Model Ppaca Amendment Long Form

MODEL PPACA AMENDMENT – LONG FORM

This is a long-formmodel amendment to Lockton’s legacy model wrap plan to allow the wrap plan sponsor to amend the plan to comply with certain provisions of the Patient Protection and Affordable Care Act (PPACA). Use this long form if the client needs to amend the Componet Program or Eligibility appendices to its wrap plan.

If your client adopted the Husch Blackwell model wrap plan, you should use the Husch Blackwell Model PPACA Amendment to amend that plan (HuschBlackwell documents have a footer in the lower left corner of each page).

Note: Some wrap plans require custom modifications to deal with unique or complex changes to eligibility rules, coverage offerings, etc. In those cases, work with HuschBlackwell to address such custom amendments.

AMENDMENT

to the

[ PLAN NAME ]

Section 7.1 of [insert the name of the wrap plan] (“the Plan”) provides that the Employer may amend the Plan at any time. In accordance with the terms of those provisions, the Plan is hereby amended as reflected in this document.

This Amendment modifies the Plan in certain respects to conform to, or to permit the Employer to conform to, the requirements of the Patient Protection and Affordable Care Act (“PPACA”), specifically the employer “shared responsibility” provisions codified in section 4980H of the Internal Revenue Code and regulations and other guidance issued thereunder (collectively, “section 4980H”); limitations on waiting periods described in the PPACA, and regulations and other guidance issued thereunder; and other applicable provisions of the PPACA.

This Amendment supersedes any conflicting provision of the Plan where the conflicting provision predates the effective date of any change made by this Amendment. To the extent this Amendment is adopted after the operational, statutory or regulatory effective date of any change set forth below, the Amendment merely conforms the Plan document to Plan intent, practice and procedure as of such effective date.

1.[1]The definition of “Employee” under Article I of the Plan is amended by adding the following paragraph to the end thereof. This change is effective as of [insert the effective date of the change, typically the day the employer mandate will apply to the employer] ______, 20__.

Notwithstanding the foregoing, if, for any period of time, an individual has not, on the Employer’s books and records, been treated as a common law employee of the Employer (or “full-time” common law employee, as defined under the Employer’s Policy Document for Full-Time Employee Determinations Under the PPACA (“PPACA Policy”), where eligibility for coverage under a Component Program depends on full-time status), and a court or government agency subsequently makes a determination that the individual was in fact a common law employee during that period of time, such determination shall not entitle the individual to any retroactive rights under the Plan unless this Plan is amended to supply such retroactive rights, and the individual’s prospective rights under the Plan shall be determined solely in accordance with the terms of the Plan.

2.Article I is amended by inserting the following new definition in alphabetical order:

PPACA

“PPACA” means the Patient Protection and Affordable Care Act of 2010, as amended, and including all regulations and other guidance under that Act.

3.Section 2.3 of the Plan is amended by deleting the last paragraph thereunder and by inserting the following new paragraph in its place. This change merely conforms the Plan document to existing Plan intent, practice and procedure, as permitted by regulations and/or other guidance under the PPACA, and therefore requires no effective date:

Where coverage is terminated pursuant to the preceding paragraph, it may be terminated prospectively. Coverage may also be terminated retroactively to the date of (as applicable) the action giving rise to the termination or, where termination is due to ineligibility or failure to timely pay premium, to the date of the person’s enrollment or, if later, the date the person became ineligible; provided, however, that with respect to Component Programs subject to the PPACA, coverage shall be terminated retroactively only in the event of fraud or material misrepresentation (both of which are hereby expressly prohibited by this Plan), or to the extent otherwise permitted by the PPACA or guidance issued thereunder (including but not limited to failure to timely pay required premiums or contributions), and upon appropriate notice to the person as may be required under the PPACA or guidance issued thereunder.

4.Section 5.10 is amended by deleting subparagraph (a) thereof. This change merely conforms the Plan document to existing Plan intent, practice and procedure, and therefore requires no effective date.

5.Section 8.2 of the Plan is amended to read as provided below. This change merely conforms the Plan document to existing Plan intent, practice and procedure, and therefore requires no effective date:

8.2Participation by Affiliated Employers

The Employer may permit any of its Affiliated Employers or other Employers (“Participating Employers”) to participate in one or more benefits under the Plan. In that event the Affiliated Employers and/or Participating Employers shall be identified in Appendix II.A Participating Employer will be deemed to have adopted the Plan by making contributions under the Plan.

6.Section 8.14 of the Plan is amended to read as provided below. This change merely conforms the Plan document to existing Plan intent, practice and procedure, and therefore requires no effective date:

8.14Workers’ Compensation

This Plan is not in place of and does not affect any requirement for coverage by workers’ compensation insurance, unless this Plan specifically provides that it is in place of, and affects, a requirement for such insurance; provided, however, that the Plan Administrator in its sole discretion reserves the right to coordinate the receipt of workers’ compensation benefits with any self-insured benefits available under this Plan and may determine that such workers’ compensation benefits shall offset or otherwise reduce the benefits available under this Plan.

