The document provides an end-of-year wrap-up and reminders relating to Affordable Care Act (ACA) compliance in 2015. Key updates include: the Supreme Court agreeing to hear a case on premium tax credits; guidance clarifying that "skinny plans" must meet minimum value standards; and FAQs further prohibiting cash incentives for individual coverage. It also reminds readers of ACA provisions taking effect in 2015, such as out-of-pocket limits and the employer shared responsibility requirement.
Health Reform Bulletin 116 Year End Wrap Up 12-29-15Daniel Michels
The most recent CBIZ Health Reform Bulletin: Year-End Wrap Up (HRB 116). This issue includes specific information and guidance on:
1. Late breaking development, IRS delays new Affordable Care Act's (ACA) reporting and disclosure obligations!
2. On December 18, 2015 Consolidate Appropriations Act, 2016, and the Protecting Americans from Tax Hikes (PATH) Act of 2015 (H. R. 2029; now Public Law No. 114-113) were signed by the President, and amend several provisions of the Affordable Care Act.
3. The IRS Issued guidance relating to ACA implementation
4. Year-End Reminders
The new At Issue bulletin is here! This yearly bulletin highlights happenings of CBIZ Benefits & Insurance and relevant changes to policies over the year of 2015.
Articles in this edition are:
- Overview of 2015
- Quick Review of New Federal Laws
- DOL Assists States Establishing Savings Programs
- Proposed Changes to ERISA’s Disability Claims and Appeal Process
- More IRS Guidance on Application of Same-sex Marriage to Benefit Plans
- 2016 Benefit Plan Limits and Cost of Living Adjustments
- Year-end Reminders
- Annual Notice Reminders
Health Reform - Additional IRS Approaches to the Cadillac Tax; Transitional R...CBIZ, Inc.
Guidance on:
1. Additional IRS Approaches to Cadillac Tax. On July 30, 2015, the IRS released a second pronouncement (IRS Notice 2015-52), which like the first, does not carry the weight of the law or regulation, but rather is an effort to test the waters to see how the law should be formulated. The new guidance expands the discussion with regard to identifying taxpayers liable for the excise tax, employer aggregation, allocation of the tax, payment of the applicable tax and determining the cost of applicable coverage.
2. Transitional Reinsurance Fee Process for 2015 Benefit Year. In preparation for reporting and paying the transitional reinsurance fees for the 2015 benefit year, the Centers for Medicare and Medicaid services released an overview of the process and procedures
3. State Innovation Waivers. The Affordable Care Act includes a provision that takes effect in 2017 which would allow a state to apply for an innovation waiver; pursuant to which the state could be relieved from certain aspects of the ACA.
4. Applicability of ACA’s Employer Shared Responsibility Provisions. On July 31, 2015, President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236); now Public Law 114-41). This law provides that for purposes of determining whether an employer is an applicable large employer with regard to employee enrollment in minimum essential health coverage under an eligible employer sponsored plan, individuals covered for medical care under TRICARE or the Veterans Administration are not counted. In addition, a recent lawsuit challenged the applicability of the ACA’s employer shared responsibility mandate to a Native American tribe.
The Health Care and Education Affordability Reconciliation Act of 2010 was recently passed by the House and will be signed into law 03/30/2010. NAHU (National Association for Health Underwriters) published a comprehensive timeline of the changes coming over the next few years. Please contact me with any questions.
Health Reform Bulletin 116 Year End Wrap Up 12-29-15Daniel Michels
The most recent CBIZ Health Reform Bulletin: Year-End Wrap Up (HRB 116). This issue includes specific information and guidance on:
1. Late breaking development, IRS delays new Affordable Care Act's (ACA) reporting and disclosure obligations!
2. On December 18, 2015 Consolidate Appropriations Act, 2016, and the Protecting Americans from Tax Hikes (PATH) Act of 2015 (H. R. 2029; now Public Law No. 114-113) were signed by the President, and amend several provisions of the Affordable Care Act.
