ACA compliance: What does the future hold?
Original post by Alden Bianchi, eba.benefitnews.com
The Affordable Care Act’s reporting requirements are challenging in thace extreme. Carriers and employers, and their vendors, service providers and strategic partners, have scrambled up a steep learning curve. And in a few short months — a few more than originally anticipated as a result of Notice 2016-4 — compliance will begin in earnest.
Here are some predictions about how we expect compliance to unfold:
1) MEC reporting will work as advertised — for the most part. For purposes of the reporting of minimum essential coverage (MEC) under Code 6055 on Forms 1094-B and 1095-B, carriers are largely relying on home-grown software. MEC reporting in the case of fully-insured plans has its challenges, principally relating to data collection. But the regulatory regime is not all that complex.
As a consequence, there is no reason to anticipate that these systems will not work, i.e., that the inputs and outputs will match the requirements of the law and applicable regulations even if the particulars of the “black box” vary from carrier-to-carrier. Expect a good deal of finger pointing over the timely collection of correct information, however, particularly as it relates to social security numbers. One hopes that the extensions of time provided by Notice 2016-4 will go a long way toward alleviating this problem.
2) Software solutions for applicable large employers may work and will converge. Where applicable large employers are concerned, the level of reporting complexity rises exponentially. (Just compare the Forms 1094-B and 1095-B to the Forms 1094-C and 1095-C to see why.) There are currently a good number of expert systems available to employers to assist with their reporting obligations. As best we can tell, vendors have generally been diligent in their efforts to beta test their products. But none of these products has yet been tested live and in real time with real data.
The software solutions for reporting by applicable large employers under Code 6056 have for the most part been developed by third parties, including payroll companies, brokers, venture-funded and other start-ups, industry-focused organizations, and interested tinkerers, among others.
In contrast to MEC reporting, these products are not at all uniform. Some favor particular compliance approaches. For example, it is not uncommon for vendors to strongly urge or require customers to use the Federal Poverty Line affordability safe harbor. This simplifies the reporting on Form 1095-C, Part II, Line 15, but at a cost to employers.
Others lack full functionality relating to transition rules. This will change as vendors gain experience and the industry consolidates. In time, these software products will converge such that the inputs and outputs will align seamlessly with all of the requirements of the law and applicable regulations.
3) For employers, the first year will be chaos. The run-up even to the now delayed reporting deadline will involve a good deal of frantic, last-minute effort. Employers have been asked to respond to detailed data requests from their vendors to provide information from disparate sources, e.g., payroll, HRIS, and the employer’s group health plan, among others.
Complicating matters is that some vendor requests ask for information that is not necessary to complete the reporting process. The biggest challenges will arise in cases where the data collection and collating cannot be automated. For companies of sufficient size, this could mean that timely compliance is out of the question, which will require a “Plan B” (i.e., late filing accompanied by a request for an abatement of penalties).
4) Also for employers, there will be some unwelcome surprises. The reporting process inevitably involves a detailed examination by a third party vendor of the approach that the applicable large employer adopted to comply with the ACA employer shared responsibility rules. This examination can reveal compliance problems and lapses.
For example, a vendor and employer might differ on the classification of a cohort of employees as variable hour by an employer that has adopted the look-back measurement method. If that cohort is sufficiently large, the employer could be facing penalties under Code 4980H(a).
IRS pinpoints ACA affordability percentage for safe harbor
Original post by Helen Karakoudas, shrm.org
The IRS has announced that the inflation-adjusted percentage used to determine what is “affordable” health coverage for individuals will also apply to the safe harbor for employers.
Under a safe harbor set forth in the Affordable Care Act’s (ACA’s) employer shared-responsibility provisions (also known as “pay or play”), health coverage has been deemed to satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to employees does not exceed 9.5 percent of any one of the following:
- The employee’s W-2 wages.
- The employee’s rate of pay.
- The federal poverty level.
The three-pronged affordability safe harbor is used so that employers have penalty protection for what they declare as “affordable” on Line 16 of IRS Form 1095-C. The safe harbor concept is the standardized way IRS regulations address the fact that employers would not know their employees’ household incomes.
For 2015, the IRS increased the applicable threshold percentage for purposes of “household income” from 9.5 percent to 9.56 percent to account for increases in health insurance premiums and income growth, with a further increase to 9.66 percent announced for 2016. But the IRS did so with regard to the affordability percentage that marketplace exchanges can use to test compliance with the ACA individual mandate. The IRS did not explicitly increase the percentage for use in the employer safe harbor test above the statutory 9.5 percent. That led many benefit attorneys to advise their clients to continue using a contribution percentage of 9.5 percent to measure their plan’s affordability.
