The term “plan year” can be confusing for some, but in the age of the Patient Protection and Affordable Care Act, it is more important than ever to have a clear understanding of what your plan year is. So, what is a health plan’s plan year?
The first thing that should be used to determine the plan year is the summary plan description, or SPD. For employers that file a Form 5500, the plan year is disclosed on the form. Outside of those 2 things, federal regulations provide the following guidance on determining a health plan’s plan year:
- The plan year is the deductible or limit year used under the plan;
- If the plan does not impose deductibles or limits on a yearly basis, the plan year is the policy year;
- If the plan does not impose deductibles or limits on a yearly basis, and either the plan is not insured or the insurance policy is not renewed on an annual basis, the plan year is the employer’s taxable year; or
- In any other case, the plan year is the calendar year.
To understand the importance of a health plan’s plan year, consider the following sampling of compliance requirements linked to the plan year (and many linked to the ACA).
- Wellness programs
- Annual plan limits
- Pre-existing condition prohibition
- Non-discrimination based on health status
- Waiting period definition
- Cost sharing limitations
- Disclosure and reporting requirements
For a full list of compliance requirements linked to a health plan’s plan year, and to learn more about determining the plan year, take a look at the following attachment.
What is a Health Plan’s Plan Year?