3. The IRS Issued guidance relating to ACA implementation
4. Year-End Reminders
The new At Issue bulletin is here! This yearly bulletin highlights happenings of CBIZ Benefits & Insurance and relevant changes to policies over the year of 2015.
Articles in this edition are:
- Overview of 2015
- Quick Review of New Federal Laws
- DOL Assists States Establishing Savings Programs
- Proposed Changes to ERISA’s Disability Claims and Appeal Process
- More IRS Guidance on Application of Same-sex Marriage to Benefit Plans
- 2016 Benefit Plan Limits and Cost of Living Adjustments
- Year-end Reminders
- Annual Notice Reminders
Health Reform - Additional IRS Approaches to the Cadillac Tax; Transitional R...CBIZ, Inc.
Guidance on:
1. Additional IRS Approaches to Cadillac Tax. On July 30, 2015, the IRS released a second pronouncement (IRS Notice 2015-52), which like the first, does not carry the weight of the law or regulation, but rather is an effort to test the waters to see how the law should be formulated. The new guidance expands the discussion with regard to identifying taxpayers liable for the excise tax, employer aggregation, allocation of the tax, payment of the applicable tax and determining the cost of applicable coverage.
2. Transitional Reinsurance Fee Process for 2015 Benefit Year. In preparation for reporting and paying the transitional reinsurance fees for the 2015 benefit year, the Centers for Medicare and Medicaid services released an overview of the process and procedures
3. State Innovation Waivers. The Affordable Care Act includes a provision that takes effect in 2017 which would allow a state to apply for an innovation waiver; pursuant to which the state could be relieved from certain aspects of the ACA.
4. Applicability of ACA’s Employer Shared Responsibility Provisions. On July 31, 2015, President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H.R. 3236); now Public Law 114-41). This law provides that for purposes of determining whether an employer is an applicable large employer with regard to employee enrollment in minimum essential health coverage under an eligible employer sponsored plan, individuals covered for medical care under TRICARE or the Veterans Administration are not counted. In addition, a recent lawsuit challenged the applicability of the ACA’s employer shared responsibility mandate to a Native American tribe.
The Health Care and Education Affordability Reconciliation Act of 2010 was recently passed by the House and will be signed into law 03/30/2010. NAHU (National Association for Health Underwriters) published a comprehensive timeline of the changes coming over the next few years. Please contact me with any questions.
Health Care Reform - Small Business Health Options Program (SHOP) UpdatesCBIZ, Inc.
One of the components of the Affordable Care Act is the Small Business Health Options Program (SHOP). The SHOP is the marketplace, sometimes referred to as “exchange”, specific to small employers.
What Changes to Expect from the new Healthcare Law, presented by The National Federation of Independent Business, the leading small business association.
How Does Obamacare Impact Your Business Planning?Tilson
The Supreme Court has upheld the PPACA and its implementation is full steam ahead. Now is the time to begin preparing for the impact on your business and your employees. Many have forgotten the complexity, decisions, and regulatory requirements of this legislation. As we all know, the devil is in the details.
Health Reform Bulletin 125 | Updated Employer Shared Responsibility Guidance,...CBIZ, Inc.
The latest HRB has been released. Get updates on the following: 1) Updated Employer Shared Responsibility Guidance; 2) ACA Implementation Guidance; 3) Gender Identity Discrimination: Preliminary Injunction Issued; 4) Final Rules - Premium Tax Credit; and 5) 2018 Benefit and Payment Parameters.
ACA Compliance Bulletin - Affordability Percentages Will Increase for 2019Kelley M. Bendele
The updated affordability percentages, which are effective for taxable years and plan years beginning January 1, 2019, are significant increases from 2018.
The article below describes a new health care reform development (additional federal agency guidance on prohibition of premium reimbursement arrangements).