While the controversy over the affordability percentage has divided employee benefits attorneys and confused business owners and HR professionals, new guidance clarifying the issue was released on Dec. 16.
According to IRS Notice 2015-87:
Treasury and IRS intend to amend the regulations under § 4980H to reflect that the applicable percentage in the affordability safe harbors should be adjusted … so that employers may rely upon the 9.56 percent for plan years beginning in 2015 and 9.66 percent for plan years beginning in 2016.
Legal Significance for ACA Safe Harbors
The phrases “intend to amend” and “should be adjusted” are key. Before this guidance, there was no official connection between Section 4980H—the ACA regulations in the Internal Revenue Code that detail the employer shared responsibility requirements—and any percentage other than 9.5 percent, which remained the only rate given in ACA regulations for affordability testing.
Though official word about the syncing of the safe-harbor percentage with the marketplace percentage came bundled with end-of-year housekeeping items, hints about a clearing of the fog came this fall:
- In a September webinar of the ACA Information Returns (AIR), the monthly group call for software developers learning about the new IRS processing engine specific to the 1095 series of forms, attendees were told that hard coding for the 9.5 percent affordability percentage for employer returns was being undone and revised for specifications that could be changed from year to year. Further references to this reformatting were also made in the October and November calls.
- On page 11 of the instructions for IRS Forms 1095-C and 1094-C, which also came out in September, there was this paragraph: “References to 9.5 percent in the affordability safe harbors and alternative reporting methods may be subject to change if future IRS guidance provides that the percentage is indexed in the same manner as that percentage is indexed for purposes of applying the affordability thresholds under Internal Revenue Code section 36B (the premium tax credit). In general this should not affect reporting for 2015, but taxpayers may visit IRS.gov for any related updates.”
“Admittedly, the door was open to possible updates. But one would have thought that, by Dec. 16, nothing would change the result for 2015,” said Paul Hamburger, co-chair of the employee benefits and executive compensation practice center for Proskauer Rose in Washington, D.C.
“Now, the [Dec. 16] guidance allows employers, essentially, to [use the inflation-adjusted percentage] for 2015 in measuring affordability even though the instructions and forms are based on 9.5 percent,” he added. “However, with vendors already having programmed their systems with unadjusted numbers, I’m not sure how it will all play out. For example, if an IRS form was completed on the basis of unaffordability at 9.5 percent but it would have been affordable at 9.56 percent, will the IRS review cause a penalty to potentially be imposed, only to be negotiated away once the numbers are put forward? We will see,” Hamburger said.
Premium contribution strategies for 2016 were the concern of Ken Mason of Spencer Fane in Kansas City, Mo. “The recent guidance comes too late to affect ACA-compliance efforts for 2015,” Mason said. “Given the usual open enrollment periods of October or November for calendar-year plans, it’s probably also too late for most calendar-year plans to take advantage of the 9.66 percent figure when setting premiums designed to fall within the ACA safe harbors for 2016.”
The ‘Christmas Present’ Rule
Hamburger also widened the lens for perspective on this news: “Over the years, it seems that year-end IRS guidance with brand-new rules is part of the year-end tradition,” he remarked. “I remember a pension-related notice that came out at the end of 1987 where the IRS issued a somewhat lenient optional tax-related rule and we colloquially referred to it as the ‘Christmas present’ rule. Since then, the IRS seems to always remember the employee benefits community at this time of year.”
IRS releases final rule on premium tax credits, notice addressing employer coverage
Original post by Timothy Jost, healthaffairs.org
Implementing Health Reform. On December 16, 2015, the Internal Revenue Service (IRS) released a final regulation containing a number of premium tax credit eligibility provisions. Several of these concern the question of when an employer-sponsored health benefit plan offers affordable coverage that meets the minimum value requirement, but the rule also addresses other miscellaneous issues.
At the same time the IRS released a long and complicated notice addressing various issues that have arisen under the Affordable Care Act (ACA) with respect to employer-sponsored coverage, focusing particularly on account-based employee benefits such as section 125 cafeteria plans and health reimbursement arrangements.
Premium Tax Credit Final Rule
The rule finalizes a minimum value rule proposed over two years ago in May of 2013. The IRS had also recently proposed additional regulatory provisions relating to minimum value, while Department of Health and Human Services regulations address other issues related to minimum value. Parts of the earlier proposed rules are finalized in this rule, and other parts remain to be finalized later.
Premium Tax Credit Eligibility
The final rule begins by cleaning up one premium tax credit eligibility issue that has nothing to do with minimum value of employer-sponsored coverage. Eligibility for premium tax credits is based on household income, including the income of children or other members of the family who are required to file tax returns. Under certain circumstances parents are allowed to include their children’s income in their tax returns.
