coverage (SBC). There are also some participant notices that must be provided annually or upon initial enrollment. To minimize costs and streamline administration, employers should consider including these notices in their open enrollment materials.
Grandfathered Plan Status
A grandfathered plan is one that was in existence when the Affordable Care Act (ACA) was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered.
- If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2019 plan year. Grandfathered plans are exempt from some of the ACA’s requirements. A grandfathered plan’s status will affect its compliance obligations from year to year. If your plan will maintain its grandfathered status, make sure you provide the notice of grandfathered status in your open enrollment materials. See the “ACA Disclosure Requirements” section below for more information on this notice.
- If your plan will lose its grandfathered status for 2019, confirm that the plan has all of the additional patient rights and benefits required by the ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.
ACA Affordability Standard
Under the ACA’s employer shared responsibility rules, applicable large employers (ALEs) are required to offer affordable, minimum value health coverage to their full-time employees (and dependent children) or risk paying a penalty. These employer shared responsibility requirements are also known as the “employer mandate” or “pay or play” rules.
Under the ACA, an ALE’s health coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5 percent of the employee’s household income for the taxable year (as adjusted each year). The adjusted percentage is 9.56 percent for 2018.
For plan years that begin on or after Jan. 1, 2019, the affordability percentage is 9.86 percent. This means that employer-sponsored coverage for the 2019 plan year will be considered affordable under the employer shared responsibility rules if the employee’s required contribution for self-only coverage does not exceed 9.86 percent of the employee’s household income for the tax year.
- If you are an ALE, confirm that at least one of the health plans offered to full-time employees (and their dependent children) satisfies the ACA’s affordability standard (9.86 percent for 2019 plan years). Because the affordability percentage significantly increases from 2018, employers may have additional flexibility to increase the employee share of the premium while still avoiding a penalty under the pay or play rules.
Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost sharing for essential health benefits (EHB). The ACA’s out-of-pocket maximum applies to all non-grandfathered group health plans, including self-insured health plans and insured plans.
The annual limit on total enrollee cost sharing for EHB for plan years beginning on or after Jan. 1, 2019, is $7,900 for self-only coverage and $15,800 for family coverage.
- Review your plan’s out-of-pocket maximum to make sure it complies with the ACA’s limits for the 2019 plan year ($7,900 for self-only coverage and $15,800 for family coverage).
- If you have a high deductible health plan (HDHP) that is compatible with a health savings account (HSA), keep in mind that your plan’s out-of-pocket maximum must be lower than the ACA’s limit. For 2019 plan years, the out-of-pocket maximum limit for HDHPs is $6,750 for self-only coverage and $13,500 for family coverage.
- If your plan uses multiple service providers to administer benefits, confirm that the plan coordinates all claims for EHB across the plan’s service providers or divides the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum for 2019.
Preventive Care Benefits
The ACA requires non-grandfathered health plans to cover certain preventive health services without imposing cost-sharing requirements (that is, deductibles, copayments or coinsurance) for the services. Health plans are required to adjust their first-dollar coverage of preventive care services based on the latest preventive care recommendations. If you have a non-grandfathered plan, you should confirm that your plan covers the latest recommended preventive care services without imposing any cost sharing.
More information on the recommended preventive care services is available through the U.S. Preventive Services Task Force and www.HealthCare.gov.
Health FSA Contributions
The ACA imposes a dollar limit on employees’ salary reduction contributions to a health flexible spending account (FSA) offered under a cafeteria plan. An employer may impose its own dollar limit on employees’ salary reduction contributions to a health FSA, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year.
The ACA’s limit on employees’ pre-tax health FSA contributions first became effective for plan years beginning on or after Jan. 1, 2013. The ACA set the health FSA contribution limit at $2,500. For years after 2013, the dollar limit is indexed for cost-of-living adjustments. For 2018 plan years, the health FSA limit is $2,650. The IRS has not yet announced the health FSA limit for 2019 plan years.
- Monitor IRS guidance for the health FSA limit for 2019 plan years.
- Once the 2019 health FSA limit is announced, confirm that your health FSA will not allow employees to make pre-tax contributions in excess of that limit.
- Communicate the health FSA limit to employees as part of the open enrollment process.
HDHP and HSA Limits for 2019
If you offer an HDHP to your employees that is compatible with an HSA, you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2019 limits. The IRS limits for HSA contributions and HDHP cost-sharing increase for 2019. The HSA contribution limits will increase effective Jan. 1, 2019, while the HDHP limits will increase effective for plan years beginning on or after Jan. 1, 2019.
- Check whether your HDHP’s cost-sharing limits need to be adjusted for the 2019 limits.
- If you communicate the HSA contribution limits to employees as part of the enrollment process, these enrollment materials should be updated to reflect the increased limits that apply for 2019.
The following table contains the HDHP and HSA limits for 2019 as compared to 2018. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.
Type of Limit
|HSA Contribution Limit
|| Up $50
|HSA Catch-up Contributions (not subject to adjustment for inflation)
||Age 55 or older
|HDHP Minimum Deductible
|HDHP Maximum Out-of-pocket Expense Limit (deductibles, copayments and other amounts, but not premiums)
Summary of Benefits and Coverage
The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including those who are newly eligible for coverage and special enrollees).
The SBC template and related materials are available from the Department of Labor (DOL).
- In connection with a plan’s 2019 open enrollment period, the SBC should be included with the plan’s application materials. If coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.
- For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should confirm that your health insurance issuer will assume responsibility for providing the SBCs. Please contact your representative at Scurich Insurance for assistance.
Grandfathered Plan Notice
If you have a grandfathered plan, make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as SPDs and open enrollment materials. Model language is available from the DOL.