Check this out! My friends at Greener Accounting and Tax Services put this presentation together to show some of the changes that will be made with two health care legislations passed this term. Very informative and somewhat disturbing.
Health Reform Bulletin 116 | Year-End Wrap Up Dec. 29, 2015CBIZ, Inc.
The government is winding up 2015 and ringing in 2016 with a bang. The final HRB of 2015 will keep you abreast of the various changes that occurred at the end of the year.
Health Reform Bulletin Oct, 2015 - Amendments to the small employer definitio...CBIZ, Inc.
The latest Health Reform Bulletin is here! This bulletin is chock full of information from a new law that amends the definition of small employer, finalized ACA reporting forms 1094 and 105 and adjusted PCORI fees and much more. Check out some more in-depth information above.
Health Reform: Interim Guidance on Expatriate Plans; Updates on ACA Reportin...CBIZ, Inc.
This Health Care Reform Bulletin provides information on the following topics:
a. Interim Guidance on Expatriate Health Coverage
b. Updates on Section 6055/6056 Reporting
i. Revised and Increased Reporting Penalties
ii. E-filing requirements for Employers
c. Final Rules: Preventive Services
d. Reminder on PCOR Fees and Transitional Reinsurance
i. Checklist for PCOR and Transitional Reinsurance Fee
Health Care Reform - Small Business Health Options Program (SHOP) UpdatesCBIZ, Inc.
One of the components of the Affordable Care Act is the Small Business Health Options Program (SHOP). The SHOP is the marketplace, sometimes referred to as “exchange”, specific to small employers.
What Changes to Expect from the new Healthcare Law, presented by The National Federation of Independent Business, the leading small business association.
How Does Obamacare Impact Your Business Planning?Tilson
The Supreme Court has upheld the PPACA and its implementation is full steam ahead. Now is the time to begin preparing for the impact on your business and your employees. Many have forgotten the complexity, decisions, and regulatory requirements of this legislation. As we all know, the devil is in the details.
Health Reform Bulletin 125 | Updated Employer Shared Responsibility Guidance,...CBIZ, Inc.
The latest HRB has been released. Get updates on the following: 1) Updated Employer Shared Responsibility Guidance; 2) ACA Implementation Guidance; 3) Gender Identity Discrimination: Preliminary Injunction Issued; 4) Final Rules - Premium Tax Credit; and 5) 2018 Benefit and Payment Parameters.
ACA Compliance Bulletin - Affordability Percentages Will Increase for 2019Kelley M. Bendele
The updated affordability percentages, which are effective for taxable years and plan years beginning January 1, 2019, are significant increases from 2018.
The article below describes a new health care reform development (additional federal agency guidance on prohibition of premium reimbursement arrangements).
Check this out! My friends at Greener Accounting and Tax Services put this presentation together to show some of the changes that will be made with two health care legislations passed this term. Very informative and somewhat disturbing.
Health Reform Bulletin 116 | Year-End Wrap Up Dec. 29, 2015CBIZ, Inc.
The government is winding up 2015 and ringing in 2016 with a bang. The final HRB of 2015 will keep you abreast of the various changes that occurred at the end of the year.
Health Reform Bulletin Oct, 2015 - Amendments to the small employer definitio...CBIZ, Inc.
The latest Health Reform Bulletin is here! This bulletin is chock full of information from a new law that amends the definition of small employer, finalized ACA reporting forms 1094 and 105 and adjusted PCORI fees and much more. Check out some more in-depth information above.
Health Reform: Interim Guidance on Expatriate Plans; Updates on ACA Reportin...CBIZ, Inc.
