Frequently Asked Questions

Yes. Employers subject to the pay or play provisions have the option of specifying the measurement method(s) for determining full-time employee status (i.e., monthly vs. look-back) in the "Eligibility" section. Subscribers can also choose to specify which employees the measurement method(s) will apply to. The selections will appear in the "Eligibility and Benefits" section of the Wrap SPD, and in Article III, section 3.1(b) of the Wrap Plan Document. If a subscriber chooses not to include information regarding measurement methods, or if the pay or play provisions do not apply, basic language regarding compliance with the Affordable Care Act will appear in these sections.

Yes, the Wrap360 templates state that the plan administrator may have fiduciary responsibilities and discretion with regard to any distribution of insurance dividends, demutualization payments, and Medical Loss Ratio rebates. This information is located in the "Eligibility and Benefits" section of your Wrap SPD and in Article V, section 5.2(d) of your Wrap Plan Document.

Please Note: The use or distribution of rebates (if any) may be explained to participants at the time the rebates actually occur and the employer determines how it will use or distribute them in accordance with the ACA's MLR guidelines. Because this use or distribution may vary from year to year, it would not be prudent to specify this in either the Wrap SPD or the Wrap Plan Document.

The following are the actual provisions included in the Wrap SPD and Wrap Plan Document, as shown below.

Wrap SPD:

ELIGIBILITY AND BENEFITS 

. . .

        Under ERISA, the Plan Administrator of the group health plan may have fiduciary responsibilities regarding distribution of dividends, demutualization and use of the Medical Loss Ratio rebates from group health insurers. Some or all of any rebate may be an asset of the plan, which must be used for the benefit of the participants covered by the policy. Participants should contact the Plan Administrator directly for information on how the rebate will be used.

Wrap Plan Document:

ARTICLE V

Plan Administration and Fiduciary Duties

5.2       Plan Administration.  Except as otherwise provided in a Welfare Program:
. . .
(d)  The Plan Administrator shall have sole discretion and authority regarding the distribution, or other use, of dividends, demutualization and/or the Medical Loss Ratio rebates, if any, from group health insurers.

The Affordable Care Act (ACA) prohibits group health plans from applying any waiting period that exceeds 90 days. 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 a group health plan can become effective. Being "otherwise eligible" for coverage means having met the plan's eligibility conditions (such as, for example, satisfying a reasonable and bona fide employment-based orientation period).

Therefore, before the waiting period begins, an employer can require employees to complete a reasonable and bona fide employment-based orientation period. In order to be a permissible eligibility condition under the law, the reasonable and bona fide employment-based orientation period must not exceed one month, and the maximum 90-day waiting period must begin on the first day after the orientation period.

Calculating the Length of an Orientation Period
One month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee's start date in a position that is otherwise eligible for coverage or, if there is not a corresponding date in the next calendar month, the last day of the next calendar month. (For example, if an employee's start date is May 3, the last permitted day of the orientation period is June 2; if the employee's start date is August 31, the last permitted day of the orientation period is September 30.)

Calculating the Length of a Waiting Period
After an individual is determined to be otherwise eligible for coverage under the terms of the plan, any waiting period may not extend beyond 90 days. All calendar days are counted beginning on the first day of the waiting period, including weekends and holidays. (A plan that imposes a 90-day waiting period may, for administrative convenience, choose to permit coverage to become effective earlier than the 91st day if the 91st day is a weekend or holiday.)

Effect on Employer Shared Responsibility ("Pay or Play")
Employers with at least 50 full-time employees (including full-time equivalent employees) should review the regulations regarding employment-based orientation periods and the ACA's 90-day waiting period limit to determine their impact on the "Pay or Play" guidelines.