The regulatory language clarifies that when a parent does this, the household’s income includes the child’s gross income included on the parent’s return. The amount included for determining tax credit eligibility, however, is the child’s modified adjusted gross income (MAGI), which is not necessarily the amount reported as gross income on the tax return. MAGI would also include, for example, the child’s tax exempt interest and nontaxable Social Security income. The final rule clarifies how this is to be handled.
The rule next clarifies how wellness incentives are handled for determining the affordability of coverage for purposes of premium tax credit eligibility. Premium tax credits are not normally available to individuals who are offered health insurance coverage by their employer. Employees may, however, be eligible for premium tax credits if the employer coverage does not provide “minimum value” (MV) or if the employer coverage is “unaffordable.” Generally, a minimum value plan must have an actuarial value of at least 60 percent and cover substantial hospital and physician services. To be “affordable” a plan must cost no more than 9.56 percent (for 2015) of an employee’s MAGI. An employer that offers a health plan that fails to provide MV or that is unaffordable may also be assessed a penalty if one or more of its employees turns to the exchange for premium tax credits.
Under the ACA, employers can offer wellness incentives that reduce the cost of the employee contribution or cost-sharing for program participants. The question arises, therefore, whether affordability and minimum value should be determined with or without the application of wellness incentive premium and cost-sharing reductions. The final regulations provide that affordability and minimum value should be determined by assuming that employees fail to qualify for the wellness incentive premium or cost-sharing reductions with one exception — if the wellness incentive relates to tobacco use affordability will be determined based on the assumption that the employee qualifies for the incentive and is thus not subject to the tobacco use surcharge.
Extension Of The ‘Family Glitch’
The final regulation proceeds, however, to extend the “family glitch.” One of the most criticized IRS rules implementing the ACA provides that if an employer offers an employee affordable sole-employee coverage, the employee’s entire family is ineligible for premium tax credits even though employer-sponsored family coverage is unaffordable.
Under the minimum value final rule, if an employee uses tobacco and does not join a tobacco cessation program, and thus coverage is in fact unaffordable with the tobacco surcharge or does not offer minimum value, not only the employee, but also the employee’s entire family, is ineligible for premium tax credits as long as coverage would have been affordable or offer minimum value had the employee complied with the smoking cessation program. This is true even if no one else in the family smokes.
Health Reimbursement Arrangements
The final regulation next addresses the effect of health reimbursement arrangements (HRAs) on affordability. Amounts newly made available to an employee through an HRA that is integrated with ACA-compliant employer-sponsored health coverage when the employee may use the HRA to pay premiums are counted toward an employee’s required contribution to determine affordability. Amounts newly made available to an employee through an HRA that is integrated into with eligible employer-sponsored coverage that an employee may only use to reduce cost-sharing is counted toward determining minimum value. If HRA contributions may be used either to cover premiums or reduce cost-sharing, they are considered for determining affordability and not minimum value.
HRA contributions, however, are only taken into account if the HRA and the primary employer-sponsored coverage are offered by the same employer. They are also taken into account for determining affordability or minimum value if the amount of the annual contribution is determinable within a reasonable time before an employee must decide whether or not to enroll.
Cafeteria Plans
The final rule also provides that employer contributions to flex arrangements under section 125 cafeteria plans are considered for determining affordability and minimum value if 1) the employer contribution cannot be taken as a taxable benefit, 2) it may be used to pay for minimum essential employer coverage, and 3) it may only be used to pay for medical care, as opposed to other benefits like dependent care that can be paid for under a section 125 plan. The guidance also released on December 16 discusses HRAs and 125 plans in much greater detail, and is examined below.
Continuation Coverage Eligibility And Tax Credits
The rules next address the effect on eligibility of former employees and retirees for continuation coverage under federal or state law, such as Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage, on eligibility for premium tax credits. The rule provides that eligibility for continuation coverage does not disqualify former employees or retirees, or their dependents, from premium tax credit eligibility unless the individual actually enrolls in the coverage. If continuation coverage is offered to current employees because of a reduction in hours, however, it will disqualify the employee from premium tax credits if it is affordable and offers minimum value. Of course, continuation coverage offered current part-time employees will often not be affordable.
Tax Credits And Coverage For Partial Months
The final rule concludes by addressing premium tax credit issues that arise when an individual is enrolled in coverage for a partial month. When a child is born, adopted, or placed with a family for adoption or foster care, or placed by court order, that child can be covered as of the date of birth, adoption, placement, or the order. The rule clarifies that when this happens, the child is treated as enrolled from the first day of the month for purposes of determining premium tax credit eligibility, even though the child is enrolled during the middle of the month. The adjusted monthly premium is determined as if all members of the coverage family were enrolled as of the first of the month in this situation.