This Health Care Reform Bulletin provides information on the following topics:
a. Interim Guidance on Expatriate Health Coverage
b. Updates on Section 6055/6056 Reporting
i. Revised and Increased Reporting Penalties
ii. E-filing requirements for Employers
c. Final Rules: Preventive Services
d. Reminder on PCOR Fees and Transitional Reinsurance
i. Checklist for PCOR and Transitional Reinsurance Fee
Healthcare Reform Proving To Be A Calendar Challenge
Healthcare reform is a significant administrative, clinical, financial and technical undertaking. As the nation moves forward to implement the mandates, the critical resource of time is proving harder to find and pay for. As 2013 comes to an end, the changes expected for 2014 will become more apparent and as we move through the year into 2015, more changes and challenges can be expected.
www.healthcaremedicalpharmaceuticaldirectory.com
John G. Baresky
https://www.linkedin.com/in/johngbaresky
#baresky
Staffscapes, Inc. is a Human Resources Outsourcing firm that specializes in HR, Payroll & Benefits. We recently presented this slide show to a group of Colorado Small Business Owners and Managers and are sharing it with the general public today.
Health Reform Bulletin: Implementation Guidance & ACA UpdatesCBIZ MHM, LLC
1) Distribution of Marketplace Notice to Employees; 2) 90-day Waiting Period; 3) Individual Shared Responsibility- Final Regulations; 4) Employer Appeals in Marketplace Eligibility Determinations; 5) Small Business Tax Credit; 6) Preventive Care - Health Saving Accounts; and 7) Internal Claims, Appeals and External Review: Providing Culturally and Linguistically Appropriate Notices
Health Reform Bulletin 124 | Qualified Small Employer HRAs and Year-end Remin...CBIZ, Inc.
On December 13, 2016, President Obama signed the 21st Century Cures Act (H.R. 34). In part, this law re-establishes the ability of small employers, those not subject to the Affordable Care Act’s employer shared responsibility provisions, to provide their employees a stand-alone health reimbursement arrangement (HRA), known as a “qualified small employer HRA”.
Health Reform Bulletin 124 | Qualified Small Employer HRAs and Year-end Remin...CBIZ, Inc.
In December 13, 2016, President Obama signed the 21st Century Cures Act (H.R. 34). In part, this law re-establishes the ability of small employers, those not subject to the Affordable Care Act’s employer shared responsibility provisions, to provide their employees a stand-alone health reimbursement arrangement (HRA), known as a “qualified small employer HRA”.
In early July, the Department of Treasury announced it is delaying a key mandate of the Affordable Care Act: what's known as the 'Pay or Play' mandate. While pushing pause on this mandate gives large employers another year to prepare, we strongly advise businesses not to wait to start making strategic decisions. For more information, contact Fraser Trebilcock Senior Health Care and Business Attorney Mike James at mjames@fraserlawfirm.com or 517.377.0823. You can also find more information at www.milhealthlaws.com.
Health Reform Bulletin 131 | The ACA Remains The Law of The LandCBIZ, Inc.
As has been covered extensively in the press, Congress went on its summer recess without repealing, replacing or modifying the Affordable Care Act. What this means for employers is that it is “business as usual”, including all reporting obligations, as more fully described below. So where does health care reform stand at this point? The answer to this question is far from clear.
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Health Care Reform - Year-End Wrap Up
1. Subject: Year-End Wrap-Up Date: December 11, 2014
As 2014 draws to a close, a new Congress and continued court challenges should not deter efforts needed now to ensure compliance with the Affordable Care Act (ACA) as we know it. While we know not what the new Congress will do, you can be sure that many aspects of the ACA will be considered. In addition, the Supreme Court has agreed to review the King v. Burwell case on the issue of whether the premium tax credit, available to individuals whose household income falls below 400% of the federal poverty level, is obtainable in both the federal and state marketplaces. The hearing of this case is expected to be held in early March, 2015. Again, we know not how the Supreme Court will rule.
In this interim, following are some recent updates and reminders relating to ACA compliance.
RECENT ACA GUIDANCE
Health plans that fail to cover hospital or physician services (“skinny plans”) fail to meet minimum value standard
On November 4, 2014, the Departments of Health and Human Services and Treasury issued guidance (IRS Notice 2014-69) clarifying that so-called “skinny plans” that fail to provide coverage for hospital services and/or physician services will not qualify as a minimum value plan.
