California rejects Obama plan to extend canceled healthcare policies Los Angeles Times | November 21, 2013 | 2:15 PM California's health insurance exchange voted unanimously Thursday against an extension of canceled health policies affecting about 1 million consumers in the state. The decision ends a weeklong drama over what would happen for policyholders who will lose their existing coverage Dec. 31 and face finding replacement insurance that may cost more. The 5-0 vote by the state exchange marks a break with the president since California has been a strong supporter of the Affordable Care Act. For the latest information go to

IRS change could make health FSAs more popular

The Internal Revenue Service has altered the "use-it-or-lose-it" rule for medical flexible spending accounts, allowing workers to roll over $500 from year to year, write Robert Bloink and William Byrnes. FSAs could become more valuable than ever under the Affordable Care Act because of greater out-of-pocket expenses for many people, Bloink and Byrnes write.

Sorting out ACA subsidies and credits

People with incomes higher than 400% of the federal poverty level may purchase health insurance plans from an Affordable Care Act marketplace, but they will not qualify for federal subsidies, and people whose incomes rise might have to pay back any subsidies they received the prior year. People who have health insurance through an employer do not qualify for subsidies unless that insurance meets the definition of unaffordable, and subsidies are calculated based on the cost of a silver-level plan but may be applied to a lower- or higher-tier plan. Subsidies to help with deductibles and copays are available to people making less than 2.5 times the poverty level, but they apply only to silver-level plans.

Section 125 rule change

The Internal Revenue Service announced last week in IRS Notice 2013-71 additional loosening of rules around cafeteria plans, all size employers with non-calendar year cafeteria plans have the option to amend their cafeteria plans and allow for one off-year election change. Generally, Section 125 cafeteria plan elections must be made before the start of the plan year, and are irrevocable during the plan year, with limited exceptions, including certain changes in status. Under existing regulations, the availability of health plan coverage through an Exchange beginning with 2014 calendar year does not constitute such a change in status. As a result, employees would not be able to change their salary reduction elections for health coverage during a plan year in order to, for example, cease their salary reductions and Section 125 cafeteria plan coverage and purchase coverage through an Exchange. The original transition rule allowing for one off-year election change was published in the employer mandate regulations and only applied to applicable large employers. IRS Notice 2013-71 expands the transition rule to all size employers.