7.Section 8.16 of the Plan is amended to read as provided below. This change merely conforms the Plan document to existing Plan intent, practice and procedure, and therefore requires no effective date:

8.16Time for Bringing Actions Against the Plan

Notwithstanding any provision in this Plan document or the terms of a Component Document to the contrary, no legal action may be brought to recover from or with respect to this Plan (i) prior to the date the claimant has exhausted all administrative remedies under this Plan and applicable Component Documents, or (ii) after the date that is eighteen (18) months following the date the claimant has received a final decision on appeal with respect to such claim.

8.A new Section 8.17 is added to the Plan as follows. This change merely conforms the Plan document to existing Plan intent, practice and procedure, and therefore requires no effective date:

8.17Indemnity of Employees

To the extent any Employee or committee of Employees has been appointed to serve as the Plan Administrator, the Employer shall indemnify and hold each such individual harmless from any and all liabilities or expenses of any kind incurred by such individual in carrying out their administrative responsibilities under the Plan, except to the extent such liabilities or expenses result from the gross negligence or willful misconduct of the individual.

Amendment to COBRA Rules to Allow the COBRA Qualifying Event to Occur at the End of a Stability Period

This portion of the amendment is helpful for situations where the Employer uses the look-back measurement method and a full-time Employee has a reduction in hoursduring a stability period for the duration of which the Employee must be considered “full-time” under the PPACA. Under the COBRA regulations, the COBRA qualifying event (triggering the COBRA election notice obligations) arises upon the reduction in hours. It might sometimes be the case that a full-time Employee has a reduction in hoursduring a stability period and will end up averaging fewer than 30 hours per week in the current or ensuing measurement period, causing a loss of eligibility for coverage but not until the end of the current or ensuing stability period.[2]

Rather than give the Employee a COBRA election notice upon the reduction in hours – which will seem counterintuitive to the Employee (because he or she continues to be treated as eligible, through the end of the current stability period) and the Employer – the COBRA regulations offer an alternative approach. Plan sponsors are permitted to treat the later actual loss of coverage (i.e., at the end of the current stability period) as the COBRA qualifying event, allowing the COBRA election notice to be given then, and the COBRA coverage period to begin then.

For Employers to take this more intuitive approach, the plan document must provide that the COBRA qualifying event occurs at that later loss of coverage, not upon the reduction in hours. If the Plan Sponsor desires to allow for this change, use the language below.

x.[3]Article XI is amended by inserting the paragraph below after subsection 11.4(c). This change is effective as of [insert the effective date of the change, typically the day the employer mandate will apply to the employer] ______, 20__.

(d)Where due to a reduction in hours during a stability period (for example, from full-time to part-time or per diem status) an Employee’s eligibility for coverage will terminate at the end of such or a subsequent stability period, the Employer may treat as the COBRA qualifying event the date of the loss of coverage rather than the date of the earlier reduction in hours, and the end of the maximum COBRA coverage period may be measured from the date of the loss of coverage rather than from the earlier reduction in hours. The terms “measurement period” and “stability period” shall have the meanings as defined in the Employer’s Policy Document for Full-Time Employee Determinations Under the Patient Protection and Affordable Care Act(“PPACA Policy”). The foregoing policy, if adopted by the Employer, will be applied on a uniform and consistent basis among all similarly situated Employees.

Amendments to “Component Document Appendix”

If the Employer is modifying the Plan’s Component Document Appendix by adding or deleting Component Programs (for example, deleting a particular coverage option (“component program”) or adding a new “minimum essential coverage” or “minimum value” medical component program to accommodate the PPACA employer mandate rules, and/or a new fixed indemnity program to supplement a minimum essential coverage offering), describe the deleted or additional Component Programs here.

The account team might find it easier to simply update/restate the existing appendix in its entirety, and attach the updated appendix to this Amendment. Where the account team uses this approach, use this language:

x.[4] The Component Program Appendix of the Plan is restated in its entirety in the form attached hereto. This change is effective as of [insert the effective date of the change ______, 20__.

Otherwise, use the following language where the Employer has deleted one or more Component Programs, and use the ensuing paragraph where the employer has added one or more Component Programs.

x.[5]The Component Document Appendix of the Plan is amended by deleting the Component Program(s) listed below. This change is effective as of [insert the effective date of the change ______, 20__.

[Insert additional entries as necessary]

Use the following where the Employer has added one or more Component Programs, and the account team is not updating/restating the Component Program Appendix in its entirety.

x.[6]The Component Document Appendix of the Plan is amended by adding the Component Program(s) listed below. This change is effective as of [insert the effective date of the change ______, 20__.

Group Medical Benefits

Insured: Group medical benefits provided under an insured arrangement with [insert name of insurer] .

Self-insured: Group medical benefits administered by[insert name of third-party administrator, including any insurer operating under an “administrative services only” agreement].