As a reminder, minimum value (MV) means that the plan covers at least 60% of the cost of medical services. It is necessary that a plan meet minimum value in order to avoid the IRC Section 4980H(b) penalty. The Notice goes on to state that an individual’s eligibility for premium assistance will not be jeopardized if the only coverage offered fails to meet MV standards. Because these products have been promoted, the Notice provides that any products in place prior to November 4, 2014 will be honored through the end of the plan year. However, any new plan implemented will put the employer at risk for a shared responsibility penalty.
Further, this Notice provides that any communication suggesting that this type of coverage would disqualify an individual from premium assistance must be proactively corrected, i.e., the summary of benefits and coverage or other plan communications must accurately reflect that a plan which fails to meet minimum value will not disqualify the individual from receiving premium assistance.
Employer Premium Payment Arrangements for Individual Coverage
On November 6, 2014, the Department of Labor’s Employee Benefit Security Administration released its 22nd set of implementation FAQs addressing several scenarios in which cash is offered by an employer, either to incent individuals to choose individual coverage over group
December 11, 2014 – HRB 104 Page 1
2. CBIZ Health Reform Bulletin
coverage, or to otherwise attempt to satisfy the employer’s shared responsibility obligation. Once again, the door is being closed and locked on these types of arrangements.
As background, in September 2013, the government issued guidance prohibiting the use of tax-favored money for individual premium, whether purchased through the marketplace or outside the marketplace (see CBIZ Health Reform Bulletin, Impact of ACA on HRAs, Health Care FSAs, and Other Employer Health Care Arrangements, 9/20/13). The guidance affirmed that no form of pre-tax contribution, whether through a health reimbursement arrangement, flexible medical spending account or other premium payment plan could be used to purchase individual coverage.
Then, on May 13, 2014, the IRS again came out with guidance, in an FAQ format, cautioning employers about the risk of violating the reimbursement of individual premium rules.
In the newest FAQs, the DOL goes even further, clarifying that whether the cash is offered on a pre-tax or after-tax basis makes no difference. If it is used to pay individual premium, it makes the individual policy an employer-sponsored plan subject to all of the requirements of the Affordable Care Act. Since these products do not necessarily comply with all requirements, it puts the employer at risk for a $100 per day/per participant penalty for failure to offer a compliant plan.
In the second FAQ, the DOL addressed whether an employer could offer a high claimant cash as an incentive to decline the employer-sponsored coverage. Once again, the answer is “No”. As an aside, not only is the answer “No” from an ACA perspective, but would likely be “No” from an Americans with Disabilities Act’s perspective as well.
In the third FAQ, the government says, “No”, once again to a scenario whereby an IRC Section 105 plan is set up to which the employer contributes and the individual purchases coverage.
INDIVIDUAL SHARED RESPONSIBILITY MANDATE
As a reminder, individuals must maintain a minimum level of coverage or be subject to a tax. The potential fees imposed on individuals for failing to maintain health coverage increases in 2015 to the greater of 2% of yearly household income; or, $325 per person ($162.50 per child under 18).
Determining Affordability of Coverage
There are certain exemptions to the requirement to maintain minimum essential coverage (see CBIZ Health Reform Bulletin, Individual Minimum Essential Coverage, 2/6/13). One of these exemptions occurs if the cost to the individual to purchase coverage exceeds 8% (8.05% for 2015) of household earnings (the government is proposing to increase the required contribution percentage to 8.13% of household income beginning in 2016). This affordability standard is distinct from the employer’s shared responsibility affordability standard and distinct from the affordability standard for being entitled to premium assistance.
