Government guidelines

AB 1163 — notification before contract changes

In compliance with California’s Assembly Bill (AB) 1163, Kaiser Permanente will notify brokers at least 45 days prior to the effective date of material changes to a contract with them.

These requirements don’t apply to mutually agreed upon changes or those required by state or federal law. See legislature.ca.gov for more information.

California legislative overview

Several laws were enacted during the 2018 California legislative session that could impact your business.

For more information, see our health care legislative overview.

COBRA regulations

An important COBRA message from Kaiser Permanente

In 1986, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions to provide individuals temporary continuation of health coverage at group rates. The law generally covers health plans offered by employers with 20 or more employees.

The Department of Labor’s Employee Benefits Security Administration has issued final federal COBRA regulations clarifying the timing and content of the federal COBRA notices that all employers are required to provide to their federal COBRA enrollees. The finalized regulations prompted us to review the billing and collection services that we perform to help ensure that we’re doing everything we can to facilitate your clients’ compliance with these regulations.

Since Kaiser Permanente in Northern and Southern California performs billing and collection services for some of your clients, we’ve created a monthly report that lists:

  • Your clients’ federal COBRA enrollees who are billed by Kaiser Permanente
  • Those who have failed to make timely payments
  • Those being terminated (either for nonpayment or for reaching the maximum period of federal COBRA continuation coverage)

We're sending the Kaiser Permanente Billed Federal COBRA Activity Report monthly to employer groups by the end of each month. If there is no COBRA membership or activity for the reporting period, your affected clients will not receive this report.

The employer group is responsible for complying with all COBRA responsibilities, including notifying qualified beneficiaries of federal COBRA rights and processing federal COBRA elections. Your affected clients have received a signature agreement that delegates the COBRA billing and collection functions to Kaiser Permanente. The new Employer Group Application has also been modified to include the signature agreement provision.   

For more information regarding employer requirements under federal COBRA regulations, your clients should consult their legal advisor. These regulations are available at www.dol.gov/dol/topic/health-plans/cobra.htm.

Compensation regulations

Compensation reports for public agencies

Effective January 1, 2009, California law AB 2589 requires health plans and insurers to annually disclose to the governing boards of public agency employer groups any compensation paid to agents, brokers, or other individuals as part of the group’s contract. Each report must include: 

  • The name and address of any agent, broker, or individual who received payment related to the group's contract
  • Any amount paid to the agent, broker, or individual (including nonmonetary compensation)

In addition, the report provides the following information:

  • Total premiums we received within the group's contract year
  • Current subscriber and membership counts (as of the last month of the contract period)

These reports will be almost identical to the federal ERISA 5500 Schedule A Disclosure Reports. (Public agencies are exempt from ERISA reporting requirements.) Reporting is required annually, so you and your public agency clients can expect to receive a Broker Compensation Disclosure Report each year within 60 days of the end of the contract year. The first reports will be mailed in the first quarter of 2010. You’ll also receive a copy of the report sent to each of your public agency clients to keep for your records. 

For more information

Form 5500 Schedule A reporting is now easier for your clients

Reports by enrollment unit have been eliminated

You and your clients will find it easier to use the ERISA 5500 Schedule A report this year due to these changes.

  • ERISA-eligible groups will only get a one-page master report based on their purchaser ID.
  • The master report will include premium, commission, bonus, and non-monetary payment totals for the year.
  • Reports broken down by enrollment unit have been eliminated.
  • Brokers or groups who want enrollment-unit breakdowns can still have these reports produced for them by contacting the Broker Compensation Reporting Team at
    858-637-2572.

Youll continue to get commission statements from the Broker Administration Department and premium audits are still available through the California Service Center. If you have questions or concerns, please contact nicholas.r.bambico@kp.org at or 858-637-2572.

Schedule A, Form 5500

The Employee Retirement Income Security Act of 1974 (ERISA) was enacted primarily to assure pension equality, but it also protects the interests of group life insurance plan participants and beneficiaries. Under ERISA, group health insurance plans must be established pursuant to a written instrument, the Summary Plan Description (SPD), which describes the benefits provided under the plan, names the persons responsible for the operation of the plan, and spells out the arrangements for funding and amending the plan. Schedule A is a financial statement used to report premiums, fees, and broker commission payments to an agent or broker and is an attachment to IRS Form 5500. Employers subject to ERISA are required to file Form 5500 according to ERISA section 104. Insurance companies are required to provide schedule information per ERISA section 103 (a)(2).

