IRS struggles to combine PPACA reports

Originally posted September 6, 2013 by Allison Bell on https://www.benefitspro.com

The Internal Revenue Service is still trying to figure out how to combine two new Patient Protection and Affordable Care Act reporting programs.

One of the new programs requires a carrier to tell the IRS and consumers whether it’s providing minimum essential coverage.

The other requires a large employer to tell the IRS whether it’s meeting the “shared responsibility” requirements -- the employer mandate -- by offering full-time workers affordable coverage with a minimum value. An employer that violates the mandate rules could have to pay a penalty of $2,000 per affected worker.

The IRS will publish the PPACA Section 6055 MEC reporting requirement and PPACA Section 6056 shared responsibility reporting requirement draft regulations in the Federal Register on Monday.

It’s been suggested before that the IRS combine the two programs. But doing so would be complicated, because the programs apply to different entities and will generate different types of information, IRS officials said.

In some cases, the IRS may let large employers use information reported on Form W-2 and information reported to meet the Section 6055 MEC reporting requirements to meet the Section 6056 shared responsibility requirements, officials said.

The IRS is considering letting employers meet the Section 6056 shared responsibility reporting requirements by using a code on the W-2.

Also in the draft, officials:

  • Declined to let employers with fiscal years other than the ordinary calendar year to base Section 6055 or Section 6056 reporting on the fiscal year. Consumers need the coverage information early in the calendar year, officials said.
  • Declined to create a safe harbor from penalties for coverage issuers or employers that violate reporting rules because other parties cause problems. Another provision already offers issuers and employers relief for any errors that are corrected in a timely manner, officials said.
  • Said that the insurer that insures a group health plan, not the group plan sponsor, is responsible for meeting the Section 6055 MEC reporting requirements for the group plan members.

9 items to tackle ahead of the Oct. 1 deadline

Originally posted September 6, 2013 by Dan Cook on https://www.benefitspro.com

Enrolling employees for the 2014 company health plan will put plan managers to a test like they’ve never seen before. Those that haven’t already immersed themselves in the details are going to be working some very late nights in the next couple of weeks.

John Haslinger, vice president for strategic advisory services at ADP, helped BenefitsPro.com compile a list of the essentials that must be executed in order to comply with the law and avoid sanctions.

Haslinger strongly advises that companies take these requirements seriously. He said the government’s decision to delay the corporate plan sanctions piece of the PPACA until 2015 doesn’t let anyone off the hook as far as meeting all the other requirements by Jan. 1. And many items must be completed by Oct. 1.

Here, then, are nine items you need to check off your 2014 checklist to stay out of the PPACA’s woodshed.

1. Notice of coverage or exchange notification: It’s up to employers to notify every employee, covered by a company health plan or not, of the health care options available to them through the insurance exchanges created by the Patient Protection and Affordable Care Act. This notification must be in an employee’s hands no later than Oct. 1. Employers hired after Oct. 1 have to be notified within 14 days.

Suggestion:  If you haven’t started this process, hire a third-party administrator with knowledge of the process to do it for you.

2. The Transitional Reinsurance Fee: This is the $63-per-covered-employee fee that plan sponsors and insurers must pay. The money goes to fund insurance for high-risk individuals. Employers and insurers have to report their enrollment numbers to the feds by Nov. 15. You’ll get an invoice back in a month, if all goes as planned, and the bill will come due a month later.

Suggestion: Set aside a good chunk of dough now to cover the cost.

3. Essential health benefits: This section of the PPACA requires non-grandfathered health plans to cover 10 essential health benefits as follows:

(1) ambulatory patient services; (2) emergency services; (3) hospitalization; (4) maternity and newborn care; (5) mental health and substance use disorder services including behavioral health treatment; (6) prescription drugs; (7) rehabilitative and habilitative services and devices; (8) laboratory services;(9) preventive and wellness services and chronic disease management; and (10) pediatric services, including oral and vision care.

For newly hired full-time employees who come on board after Jan. 1, coverage must be made available no longer than 90 days after hire.

Suggestion: State EHBs may vary, so make sure you know the requirements where you live.