On November 26, 2014, the IRS issued final regulations relating to minimum essential coverage (MEC) and hardship exemptions for purposes of the individual shared responsibility mandate. Specifically, these regulations address the effects of employer contributions to a cafeteria plan or health reimbursement arrangement (HRA), and wellness program incentives for affordability purposes. It remains to be seen whether these standards will be included in the premium tax credit affordability regulations.
December 11, 2014 – HRB 104 Page 2
3. CBIZ Health Reform Bulletin
Cafeteria Plan Contributions
For purposes of determining affordability of coverage, amounts made available for the current plan year under a cafeteria plan will not be included in the employee’s cost if the amount:
1.Cannot be taken as a taxable benefit, such as cash;
2.Is only used to pay for MEC; and
3.Is only used to pay for medical care, as defined in IRC Section 213(d).
Employer Contributions to HRAs
Amounts newly made available for the current plan year under an HRA that an employee may use to pay premiums, or may use to pay cost-sharing or benefits not covered by the primary plan in addition to premiums, are counted toward the employee’s required contribution if the HRA is integrated with the employer-sponsored group health plan.
Wellness Program Incentives
For purposes of determining affordability, the final regulations clarify that wellness incentives, such as a discount or rebate, or imposition of a surcharge, unrelated to tobacco use are treated as unearned; while wellness incentives related to tobacco use are treated as earned. However, if there is an incentive for completing a program unrelated to tobacco use and a separate incentive for completing a program related to tobacco use, then the incentive related to tobacco use may be treated as earned.
Premium Tax Credit
The following contribution percentages will be used to determine whether an individual is eligible for affordable employer-sponsored MEC in tax years beginning in 2015 and 2016:
HOUSEHOLD INCOMEPERCENTAGE
OF FEDERAL POVERTY LINE)
INITIALPERCENTAGE
2015
FINALPERCENTAGE
2015
INITIALPERCENTAGE
2016
FINALPERCENTAGE
2016
Under 133%
2.01%
2.01%
2.03%
2.03%
Between 133% and 150%
3.02%
4.02%
3.05%
4.07%
Between 150% and 200%
4.02%
6.34%
4.07%
6.41%
Between 200% and 250%
6.34%
8.10%
6.41%
8.18%
Between 250% and 300%
8.10%
9.56%
8.18%
9.66%
Between 300% and 400%
9.56%
9.56%
9.66%
9.66%
ACA PROVISIONS EFFECTIVE IN 2015
Cost-share limits
The 2015 out-of-pocket limits applicable to insured plans offered via the Marketplace, and insured and self-funded plans offered outside Marketplace are:
•$6,600 for single coverage
•$13,200 for coverage for more than one
As a reminder, the 2015 out of pocket limits applicable to high deductible health plans used in conjunction with a health savings account are $6,450 for individual; $12,900 for family. December 11, 2014 – HRB 104 Page 3
4. CBIZ Health Reform Bulletin
Employer Shared Responsibility Requirement
Employers employing 100+ Employees could be subject to excise tax penaltiesunder IRC Section 4980H(a) and (b) beginning 2015. The penalty tax is based onnumber of employees employed in 2014; and, whether adequate affordable coverage isoffered in 2015.
Employers employing between 50 to 99 Employees in 2014 would not be subject tothe employer shared responsibility requirement, generally, until their plan anniversaryoccurring in 2016, as long as:
1.There has been no change in the plan year since February 9, 2014;
2.The employer maintains its workforce size and average hours worked; and
3.The employer maintains previously offered health coverage. This means that:
The health coverage offered and the group to whom it is offered has not materially eliminated or reduced; and
The employer contribution toward such coverage is maintained at the same or greater contribution level, or does not fall below 95% of the dollar amount contributed toward single coverage prior to February 9, 2014.
Employers employing fewer than 50 employees in 2014 are not subject to theemployer shared responsibility requirement. These employers have the option to applyand purchase coverage through the Small Health Options Program (SHOP).