Kaiser Permanente provides employers with a 5500 Broker Compensation Disclosure Report outlining the amount of monetary (e.g., commissions, bonuses or fees) and non-monetary compensation (e.g., gifts, meals, etc.) paid to a broker. We do this to assist employers in complying with government reporting. A copy of the employers 5500 Broker Compensation Disclosure Report is mailed to the broker of record.

If you have questions about the 5500 Broker Compensation Disclosure Report, call the Client Services Unit at 800-752-4737.

Form 1099-MISC

A Form 1099-MISC is sent each January to 1099 reportable brokers who have earned $600 or more in commissions during the reporting period year. If you havent received a Form 1099-MISC and believe you should, contact the Kaiser Financial Services Operation hotline at
510-987-1754 or the Broker Compensation Services at 800-440-2323.

Medicare creditable coverage information

If a health plan’s prescription drug coverage is as good as or better than Medicare Part D, it’s considered “creditable.” Employers who offer prescription drug coverage to Medicare-eligible individuals are required to notify their beneficiaries unless they are enrolled in a Part D plan. Employers are also required to notify the Centers for Medicare & Medicaid Services (CMS) whether or not their coverage is creditable.

  1. ALL employers must complete and submit this Disclosure to CMS form online and use the Federal ID #:
    94-1340523.
  2. To find out if your Kaiser plan is creditable, download the 2019 flyer, 2020 flyer, or 2021 flyer.
  3. Find out more information about Part D Creditable Coverage from CMS.
Mental Health Parity

Updates to cost share for some mental health and chemical dependency services

To comply with requirements of the Mental Health Parity and Addiction Equity Act (MHPAEA), we’ve made changes to cost share for some mental health and chemical dependency services. As 2015 contracts renew or are amended, we’re revising Evidence of Coverage (EOC) documents to reflect those updates. The changes don’t affect rates or access to care.

For details on what’s new for large and small groups, see below.

Changes for large groups

When it’s prescribed by a plan physician, we cover care at licensed residential treatment facilities in our service area. Facilities must provide 24-hour individualized treatment for chemical dependency or mental health. The following services are covered when they’re above the level of custodial care at one of these facilities:

  • individual or group chemical dependency or mental health counseling
  • medical services
  • room and board
  • social services
  • medication monitoring
  • drugs prescribed by a plan provider as part of the patient’s care, in accord with our drug formulary guidelines, and administered in the facility by medical personnel
  • discharge planning

Additionally, the non-Medicare EOCs’ cost-share disclosures will be revised as follows (for the purpose of this notification, “non-Medicare EOCs” means all EOCs other than Senior Advantage EOCs):

  • In all EOCs, we’ve added a disclosure of the cost share for chemical dependency day treatment and intensive outpatient services. The cost share for chemical dependency day treatment and intensive outpatient services is the same cost share as outpatient surgery, up to a maximum of the cost share for primary care visits.
  • In EOCs where the cost share for hospital inpatient care is “no charge” and the cost share for chemical dependency residential treatment is a copayment, the cost share for chemical dependency residential treatment has been revised to be “no charge.”
  • In EOCs where the deductible doesn’t apply to outpatient surgery, the deductible doesn’t apply to the following mental health or chemical dependency services either:
    • partial hospitalization programs
    • intensive outpatient programs
    • day treatment programs

We’ve already made the coverage and cost share changes reflected in this notice. When members receive services, they’ll pay the cost share shown in this notice. If your EOC doesn’t currently reflect the changes described above, you may see these changes in your EOC at renewal. If you have any questions about changes we’ve made to meet MHPAEA requirements, please contact your Kaiser Permanente representative.

Changes for small groups

Unless otherwise specified, the changes in this notification only apply to non-Medicare EOCs. For the purpose of this notification, “non-Medicare EOCs” means all EOCs other than Kaiser Permanente Senior Advantage when Medicare is secondary coverage.

Global changes

The following changes affect EOCs for all plans:

  • We’ve added a disclosure of the cost share for chemical dependency day treatment and intensive outpatient services to the EOC. The cost share is $5 per day, except as described below under “Additional changes to specific plans.”
  • When it’s prescribed by a plan physician, we cover care at licensed residential treatment facilities in our service area. Facilities must provide 24-hour individualized treatment for chemical dependency or mental health. The following services are covered when they’re above the level of custodial care at one of these facilities:

    • individual or group chemical dependency or mental health counseling
    • medical services
    • room and board
    • social services
    • medication monitoring
    • drugs prescribed by a plan provider as part of the patient’s care, in accord with our drug formulary guidelines, and administered in the facility by medical personnel
    • discharge planning

This change also applies to Medicare EOCs.