4. Defining and counting your eligible full-time employees: The PPACA has redefined full-time employees for purposes of healthcare coverage. Now, employers must offer coverage to anyone who works an average of 30 hours a week. Calculating the 30 hours can be tricky, so you need to know the details. For instance, hours an employee is paid to work aren’t the only ones you count. You need to include the hours you pay someone not to work, such as vacation time, and hours of unpaid leave, such as jury duty. Having a good fix on who your eligible employees will be come Jan. 1 is critical to meeting the requirements of the law. To provide good data to the feds when they ask for it in 2015, employers will have to start tracking hours beginning this Oct. 1.

Suggestion: If you have put this exercise off because of the delay for sanctions until 2015, start counting now. You’ll need data from 10/1/13. Just because you don’t face sanctions doesn’t mean it isn’t essential to have a handle on this number.

5. 90-day waiting period: Under the PPACA, a group health plan or health insurance issuer offering group health insurance coverage must offer health coverage to new employees within 90 days of their hiring. No more “we’ll get you covered if you survive six months here.”

Suggestion: You might want to test potential hires out as contractors to make sure they’re a fit before you’re committed to coverage after 90 days.

6. Preventive services must be offered without cost-sharing: This requires group health plans to cover recommended preventive services without charging a deductible or co-pay/coinsurance. Grandfathered plans are generally excluded from complying with this provision. Among these services are immunization, well-woman visits, screening for gestational diabetes, screening for sexually transmitted diseases, well baby visits, and others.

Suggestion: If your benefits package includes a wellness program, you’ve got more assignments to complete before Oct.1. The idea behind these new rules is that all employees, regardless of their physical condition, should be able to meet the incentives built into wellness programs. Among the requirements:

7. Reasonable accommodations: Some employees, for various reasons, cannot meet the requirements established by wellness programs, so there must be options available for them built into the system.

8. The program must be designed to promote health or prevent disease: Wellness program goals must be tied to direct health benefits. Also, the goals established must not be “overly burdensome.”

9. Rewards must be available to all similarly situated employees: Again, because employees present a range of medical conditions, including some that may thwart them from achieving a reward, the conditions present in a given workplace have to be considered when designing the incentives and goals. Notice must be given to these employees of the options available to them.

Suggestion: Have a wellness program professional review your program to make sure that it is fair to all, truly promotes better health and includes incentives that any employee making a reasonable effort can hope to enjoy.


DOL Says No Fine for Failing to Provide Exchange Notices in 2013

Originally posted by Stephen Miller on September 13, 2013 on https://www.shrm.org

U.S. employers were again surprised by another unexpected suspension of a provision of the Patient Protection and Affordable Care Act (PPACA or ACA) when, on Sept. 11, 2013, the Department of Labor (DOL) announced there will be no penalty imposed on employers that fail to distribute to workers a notice about available coverage under state- and federal-government-run health insurance exchanges (collectively referred to by the government as the "health insurance marketplace"), scheduled to launch in October 2013.

Fair Labor Standards Act (FLSA) Section 18B, added to the labor statute by the PPACA, requires employers that are subject to the FLSA to provide all their employees by Oct. 1 of each year (the traditional start of the annual open enrollment season for employee health plans), and all new employees at the time of hiring, a written notice informing them of the following:

  • The existence of the government-run health care exchanges/the marketplace, including a description of the services provided and the manner in which employees may contact an exchange to request assistance.
  • If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, workers may be eligible for a premium tax credit under Section 36B of the Internal Revenue Code if they purchase a qualified health plan through an exchange.
  • Employees who purchase a qualified health plan through an exchange may lose their employer’s contribution to any health benefits plan the organization offers. All or a portion of this contribution may be excluded from income for federal income tax purposes.

According to the PPACA and subsequent guidance, the notice must be provided to each employee, regardless of plan-enrollment status or part-time or full-time status. Employers are not required to provide a separate notice to dependents or retirees, but an employer's obligation to provide notice may extend to its independent contractors and leased workers, depending on the nature of their relationship with the employer as determined under the FLSA's "economic reality" test.

The PPACA has a $100-a-day penalty for noncompliance with its provisions (unless otherwise specified in the statute), and it had generally been assumed this penalty would apply to employers that fail to distribute the exchange notice, possibly with additional penalties for failure to comply with a provision of the FLSA. However, the penalty provision had not been made explicit in any previous guidance, nor had the regulators described how the penalty would be implemented and enforced.

Then, on Sept. 11, 2013, the DOL posted on its website a new FAQ on Notice of Coverage Optionswhich states:

Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?