For employers employing fewer than 25 employees, the IRS’ Small Business TaxCredit is available for a two-consecutive year period. The credit only applies to SHOPcoverage. For purposes of this credit, an eligible employer is one who employs fewerthan 25 full-time employees whose average annual wages is less than $50,800(indexed for 2015). Those employers employing fewer than 10 full-time employeeswhose average annual wage is less than $25,800 are also eligible for the credit. Themaximum credit is 50% of premiums paid by employer (35% for premiums paid by smalltax-exempt employer).
Required Reporting and Disclosure
The ACA imposes new reporting requirements; these are found in IRC Sections 6055 and 6056. Section 6055 reporting relates to who qualifies for minimum essential coverage (MEC). Section 6056 reporting relating to the employer shared responsibility requirement will assist the government in determining which employers might be subject to a shared responsibility risk, as well assist in determining whether individual taxpayers are entitled to premium assistance.
The forms for both of these reporting requirements are the Form 1094 transmittal and Form 1095 benefit statement. IRC Section 6055 reporting is accomplished on the B series of the form; the employer shared responsibility reporting is accomplished on the C series. A self- funded employer subject to shared responsibility can satisfy both its IRC Sections 6055 and 6056 reporting obligations by completing all parts of the Form 1095-C
The first reports will be required for the 2015 calendar year, due in 2016. The benefit statements must be provided to individuals listed in the reporting forms by January 31st of each year; the first report is due January 31, 2016. The report to the government will be due by February 28th of each year if filed by paper; by March 31st if filed electronically.
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Thus far, the IRS has only issued draft versions of the forms and instructions; the final version of these forms is expected in the near future.
To assist our clients with these reporting requirements, CBIZ will be making an ACA Reporting Tool & Technology Platform available in 2015 to accommodate the collection, processing, and ongoing record-keeping of the required data. Ask your CBIZ representative for information about the CBIZ ACA CheckPoint tool.
Background CBIZ Health Reform Bulletins on these reporting requirements:
IRS Releases Draft Instructions for ACA Shared Responsibility Reporting (9/15/14)
IRS Releases Draft Section 6055 and 6056 Reporting Forms (8/5/14)
IRS Final Rules – IRC Sections 6055 and 6056 (3/14/14)
Information Reporting by Employers on Health Coverage and Reporting of Minimum Essential Coverage (9/18/13)
Affordability Standard – Employer-Sponsored Coverage
Under an employer-sponsored plan, coverage is deemed affordable to a particular employee if his/her required contribution to the plan does not exceed 9.5% (indexed for 2014) of the employee’s household income for the taxable year, based on the cost of single coverage in the employer’s least expensive plan. The household income threshold percentage increases to 9.56% for 2015; it is proposed to increase to 9.66% for 2016. The employer shared responsibility regulations provide three safe harbors that can be used by employers to determine affordability (see Affordability Standard in the CBIZ Health Reform Bulletin, Exploring the Final Employer Shared Responsibility Regulations, 3/10/14). Note, at this point, the safe harbors continue to be based on 9.5% household income standard.
PROPOSED BENEFIT AND PAYMENT PARAMETERS FOR 2016
On November 26, 2014, the Center for Medicare and Medicaid Services (CMS) published proposed benefit and payment regulations addressing several issues applicable to the 2016 benefit year. Following are some of the proposals contained in the regulations:
Transitional Reinsurance Fee. The goal of a transitional reinsurance program is to stabilize premiums in the individual market to offset the expenses of the eligible individuals enrolling in the Marketplace. For 2014, the contribution rate is $63 per covered life, $44 per covered life in 2015. The proposed amount for 2016 drops to $27 per covered life.
Annual Open Enrollment Period. For the 2016 plan year, the annual open enrollment period for obtaining coverage through the Marketplace will run from October 1, 2015 through December 15, 2015. CMS proposes to maintain the October 1st through December 15th enrollment period applicable in years thereafter.