Additional changes to specific plans

Plan names vary slightly by year. Names also are different for plans sold through CaliforniaChoice® .

Plan names

Change

Gold 80 HRA 2000/30 (2015)

Gold 2000/30 Deductible HMO + HRA (2014)

Cost share for chemical dependency day treatment and intensive outpatient programs is 20% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

Silver 70 HMO 1000/40 (2015)

Silver 1000/40 Deductible HMO (2014)

Silver HMO B (CaliforniaChoice 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 30% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

Silver 70 HMO 1500/45 (2015)

Silver HMO C (CaliforniaChoice 2015)

  • Mental health and chemical dependency outpatient services are not subject to the plan deductible.
  • Cost share for chemical dependency day treatment and intensive outpatient programs is 20% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

Silver 1500/45 Deductible HMO (2014)

Mental health and chemical dependency outpatient services are not subject to the plan deductible.

Bronze 60 HMO 5000/60 (2015)

Bronze 5000/60 Deductible HMO (2014)

Bronze HMO B (CaliforniaChoice 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 30% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

Bronze 60 HSA 3500/30 (2015)

Bronze 3500/30 Deductible HMO + HSA (2014)

Bronze HMO A (CaliforniaChoice 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 30% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

$40/$2,000 Deductible HMO Plan HSA (2014, 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 30% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

$40/$3,000 Deductible HMO Plan HSA (2014, 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 30% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

$30/$3,000 HSA-Qualified Deductible HMO Plan (2014, 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 30% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

$30/$1,500 Deductible HMO Plan with HRA (2014, 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 20% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

$30/$2,500 Deductible HMO Plan with HRA (2014, 2015)

Cost share for chemical dependency day treatment and intensive outpatient programs is 20% coinsurance (up to a maximum of $5 per day), not subject to the plan deductible.

We’ve already made the coverage and cost share changes reflected in this notice. When members receive services, they’ll pay the cost share shown in this notice. If your EOC doesn’t currently reflect the changes described above, you may see these changes in your EOC at renewal. If you have any questions about changes we’ve made to meet MHPAEA requirements, please contact your Kaiser Permanente representative.

SB 1168/HR 2851—continuation of coverage for college students

Give your clients the information they need to stay on top of the latest changes to health care law. Effective January 2009,* California law SB 1168 protects coverage for dependent students on leave. A similar federal law, HR 2851, goes into effect in October, as contracts renew. Here’s what your clients need to know about the new legislation:

  • Commercial health plans and insurers are prohibited from terminating coverage for full-time dependent students over 18 during a break in the school calendar or a medically necessary academic leave of absence.
  • Coverage continues for up to one year or until coverage is scheduled to terminate under the plan’s terms and conditions, whichever comes first.
  • Documentation of the medical necessity must be submitted to Kaiser Permanente if our health plan certifies the students for coverage.

More information and helpful downloads

Information about the coverage will be included in student certification notices mailed to members beginning in April. To find out more:

Minimum essential coverage and 1095 IRS reporting forms

The Affordable Care Act(ACA) requires most U.S. citizens to have health coverage that meets a government standard — known as minimum essential coverage — or be subject to a potential tax penalty.

This requirement is sometimes called the individual mandate. However, the revised U.S. tax code reduced the penalty to zero.

Employers, insurers, and government agencies are still required by the ACA to annually report to the IRS the minimum essential coverage they provide for all enrolled individuals. They are also required to provide reports to subscribers using IRS Form 1095.

Starting in January, health plan subscribers will get one or more 1095 tax forms for the previous tax year, depending on their plan.

The forms apply to everyone with health coverage, except those who purchased a catastrophic plan through a health insurance marketplace such as Covered California. The form they’ll receive depends on the type of health plan they have:

 

Type of plan

Form

Individual and family through a marketplace

1095-A

Individual and family direct from carrier

1095-B

Small group (50 or fewer employees)

1095-B

Fully insured large group (more than 50 employees)

1095-B and 1095-C

Self-funded large group (more than 50 employees)

1095-C

 

California individual mandate for 2020 tax year

Starting on January 1, 2020, California residents must have qualifying health coverage for themselves, their spouses or domestic partners, and their dependents for each month.

Unless they qualify for an exemption, California residents could face a financial penalty of $695 or more when they file their 2020 state income tax returns, starting in 2021. The penalty for a dependent child is half of what it would be for an adult.

This law does not change Kaiser Permanente's Large Group special open enrollment guidelines.

Filing tax returns

When your clients’ employees fill out their tax returns, they should report any federal financial assistance they received toward health coverage. Additional tax forms will determine if the taxpayer receives a credit or owes payment. Subscribers will need to file Form 8962 to claim the premium tax credit or if advance payments were made to Kaiser Permanente.