A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by Oct. 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

DOL Encourages Compliance

Keith R. McMurdy, a partner at law firm Fox Rothschild LLP, commented in a posting on his firm’s Employee Benefits Legal Blog that Section 18B of the FLSA clearly states that any employer subject to the FLSA “shall provide” written notice to current and future employees and that the DOL’s Technical Release No. 2013-02, issued in May 2013, states that Section 18B of the FLSA generally provides that an applicable employer “must provide” each employee with a notice. McMurdy wrote:

My experience with the federal laws and the enforcement of said laws by federal agencies is that when things say “shall” and “must,” there are penalties when you don’t do them. So when the DOL now takes the position that it is not a “shall” or “must” scenario, but rather only a “should” and “even if you don’t we won’t punish you” proposition, I get suspicious. But I also think this confirms what I have said since the beginning about PPACA compliance for employers. It is all about your risk tolerance.” …

So, if you don’t want to send the Oct. 1, 2013 Notice, apparently the DOL “FAQ” says you have no penalties and thus no risk. Me? My risk tolerance is a little lower than that and my experience with regulatory agencies is such that I don’t trust informal “FAQs” posted on the web as much as I trust the clear language of the statutes and prior technical releases. Words like “shall” and “must” usually mean that if I don’t do it I get burned. So I am still recommending that employers comply with the notice requirement. Why? I can almost guarantee that if you send the notice, you won’t face a penalty for not sending it. But if you don’t send one, well, I still say all bets are off.

Christine P. Roberts, a benefits attorney at law firm Mullen & Henzell LLP,commented on her “E is for ERISA” blog, “This information, at this late date, is more confusing than it is helpful to employers who have already invested significant resources in preparing to deliver the Notice of Exchange.” She added this cautionary note:

“Particularly for employers with pre-existing group health plans, the Notice of Exchange potentially could be viewed by the DOL as within the scope of the employer’s required disclosures to participants and thus within the scope of an ERISA audit, or separate penalties could be imposed through amendment to the FLSA or the ACA.”

Model Notices

The DOL’s Sept. 11 FAQ reiterated that the department has two model notices to help employers comply with the Oct. 1 exchange/marketplace notice deadline (which they are strongly encouraged to meet):

Employers may use one of these models, as applicable, or a modified version. The model notices are also available in Spanish and MS Word format at www.dol.gov/ebsa/healthreform.


IRS loosens employer mandate reporting requirements

Originally posted September 9, 2013 by Gillian Roberts on https://eba.benefitnews.com

In a follow-up to the Obama administration’s July 2 employer mandate delay, the U.S. Department of the Treasury and Internal Revenue Service issued a proposed rule late last week that would make certain reporting requirements in the provision of the Affordable Care Act voluntary. According to a statement by the department, “The regulatory proposals reflect an ongoing dialogue with representatives of employers, insurers, other reporting entities, and individual taxpayers.”

The changes include:

  • “Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees.”
  • “Replacing section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses, and dependents.”
  • “Limited reporting for certain self-insured employers offering no-cost coverage to employees and their families.”

“Today’s proposed rules enable us to continue engaging on how best to implement the ACA reporting requirements in a more streamlined and focused manner,” said Assistant Secretary for Tax Policy Mark J. Mazur in the statement.  “We will continue to consider ways, consistent with the law, to simplify the new information reporting process and bring about a smooth implementation of those new rules.”

The full statement can be found here and the full rule, with details to provide comments, can be found here.


Proposed rules would ease employers' health plan reporting burden

Originally posted September 6, 2013 by Jerry Geisel on https://www.businessinsurance.com

Newly proposed Internal Revenue Service and Treasury Department health care reform regulations would ease the amount of employee plan coverage information employers would have to report to federal regulators.

Under the proposed rules, released Thursday, employers would not be required to report cost information related to family coverage.

In addition, employers would have to report how much of the premium employees will have to pay for single coverage only.

Limiting that reporting requirement to single coverage is appropriate, the IRS and the Treasury Department said because a health care reform law affordability test applies only to single coverage — not family coverage.

Under that test, if the premium paid by employees for single coverage exceeds 9.5% of household income, the employee is eligible for a federal premium subsidy to purchase coverage in a public insurance exchange. If the employee uses the subsidy, the employer may be liable for a $3,000 penalty.