Cost Sharing Limits. In 2016, the proposed maximum annual limitation on cost sharing will be $6,850 for self-only coverage; $13,700 for other than self-only coverage. CMS clarified that the annual cost-share limitation applies for the plan year and not the calendar year for non-calendar year plan. In addition, insurers can, but are not required to, count out-of-network cost share amounts against the annual limit.
Federal Exchange User Fees. Insurers participating in the federal marketplace are subject to a user fee to help pay for the operational expenses of the Marketplace. For 2014 and 2015, the user fee rate is 3.5% of the monthly premium charged by the insurer. Based on CMS’ enrollment and premium projections, the 3.5% user fee in 2016 is proposed to remain the same.
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NEXT STEPS
Employers subject to ACA shared responsibility requirement (50+ employees):
Assess your shared responsibility risk.
Amend health plan and cafeteria plan eligibility provisions (if necessary). Be aware of two new status change events that were authorized for cafeteria plans specifically allowing a change in election due to a Marketplace open or special enrollment period and the other relating to a reduction in hours to less than 30 hours a week (see New Cafeteria Plan Status Change Events in the CBIZ Health Reform Bulletin, IRS Pronouncements, 10/6/14). If a cafeteria plan intends to permit these status change events, make certain the plan is amended by the end of the 2015 plan year.
Measure all employees using monthly or look-back standard.
Establish a process to collect Social Security Numbers for employees (if insured); for employees and dependents (if self-funded).
Ensure that the monthly data required for the IRC Sections 6055 and 6056 reporting obligations is captured beginning January 1, 2015.
Employers sponsoring plans of any size should review the terms and conditions of theirplans, especially the eligibility provisions to ensure that they accurately meet theemployer’s intent. Of particular note, the definition of spouse should be reviewed asshould employee eligibility. Also note, the cafeteria plan status changes as describedabove are available to employer-sponsored cafeteria plans of any size.
If your group health plan is self-funded, the deadline for submitting the transitionalreinsurance form together with annual enrollment count and payment scheduled hadbeen extended to December 5, 2014.
YEAR-END REMINDERS
Form W-2 Reminder - Aggregate Cost of Health Coverage
The Form W-2 must include the aggregate cost of health coverage. The aggregate costinformation is to be reported in Box 12, using Code DD. For details about thismandatory reporting, see these CBIZ Health Reform Bulletins, Reminder: FastApproaching Form W-2 Reporting Requirement and Additional IRS Guidance on W-2Reporting Requirement.
Summary of Benefits and Coverage
Under ACA, all group health plans, including grandfathered plans, whether insured orself-funded, are required to provide a Summary of Benefits and Coverage (SBC) to planparticipants within certain timeframes:
1.Upon application;
2.By the first day of coverage;
3.Within 90 days of enrollment be special enrollees;
4.Upon contract renewal; and
5.Upon request.
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Marketplace Notice Obligation
All employers subject to Fair Labor Standards Act were to provide the initial notice ofmarketplace options to all employees by October 1, 2013. In addition, there is an on- going obligation to provide the Notice to all new hires within 14 days of hire. Thepurpose of the Notice is to explain important information about the pros and cons ofbuying coverage through the marketplace. The DOL provides model notices (in bothEnglish and Spanish) that can be used by employers who offer health coverage tosome or all employees, and for those who do not offer coverage.
Patient-Centered Outcomes Research Institute Fee
The Patient Centered Outcome Research (PCOR) fee is required to be reportedannually to the IRS on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan. The fee was$1 for the first year; $2 for the second year. The fee increases to $2.08 for plan yearsending between October 1, 2014 and October 1, 2015. For additional information aboutthe PCOR fee, see IRS webpage, questions and answers and chart of plans subject tothe fees.
About the Author: Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc. She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law. Ms. McLeese is based in the CBIZ Leawood, Kansas office.
The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations.
This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein. December 11, 2014 – HRB 104 Page 7