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Recently, we found a discrepancy related to SEBB subscribers waiving their SEBB employee medical coverage to stay enrolled in PEBB retiree insurance coverage (both Medicare and non-Medicare). We want to share why this topic surfaced, and the future policy and its effective date.
Background
Centers for Medicare & Medicaid Services (CMS) federal requirements are designed to prevent employers from:
- Incentivizing Medicare coverage over available employer-sponsored medical coverage.
- Shifting employee health care costs from employers to Medicare.
CMS regulations also specifically address temporary periods of eligibility for employer-sponsored coverage. These federal requirements limit the SEBB and PEBB Programs’ options to address retirees who are rehired or work part-time and want to maintain uninterrupted PEBB-sponsored Medicare retiree insurance coverage. The rules and regulations differ for pension benefits and health benefits, which understandably may frustrate school districts seeking substitutes and retirees wanting part-time substitute work.
Earlier this year, the PEB Board passed Resolution PEBB 2024-11, allowing the PEBB Program to automatically defer PEBB retiree insurance coverage when a retiree becomes eligible for SEBB employee benefits. This aligns with current rules for PEBB retiree subscribers who are prohibited from waiving PEBB employee medical coverage to remain in PEBB retiree insurance coverage.
Implementation of the resolution brought to light a disconnect at HCA. HCA leadership believed that SEBB employees were already prohibited from waiving SEBB employee medical coverage to remain in PEBB retiree insurance coverage. Therefore, the believed impact of Resolution PEBB 2024-11 was merely reducing the paperwork burden for school employees to defer their PEBB retiree insurance coverage. But HCA leadership recently became aware that their understanding was incorrect. In fact, HCA was allowing some SEBB-eligible employees to waive SEBB employee medical benefits to remain enrolled in PEBB retiree insurance coverage.
What we’re doing
This recent awareness revealed an inconsistency between current practice and federal requirements. But HCA cannot allow persons eligible for SEBB employee benefits to waive this coverage and remain enrolled in PEBB retiree insurance coverage, as this would likely be an impermissible shifting of employee medical costs onto the federal government.
HCA understands this is a change from the SEBB benefits administrator (BA), retiree, and even HCA customer service perspective. Certain SEBB Program rules and the Special Open Enrollment (SOE) matrix included language that did not clearly prohibit such waivers. This is why BAs and retirees received the guidance they did from HCA customer service allowing waivers. SEBB Program rules and the SEBB Program SOE matrix are being revised effective September 1, 2024, which will clarify and establish clearer compliance with federal requirements. There may be additional rule and policy clarification work on this topic in the future.
We have received questions about the effective date of this policy change because we have not provided a clear answer until now. For the effective date of any policy change, there are typically three possible options:
- Generally, the effective date of a policy change in the PEBB and SEBB Programs is January 1 of the following year (this aligns with the start of the benefit plan year).
- Sometimes, for the SEBB Program, the effective date of a change is September 1 to align with the start of the next school year (because SEBB Program eligibility is tied to a school year, unlike eligibility for the PEBB Program).
- In very limited circumstances, a Board policy resolution can be implemented immediately, even while formal rulemaking and administrative policy making is ongoing.
In this case, the effective date is September 1, 2024, to align with the start of the next school year. This means that as of September 1:
- Retirees (both Medicare and non-Medicare) will not be able to waive SEBB employee coverage to remain on PEBB retiree insurance coverage. This includes retirees who waived SEBB employee medical coverage in the past.
- A retiree will not have to submit a form for HCA to defer their PEBB retiree insurance coverage.
- Benefits 24/7 should prompt a BA to contact HCA to facilitate the deferral process and allow the BA to manage the person’s enrollment on SEBB benefits.
This effective date should help BAs better prepare and adjust their hiring/employment decisions for the next school year. This also ensures that school districts and retirees reflect carefully about the anticipated work hours at the start of the school year, and hours actually worked throughout the school year, related to SEBB eligibility requirements.
HCA recognizes additional circumstances and clarifications are needed on other aspects of this topic. We will send additional guidance when it is available.
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