No penalty is assessed regardless of how much the employer charges for family coverage, making the need to collect such information unnecessary, regulators said.

“Because only the lowest-cost option of self-only coverage offered under any of the enrollment categories for which the employee is eligible is relevant to the determination of whether coverage is affordable — and thus to the administration of the premium tax credit and employer shared responsibility provisions — that is the only cost information proposed to be requested,” according to the proposed regulation, which is scheduled to be published in the Sept. 9 Federal Register.

While regulators have reduced the amount of information to be reported, “it is only limited relief. There still will be a massive amount of work to meet the reporting requirements,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

The proposed rules, though, could pose problems in other areas. For example, employers would be required to report tax identification numbers of employees' dependents.

Employers do not always have such information for every dependent, said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.


IRS Issues Proposed PPACA Rules on Employer-Information Reporting

Originally posted September 6, 2013 by Stephen Miller on https://www.shrm.org

On Sept. 5, 2013, the U.S. Department of the Treasury and the Internal Revenue Service issued two proposed rules intended to streamline the information-reporting requirements for certain employers and insurers under the Patient Protection and Affordable Care Act (PPACA or ACA).

The PPACA requires information reporting under Internal Revenue Code (IRC) Section 6055 by self-insuring employers and other health coverage providers. And under IRC Section 6056, information reporting is required of employers subject to the employer "shared responsibility" provisions, also known as the employer mandate—meaning those with 50 or more full-time equivalent workers, who must provide coverage for employees working an average of at least 130 hours per month (or 30 or more hours per week) looking back at a standard measurement period of not less than three but not more than 12 consecutive months—or pay a $2,000 penalty for each full-time worker above a 30-employee threshold. The shared-responsibility mandate, which was set to take effect in January 2014, has been delayed until January 2015.

One proposed rule, “Information Reporting of Minimum Essential Coverage,” pertains to IRC Section 6055, while the other proposed rule, “Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans,” pertains to IRC Section 6056.

“These reporting requirements serve distinct purposes under the ACA,” Timothy Jost, a professor at the Washington and Lee University School of Law in Virginia, explained in a commentary about the proposed rules posted on the journal Health Affairs’ blog. “The large-employer reporting requirement is necessary to determine whether large employers are complying with the employer-responsibility provisions of the ACA and will also help identify individuals who are ineligible for premium tax credits because they have been offered coverage by their employer. The minimum-essential-coverage reporting requirement will assist the IRS in determining whether individuals are complying with the ACA’s individual-responsibility requirement and also whether they are eligible for premium tax credits because they lack minimum essential coverage.”

Once the final rules have been published, employers and insurers will be encouraged to report the specified information in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.

“The absence of these rules was the reason given by the IRS for delaying the employer mandate until 2015,” Jost noted. “The IRS is encouraging voluntary reporting by employers and insurers, subject to the requirements for 2014, and should have no trouble getting the final rules in place for mandatory reporting in 2015.”

Statutory Requirements

Specifically, the PPACA calls for employers, insurers and other reporting entities to report under IRC Section 6055:

  • Information about the entity providing coverage, including contact information.
  • A list of individuals with identifying information and the months they were covered.

And under IRC Section 6056:

  • Information about the applicable large employer offering coverage (including contact information for the company and the number of full-time employees).
  • A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.

Proposed Reporting Options

The proposed rules describe a variety of options to potentially reduce or streamline information reporting, such as:

  • Replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses and dependents.
  • Eliminating the need to determine whether particular employees are full time if adequate coverage is offered to all potentially full-time workers.
  • Allowing organizations to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.
  • Allowing self-insured group health plans to avoid providing employee statements under Sections 6055 and 6056 by furnishing a single substitute statement.
  • Allowing limited reporting by certain self-insured employers that offer no-cost coverage to employees and their families.
  • Permitting health insurance issuers to forgo reporting, under Section 6055, on individual coverage offered through a government-run health care exchange, or marketplace (set to launch in October 2013), because that information will be provided by the marketplace.
  • Permitting health insurance issuers, employers and other reporting entities, under Section 6055, to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.