Subscribers may have to pay a tax penalty if they:

  • had a coverage gap lasting more than 3 months
  • had more than one coverage gap in the same tax year
  • can’t claim an exemption

Subscribers may receive corrected forms, so it’s important to use the most current forms to ensure accuracy of information. Also note that not filing a return could affect a subscriber’s eligibility for federal assistance.

Review our annual reporting requirements for the ACA fact sheet and minimum essential coverage Q&A overview for more information or see below for more details on each form.

1095-A, Health Insurance Marketplace Statement

  • For subscribers in plans purchased through a marketplace only. Excluding those who purchased a catastrophic plan.
  • The marketplace will mail out 1095-A forms starting in January.
  • If a subscriber has questions about their form or need a corrected form, they need to contact the marketplace.
  • Reconciles advance premium tax credit to verify income and eligibility for assistance.
  • Needed to complete IRS form 8962.
  • The 1095-A requires the subscriber to file a 1040 tax form rather than a 1040EZ.
  • Lists all dependents along with the subscriber.
  • Lists coverage periods.
  • Subscribers with multiple plans will get separate forms for each plan. Nondependent children may get their own 1095-A.

1095-B, Health Coverage

  • For subscribers who purchased individual and family plans directly from Kaiser Permanente, including Charitable Hospital Coverage. Also for fully insured small and large group subscribers.
  • 1095-B forms will be mailed by Kaiser Permanente in January.
  • Medicare, Medi-Cal, or Children’s Health Insurance Program subscribers receive their forms from the respective government agency.
  • Kaiser Permanente subscribers will also get a cover letter that explains:
    • what 1095-B is and why they’re getting it
    • what they need to do
    • contact information for replacement forms

1095-C, Employer-Provided Health Insurance Offer and Coverage

• For employees in large group plans who were eligible for benefits at least one month during the tax year.

• Mailed by the end of March by the employer or plan sponsor.

• Employers who self-fund must also report which employees and dependents are covered.

• 1095-C identifies:

o Employee and employer

o Months during the year the employee was offered group coverage

o Cost of the cheapest monthly premium the employee could have paid under the plan

o Months of coverage in which the employee and/or dependents were enrolled in a self-funded plan

• If subscribers had benefits-eligible jobs with more than one employer during the same tax year, they’ll get a separate 1095-C from each employer.

• If subscribers weren’t eligible for benefits but averaged 30 or more hours per week in at least one calendar month during the tax year, they should get a 1095-C.

• Subscribers and dependents covered through a self-funded plan will need to fill out Part 3 of 1095-C to show months of coverage.

• Subscribers in fully insured large group coverage will get both 1095-C from their employer and 1095-B from Kaiser Permanente:

o 1095-C tells subscribers the months of the previous year they were offered coverage by their employer

o 1095-B tells subscribers the months of the previous year they had coverage in a fully insured plan issued by Kaiser Permanente (including Kaiser Permanente Insurance Company)

• Subscribers in self-funded large group coverage will only get a 1095-C, sent from their employer.

• Those who waived coverage will get a 1095-C from their employer showing they were offered coverage.

Contact information

  • For questions about 1095-A, visit Covered California or call 800-300-1506.
  • For 1095-A duplicate forms, the subscriber must contact the marketplace.
  • For questions about 1095-B, contact Kaiser Permanente Member Services at 844-477-0450.
  • For questions about 1095-C, subscribers should ask the employer.
  • For more info on 1095-B from Kaiser Permanente, visit kp.org/proofofcoverage .
  • For more info on 1095-B from a government agency, visit the appropriate agency website.
  • Registered members can download duplicate or receive electronic forms at kp.org/proofofcoverage .
  • For tax information, visit IRS.Gov/aca or call the IRS at 800-829-1040.
  • For information on tax exemptions, visit healthcare.gov.

This information was accurate at the time of posting. However, from time to time, new details become available after our release date. For the most current information, contact your sales executive.

* The new laws apply to all commercial plans. Medicare and special programs such as Medi-Cal will not be affected.

The traditional HMO plan and the in-network portion of the Point-of-Service (POS) plan are underwritten by Kaiser Foundation Health Plan, Inc. (KFHP). Kaiser Permanente Insurance Company (KPIC) underwrites the PPO and Indemnity tiers of the POS plan. KPIC is a subsidiary of KFHP.

Kaiser Permanente cannot give legal or financial advice. To find out more about claiming the subsidy as an offset against payroll taxes, contact the Internal Revenue Service.