Group Medical Benefits(second addition)

Insured: Group medical benefits provided under an insured arrangement with[insert name of insurer].

Self-insured: Group medical benefits administered by [insert name of third-party administrator, including any insurer operating under an “administrative services only” agreement].

Group Fixed Indemnity Benefits

Insured: Group fixed indemnity healthcare benefits provided under an insured arrangement with[insert name of insurer] .

[Insert additional entries as necessary]

Amendments to “Administrative Facts”or “Plan Description” Appendix

Complete the following if the Employer is adding, deleting or modifying a Component Program such that the provisions in the Plan’s Administrative Facts Appendix relating to the Funding Medium and/or Type of Administration are no longer accurate.[7]

x.[8] The “Funding Medium” and/or the “Type of Administration” provisions of the Administrative Facts or Plan Description Appendix is/are amended as provided below. This change is effective as of [insert the effective date of the change; this should be the same effective date that applies to the new or modified Component Program described above] ______, 20__.

Funding Medium: / Benefits under the Component Programs referenced in Appendix I are provided through [choose one or both, as applicable]
one or more insurance contracts
contributions by the Participating Employer(s) and with specified Employee contributions, as applicable.
Type of Administration / Administered according to the Component Documents, as follows: [choose one or more, as applicable]
Self-insured benefits, administered by TPA. Some benefits under the Plan are self-insured, but administered by a third-party administrator.
TPA is an insurance company. Please note that although one or more benefits are administered by an insurance company, the insurance company in those cases does not insure or guarantee the benefits that it administers; see Appendix I for the identity of the third-party administrator(s)).
Plan Sponsor maintains stop-loss coverage. The Plan Sponsor maintains a stop-loss or reinsurance policy to protect the Plan Sponsor against catastrophic loss under the comprehensive medical benefit program offered under this Plan. However, the stop-loss insurance merely reimburses the Plan Sponsor for benefits it funds under the program, and is not to be construed as “insuring” the comprehensive medical benefits under the program.
Insured benefits. Some benefits under the Plan are insured by one or more insurance companies. Appendix I describes the various benefits, whether they are insured or self-insured, and the identity of the insurance companies and/or third-party administrators.

Amendments to Eligibility Appendix/Matrix

If the Employer has added a new Component Program, deleted a Component Program, or modified eligibility for an existing Component Program (for example, by adding eligibility for a new cohort of employees to accommodate requirements under the PPACA’s employer mandate), the Plan’s Eligibility Appendix or Matrix should be amended.One way to do this is simply update/restate the existing Appendix/Matrix and attach it in its entirety to this Amendment. The other approach is to check the appropriate boxes and fill in the appropriate blanks below.

Where the account team chooses to simply update/restate the existing Appendix/Matrix and attach it in its entirety to this Amendment, use this language:

x.[9] The Eligibility Appendix/Matrix of the Plan is restated in its entirety in the form attached hereto. This change is effective as of [insert the effective date of the change ______, 20__.

Otherwise, complete the remainder of this section of this model Amendment:

Use the following language where the Employer has deleted one or more Component Programs.

x.[10]The provisions of the Eligibility Appendix/Matrix related to the following Component Programs are deleted: [list the same Component Programs you listed above, as deleted Component Programs]

[Insert additional entries as necessary]

This change is effective as of [insert the effective date of the change; this will likely be the date the employer mandate applies to the Plan Sponsor] ______, 20__.

Use the following where the Employer has added one or more Component Programs.

x.[11]The Eligibility Appendix/Matrix of the Plan is amended by addingeligibility, effective date and coverage termination information for the new Component Program(s) listed below. This change is effective as of [insert the effective date of the change; this will likely be the date the employer mandate applies to the Plan Sponsor] ______, 20__.

For each new Component Program, insert the following information:

[Insert name of the new Component Program]

Employee Eligibility Classification:[12] .

Employee Effective Date:[13] .

Dependent Effective Date:[14] The effective date of the Employee’s coverage or, if later,.

Coverage Termination Date:[15] .

Insert additional entries as necessary

Use the following where the Employer is modifyingeligibility, coverage effective dates (waiting periods) or coverage termination dates for one or more existing Component Programs.

NOTE: The “Employee Effective Date” for some Component Programs simply says, “Same as Medical.” This might no longer be true if the employer is modifying the effective date of medical coverage to comply with PPACA-imposed limits on waiting periods, but does not wish to modify the waiting period for other coverage. See the next model paragraph, titled “Same as Medical” Changes,for language designed to address that situation.

x.[16]The Eligibility Appendix/Matrix of the Plan is amended by modifying the employee eligibility classification, employee effective date, dependent effective date and/or coverage termination date information for the following Component Programs, to read as provided below. This change is effective as of [insert the effective date of the change; this will likely be the date the employer mandate applies to the Plan Sponsor] ______, 20__. To the extent this Amendment is adopted after that effective date, the Amendment conforms the Plan document to Plan intent, practice and procedure as of that effective date.