According to Jost, the IRS is attempting to avoid duplication and collecting unnecessary information. “Large employers need only report the employee’s share of the lowest-cost monthly premium for self-only coverage, since a determination as to whether employer coverage is affordable for adjudicating eligibility for premium tax credits is based on the cost of self-only, rather than family, coverage,” he wrote. “Entities that must report minimum essential coverage can report birthdates, rather than Social Security numbers, for dependents if they are unable to secure the Social Security numbers after reasonable efforts.”

The IRS is soliciting comments on the Section 6055 and 6056 proposed rules through Nov. 8, 2013. The agency will take the public comments into account when developing final reporting rules on further simplifications.

Separately, the process to challenge an insurance exchange's finding that an employer's plans are unaffordable or fail to provide minimum essential coverage (thereby triggering penalties against the employer) is presented in a final rule published in the Federal Register on Aug. 30, 2013, by the U.S. Department of Health and Human Services.

 


IRS Recognizes All Same-Sex Marriages for Pretax Benefits

Originally posted by Stephen Miller on https://www.shrm.org

Under a new Internal Revenue Service ruling, employees who pay for employer-provided health insurance for their same-sex spouse may treat these costs as excludable from federal income taxes, even if they live in a state that doesn't recognize their marriage. State income taxes are another matter, however.

The U.S. Department of the Treasury and the IRS ruled on Aug. 29, 2013, that same-sex couples who were legally married will be treated as married for federal tax purposes, including the pretax treatment of a spouse's health insurance coverage, in all 50 states and the District of Columbia. Revenue Ruling 2013-17 applies, in other words, regardless of whether the couple now live in a state that recognizes same-sex marriage or a state that does not recognize same-sex marriage.

The ruling implements federal tax aspects of the Supreme Court's June 26 decision in United States v. Windsor, which invalidated a key provision of the 1996 Defense of Marriage Act.

Revenue Ruling 2013-17 applies to all federal tax provisions in which marriage is a factor, including filing status, claiming personal and dependency exemptions, employee benefits, and claiming the earned income tax credit or child tax credit.

The ruling covers same-sex marriages entered into in one of the U.S. jurisdictions where such marriages are recognized as legally valid (sometimes referred to as the "state of celebration," as opposed to a couple's state of residency), as well as legal marriages performed in a foreign country. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.

Employee Benefits Affected

Under the ruling, same-sex couples will be treated as married for all federal tax purposes. Those who purchased same-sex spouse health insurance coverage from their employer on an after-tax basis may treat the costs of that coverage as pretax and excludable from income (for federal income tax purposes; state income taxes may still apply).

"Same-sex spouses legally married anywhere no longer are taxed on health benefits coverage for their spouses and can pay premiums pretax, even if they live in a non-recognition state such as Florida, Texas, etc. This is a huge development and a relief for these employers and employees," Todd Solomon,a partner in the employee benefits practice group of McDermott Will & Emery LLP in Chicago, told SHRM Online.

"However, state taxation of benefits may continue to be quite complex, although it remains to be seen how states will treat this," Solomon added. "On the flip side, the guidance may not be welcome for employers who currently do not offer same-sex partner benefits because now they are legally required to offer benefits to same-sex spouses in all states" (see box below).

Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously taxed health insurance and other benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of Revenue Ruling 2013-17.

Other agencies may provide guidance on federal programs they run that are affected by the Internal Revenue Code, Treasury said.

Are Employers Obligated to Provide Equal Treatment?

Are employers located in states that do not recognize same-sex marriage now required to grant access to health care benefits to the spouses of employees in legal same-sex marriages (entered into elsewhere), if they grant health benefits to spouses in opposite-sex marriages?

"This is an open question, and only time and legal challenges—which there are certain to be—will tell," commented Todd Solomon of McDermott Will & Emery LLP.

Employers are not "required" to offer medical plan coverage to same-sex spouses the way they are required to offer a qualified joint and survivor annuity (QJSA) and a qualified preretirement survivor annuity (QPSA) in a pension plan because there are no similar statutory benefit mandates in the welfare plan context, Solomon explained. However, "employers that do not cover same-sex spouses will be very vulnerable to discrimination claims, in particular sex discrimination under Title VII. State and local discrimination claims are also possible, but private sector employers can likely argue that these claims are preempted by ERISA. But ERISA does not preempt Title VII."