Notice of Patient Protections
Under the ACA, non-grandfathered group health plans and issuers that require designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Also, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for obstetrical/gynecological care.
If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant. If your plan is subject to this notice requirement, you should confirm that it is included in the plan’s open enrollment materials. Model language is available from the DOL.
Group health plan sponsors should consider including the following enrollment and annual notices with the plan’s open enrollment materials.
Initial COBRA Notice
The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers with 20 or more employees that sponsor group health plans. Group health plan administrators must provide an initial COBRA notice to new participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD. A model initial COBRA notice is available from the DOL.
Notice of HIPAA Special Enrollment Rights
At or prior to the time of enrollment, a group health plan must provide each eligible employee with a notice of his or her special enrollment rights under the Health Insurance Portability and Accountability Act (HIPAA). This notice may be included in the plan’s SPD.
Summary Plan Description
Plan administrators must provide an SPD to new participants within 90 days after plan coverage begins. Any changes that are made to the plan should be reflected in an updated SPD booklet or described to participants through an SMM. Also, an updated SPD must be furnished every five years if changes are made to SPD information or if the plan is amended. Otherwise, a new SPD must be provided every 10 years.
HIPAA Privacy Notice
The HIPAA Privacy Rule requires covered entities (including group health plans and issuers) to provide a Notice of Privacy Practices (or Privacy Notice) to each individual who is the subject of protected health information (PHI). Health plans are required to send the Privacy Notice at certain times, including to new enrollees at the time of enrollment. Also, at least once every three years, health plans must either redistribute the Privacy Notice or notify participants that the Privacy Notice is available and explain how to obtain a copy.
Self-insured health plans are required to maintain and provide their own Privacy Notices. Special rules, however, apply for fully insured plans. Under these rules, the health insurance issuer, and not the health plan itself, is primarily responsible for the Privacy Notice.
||Must maintain and provide their own Privacy Notices
||Fully insured plans
||Health insurance issuers have primary responsibility for Privacy Notices
Special Rules for Fully Insured Plans
: The plan sponsor of a fully insured health plan has limited responsibilities with respect to the Privacy Notice.
- If the sponsor of a fully insured plan has access to PHI for plan administrative functions, it is required to maintain a Privacy Notice and to provide the notice upon request.
- If the sponsor of a fully insured plan does not have access to PHI for plan administrative functions, it is not required to maintain or provide a Privacy Notice.
A plan sponsor’s access to enrollment information, summary health information and PHI that is released pursuant to a HIPAA authorization does not qualify as having access to PHI for plan administration purposes.
Model Privacy Notices are available through the Department of Health and Human Services.
Annual CHIPRA Notice
Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual notice about the available assistance to all employees residing in that state. The DOL has provided a model notice.
Plans and issuers must provide notice of participants’ rights to mastectomy-related benefits under the Women’s Health and Cancer Rights Act (WHCRA) at the time of enrollment and on an annual basis. Model language for this disclosure is available on the DOL’s website.
Medicare Part D Notices
Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals as to whether or not their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the plan and each year before Oct. 15 (when the Medicare annual open enrollment period begins). Model notices are available on the Centers for Medicare and Medicaid Services’ website.
Summary Annual Report
Plan administrators that are required to file a Form 5500 must provide participants with a narrative summary of the information in the Form 5500, called a summary annual report (SAR). Group health plans that are unfunded (that is, benefits are payable from the employer’s general assets and not through an insurance policy or trust) are not subject to the SAR requirement. The plan administrator generally must provide the SAR within nine months of the close of the plan year. If an extension of time to file the Form 5500 is obtained, the plan administrator must furnish the SAR within two months after the close of the extension period.
Michelle’s Law Notice
Group health plans that condition dependent eligibility on a child’s full-time student status must provide a notice of the requirements of Michelle’s Law in any materials describing a requirement for certifying student status for plan coverage. Under Michelle’s Law, a plan cannot terminate a child’s coverage for loss of full-time student status if the change in status is due to a medically necessary leave of absence. Due to the ACA’s age 26 mandate for dependent coverage, most health plans no longer condition dependent eligibility on full-time student status and, thus, are not subject to Michelle’s Law.
HIPAA Opt-out for Self-funded, Nonfederal Governmental Plans
Sponsors of self-funded, nonfederal governmental plans may opt out of certain federal mandates, such as the mental health parity requirements and the WHCRA coverage requirements. Under an opt-out election, the plan must provide a notice to enrollees regarding the election. The notice must be provided annually and at the time of enrollment. Model language for this notice is available for sponsors to use.
Wellness Program Notices
Group health plans that include wellness programs may be required to provide certain notices regarding the program’s design. As a general rule, these notices should be provided when the wellness program is communicated to employees and before employees provide any health-related information or undergo medical examinations.
- HIPAA Wellness Program Notice—HIPAA imposes a notice requirement on health-contingent wellness programs that are offered under group health plans. Health-contingent wellness plans require individuals to satisfy standards related to health factors (for example, not smoking) in order to obtain rewards. The notice must disclose the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the otherwise applicable standard) in all plan materials describing the terms of a health-contingent wellness program. Final regulations provide sample language that can be used to satisfy this requirement.
- ADA Wellness Program Notice—Employers with 15 or more employees are subject to the Americans with Disabilities Act (ADA). Wellness programs that include health-related questions or medical examinations must comply with the ADA’s requirements, including an employee notice requirement. Employers must give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared and for what purpose, the limits on disclosure and the way information will be kept confidential. The Equal Employment Opportunity Commission (EEOC) has provided a sample notice to help employers comply with this ADA requirement.