Open enrollment for individual health plans will soon be upon us. However, folks that are already enrolled need to pay attention to their accounts now.
When consumers originally filled out their application, they chose to allow Covered California to verify their income electronically using their federal tax return information from the Internal Revenue Service (IRS) – This is called Consent for Verification. Consumers could authorize Covered California to electronically verify their income for a period of Zero (0) to Five (5) years. It allows Covered California to apply the Advanced Premium Tax Credit (APTC or subsidy) and Cost Sharing Reductions (CSR) to their annual renewal without the consumer having to take any action.
Consumers may not remember what authorization they gave, so it’s important to review their status. Note that consumers who did not authorize Covered California to electronically verify income and household size for 2016 were sent letters requesting their consent, but may not have acted as yet.
They were told that it is needed by September 30, 2015 in order to accurately complete the renewal. If this is not done by the deadline, premium assistance or cost sharing reductions will end on the last day of 2015. The health plan will then be renewed, but with no financial assistance. Consumers may be automatically re-enrolled for 2016 coverage if their plan is still available.
In order to check status, Covered CA advises consumers to follow these steps:
- Log in to your account on www.CoveredCA.com
- Locate the “ACTIONS” section of the webpage (on the right)
- Click on the “Update Consent for Verification” link
- Click on the drop down menu to choose the number of years (up to 5 years) to allow Covered California to check your household income
- Click the “Update” button on the bottom of the webpage to submit your choice
It is the consumer’s responsibility to complete this task, not the broker or certified enrollment assistant. We have been very clear about advising our clients that while we are here to help, we simply do not have the resources to manage the Covered CA account. In fact, now is a good time for everyone to login and make sure the user name and password is still valid. Once open enrollment starts, it’s likely that there will be issues with access to representatives to reset those access points.
September is also important for business that want to take advantage of the Safe Harbor 40lk Plan for 2015. These plans must be adopted no later than September 30, 2015 to get the tax advantage for 2015. The highlights of these plans are as follows:
- Eliminates the burden of restrictive discrimination testing.
- Allows all participants to contribute up to the maximum annual deferral limit ($18,000), plus “catch up” ($6,000) contributions for employees age 50 and over.
- Allows additional matching and/or profit sharing contributions.
- Requires a flat contribution of 3% of pay or a 100% match on salary deferrals up to 4% of pay.
- Vesting of required contributions is 100% immediately.
- Allocation of additional profit sharing may be customized to benefit owners and/or select groups of employees.
When we first instituted our Safe Harbor 40lk plan at my firm, it was a big step. But in reviewing the numbers I saw that I could put away the amounts I needed for my own retirement and the tax savings allowed me to fund the contributions for my staff. That may sound a little greedy, but it really was a win-win deal. At the risk of sounding unpatriotic, I would much rather give the money to my staff than the IRS. A good design can make this work well for everyone- in the right circumstances. We have set up several plans for firms that had a similar situation. But September 30th will be here soon, so it’s a good idea to start looking at the numbers.
I am also adding a shameless plug for the Ducky Derby. It will be held on 9/27 at 1:30 at Caldwell Park. This event raises funds for our local youth development and substance abuse programs. So add that to the list of things you need to do before the end of September. Adopt your Duck!