While Title VII does not protect against sexual orientation discrimination, Solomon pointed out that guidance from the Equal Employment Opportunity Commission suggests that it might interpret this type of exclusion of same-sex spouses as sex discrimination, and therefore "an employer denying coverage to a same-sex spouse will be at risk for having to defend a costly sex discrimination lawsuit."

Retroactive Application and Refund Claims

The IRS set a prospective effective date for the ruling of Sept. 16, 2013. Legally married same-sex couples must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.

For prior tax years still open under the statute of limitations, individuals who were in same-sex marriages may opt to file original or amended returns choosing to be treated as married for federal tax purposes. Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.

With respect to retroactivity for prior years, "employers are still in wait-and-see mode until the IRS issues further guidance," said Solomon. "What we know is that employees and employers have the right—but not the obligation—to file for refund claims on past taxes paid on same-sex spouse benefits in open tax years—typically 2010, 2011, and 2012."

"Employers can expect to get requests from employees for corrected Form W-2s from these prior years," Solomon noted. "But what is not clear yet is how to handle cafeteria plan participation and tax reporting for prior years and whether adjustments need to be made. The IRS will be issuing more guidance on this issue as well as the retroactive impact of the guidance on retirement benefits that have or in many cases have not been paid to same-sex spouses."

Along with Revenue Ruling 2013-17, the IRS released two related sets of frequently asked questions and answers:

The IRS ruling "assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change,” Treasury Secretary Jacob J. Lew noted in a released statement.

 


Don't forget about employee ACA communication due Oct. 1

Originally posted by Keith R. McMurdy August 16, 2013 on https://eba.benefitnews.com

With the recent employer mandate delay, some businesses might be overlooking the requirement to provide a notice to employees about health insurance coverage that may be available through a public exchange.

Employers must provide a notice to each employee, regardless of plan enrollment status or part-time or full-time status, by Oct. 1. The notice must be provided automatically, free of charge, and written in language that the average employee can understand. It may be provided by first class mail or electronically, if the requirements of the U.S. Department of Labor’s electronic disclosures safe harbor are met. It must also be provided to new hires — for 2014, the DOL will consider a notice delivered timely to a new employee if it’s provided within 14 days of the start date.

The notice must inform each employee of three things:

  • The existence of state or federal health insurance exchanges.
  • If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60%, then the employee may be eligible for a federal premium tax credit if the employee purchases a qualified health plan through an exchange.
  • If the employee purchases a qualified health plan through an exchange, then the employee may lose the employer contribution to any health benefits plan offered by the employer; also, all or a portion of such contribution may be excludable from income for federal income tax purposes.

The good news is that employers don’t have to create the notices from scratch. The DOL published model notices, one for Employers Who Offer Health Plans, and one for Employers that Do Not Offer Health Plans. If employers have questions about how to complete the forms, this is an opportunity for an employee benefit adviser to step in and provide guidance. Above all, advisers should remind employers that they need to issue them. Just because employers have a year to wait on the coverage mandate does not mean they can ignore other compliance rules like this one.

 


Medicare Part D Notice Due Before October 15th

This is a reminder to employers who are required to provide an annual Medicare Part D Notice. Sponsors of group health plans that provide prescription drug coverage generally must provide the Notice to all participants who are eligible for Medicare. The Notice must be distributed prior to the start of the election period (which runs from October 15 to December 7), so you may want to include the Notice in your open enrollment packages. You must send the Notice out no later than October 14, 2013.
You must provide the Notice to all Part D eligible individuals enrolled in or seeking to enroll in your plan, including spouses and dependents. Because employers may not know which individuals are Part D eligible (some individuals might be eligible because of a disability, some might be eligible due to age, etc.) many employers distribute the Notice to all individuals eligible to enroll in the plan to ensure that no Part D eligible individual is missed.
Here are some basic rules for the Notice:
  • You have flexibility in the form and manner of providing the Notice
  • You may use the model notice form published by the Centers for Medicare & Medicaid Services (CMS) (although you are not required to do so).
  • You are not required to send the Notice as a separate mailing. You can provide it with other participant information materials (although note that certain formatting requirements may apply)
  • A separate disclosure must be provided if you know that the spouse or dependent resides at a different address than the participant.
  • You may distribute the Notice electronically if you follow the same electronic disclosure requirements that apply to summary plan descriptions (SPDs), except you should inform the participant that he/she is responsible for providing a copy of the disclosure to his/her Medicare-eligible spouse and/or dependents eligible for coverage under the plan (otherwise, you will need to separately send them a hard copy notice) And you must post the Notice on your website (if you have one) with a link on your home page to the Notice.
  • If you have not yet finished your 2013 offerings, the Notice should still be provided now based on your current 2012 offerings. If the status of those offerings changes from creditable to non-creditable (or vice versa), you will need to provide an additional Notice within a reasonable period of time (maximum 60 days) after the change occurs. You should indicate on your Notice that it will not be updated if coverage changes but it remains creditable or non-creditable (as applicable)
In addition to the Notice, you must annually disclose to CMS the creditable coverage status of your prescription drug plan, using the online Disclosure to CMS Form (available here). The Form is due no later than 60 days after the beginning of the plan year, within 30 days after termination of a prescription drug plan, or within 30 days after any change in creditable coverage status.
For further information or if you have any questions about Medicare Part D and notices of creditable coverage, visit the Medicare section on the CMS website at https://www.cms.hhs.gov/CreditableCoverage
or call our office at (513) 573-0129

How the ACA affects annual enrollment

Originally published July 25, 2013 by Andrew Molloy on https://ebn.benefitnews.com

Despite the one-year delay of the pay-or-play mandate, there are still several provisions employees need to know about.

With annual benefit enrollments on the horizon, employers need to be prepared now for the changes that health care reform is bringing. Hopefully, employees already know that as of Jan. 1, 2014, they must have health insurance coverage. Beyond this mandate, however, what are some of the other issues of which employers should be aware?

The Affordable Care Act requires employers to tell their employees in writing by Oct. 1 about the new public health care exchanges and how these relate to their workplace benefits. This requirement applies to all employers subject to the Fair Labor Standards Act.

Under the law, employees need to know that they may be eligible for a tax credit and cost-sharing reduction if their employer's plan does not meet certain coverage and affordability requirements and the employee purchases a qualified health plan through a public exchange. Employers must also inform workers that if they choose to purchase their coverage through an exchange, they may not receive any employer contribution toward their premium, nor any related tax advantage.

Employees may still be confused about the exchanges by the time of enrollment. For the most part, those who work for large employers will see little impact since the subsidies offered for a qualified employer-sponsored medical plan will make the choice moot. However, employees of small- to medium-sized companies where health insurance is not available, or isn't affordable, will have to make a decision about whether to go to a public exchange for their coverage. For these employers, it means telling their workers what their options are and are not.

Despite the recently announced one-year delay in the employer shared responsibility requirement, employers still have obligations for 2014 and they'll have to review their medical plans carefully to ensure they meet the essential health benefits mandated by the law. In addition, the plan cannot have any annual coverage limits; cannot exclude people with pre-existing health conditions; must extend coverage to children up to age 26; and must comply with limits on deductibles and out-of-pocket expenses, among other requirements. It is also important to note that the requirement for essential health benefits applies only to individual and small group plans; the requirement does not exist for self-insured plans.

With the pay-or-play delay, employers will not be penalized if their plans do not cover at least 60%, on average, of an employee's health care costs in a given year, or if an employee's premium costs exceed 9.5% of his or her income. Those employees may still be eligible for tax credits on the public exchange, but for 2014 employers will not be subject to penalties if employees receive those tax credits.

Financial responsibility

It's clear that shifts in financial responsibility will continue to affect today's benefits picture. As employers feel the pressure of rising costs and enrollments in their health plans, they are likely to further fuel the already rapid growth of consumer-directed health plans. In fact, 52% of employers surveyed recently anticipated introducing high deductible/consumer-driven health plans in the next three to five years.

Employers should be aware that employees will see any loss of medical coverage or increase in cost sharing as a reduction in compensation. Consequently, employers will need to pay more attention to their company's total benefits package and consider ways to preserve or increase its value.

Above all, during this transitional period of health care reform, employers must clearly communicate benefits options and their value to employees. Employees need to understand that in most cases, their health benefits will remain the same and they won't have to go to the public exchanges for their coverage. They should also be educated about the need for disability coverage and its value.

Using multiple enrollment methods and a variety of learning tools will help ensure a successful benefits enrollment. In fact, research shows that participation is highest when employees have at least three weeks to absorb their benefits-education information, with at least three different ways to learn about their choices.