The rule next addresses how premium tax credits are calculated where there is a partial months of coverage, which can occur when a child joins the plan mid-month by birth, adoption, placement or court order or when coverage is terminated mid-month, for example by a death. In this situation, the premium tax credit covers the lesser of the actual amount of the pro-rated premium charged for the month (taking into account any premium refunds) or the excess of the benchmark plan premium for a full month of coverage over the full amount that the eligible household would be required to contribute for coverage given its income level.
Thus if a taxpayer has a $500 premium and would normally be entitled to a premium tax credit of $300 based on a $450 benchmark premium and a $150 contribution amount, and the taxpayer dies mid-month and is refunded $250, the taxpayer would be entitled to a $250 premium tax credit based on his or her actual expenditure, but if the taxpayer is refunded $150, the taxpayer would be entitled to a $300 tax credit based on the benchmark plan cost.
The final rule provides that if family members live in different states the benchmark plan premium is determined by summing the benchmark premiums for the different states as they apply to the family members in each state. The rule updates the table of percentages, which determines how much individuals must contribute of their own income toward the cost of premiums to be eligible for premium tax credits given their income. And, finally, the rule analyzes how qualified health plan premiums and benchmark plan premiums should be allocated for determining premium tax credit eligibility when either the premiums of a plan in which an individual is enrolled or a state’s benchmark plan covers services that are not essential health benefits and thus not eligible for premium tax credit payments.
IRS Notice 2015-87
The notice (IRS Notice 2015-87) addresses a range of issues relating to the ACA and employer coverage, elaborating on some issues addressed by the final rule. Many of the questions it raises elaborate on IRS Notice 2013-54, issued in 2013. The notice states that a number of these issues will be addressed by future rulemaking and requests comments. It clarifies existing requirements as to some issues and allows plans a grace period before employers must come into compliance. The notice also, however, allows employees to claim the benefit of some of the requirements even though employers have not yet come into compliance.
Health Reimbursement Arrangements
The notice begins by addressing a series of issues raised by health reimbursement arrangements (HRAs). It first clarifies that an HRA that covers only former employees or retirees is not required to be integrated with an employee-sponsored plan that meets ACA requirements. A former employee covered by such an HRA, however, is ineligible for premium tax credits as long as funds remain available in the HRA.
If an HRA covers current employees, a former employee who is no longer covered by the group health coverage that must be integrated with an HRA for the HRA to comply with ACA requirements may not use funds remaining in his or her HRA to purchase individual coverage. Amounts credited to an HRA prior to January 1, 2013, or during 2013 under terms in effect prior to January 1, 2013, may, however, be used for medical expenses under the terms then in effect even though those terms do not comply with ACA requirements that went into effect in 2014.
The notice provides that HRAs available to cover medical expenses of an employee’s spouse or children (family HRAs) may not be integrated with employee-only coverage but must be integrated with coverage in which the dependents are enrolled to comply with ACA requirements. Recognizing that many employer plans do not conform to this requirement, the IRS is allowing plans a grace period to come into compliance with this requirement.
Under earlier guidance, the IRS had made it clear that HRAs could not be used to purchase individual health insurance coverage. This guidance clarifies that HRAs can be used to pay the premiums for excepted benefit coverage, such as dental or vision plans. The notice further clarifies that section 125 cafeteria plans cannot be used to purchase individual coverage, even if the 125 plan is funded fully by employee contributions.
The Notice explains at great length and in detail how HRAs and flex contributions to a section 125 cafeteria plan are treated for determining affordability and minimum value of employer-sponsored coverage. This issue is also addressed by the rule and discussed above. The notice offers several examples of how these rules are applied.
Flex Plans And Opt-Out Payments
One of the requirements of the rule and notice is that employer contributions to flex plans will only be considered for determining affordability or minimum value of employer coverage if the flex plan can only be used for health spending. Solely for purposes of determining affordability for application of the employer mandate (which imposes a penalty of employers who do not offer affordable, minimum value coverage if their employees receive premium tax credits) and for employer reporting requirements, contributions to flex accounts that can be used for non-health as well as health purposes will be considered to reduce employee contributions for plan years beginning before January 1, 2017 for arrangements adopted on or before December 16, 2015. However, they will not be considered for determining affordability of employer coverage for an employee either for determining liability under the individual responsibility provision or eligibility for premium tax credits.
If an employer offers an employee payments that are available only to an employee if the employee declines health insurance coverage (an opt-out payment), the IRS will consider the opt-out payment as an additional charge for the coverage for determining its affordability for application of the employer mandate penalty. The employee has the option of receiving additional salary for foregoing coverage, and thus is being charged the amount of the additional salary if he or she accepts coverage.
The IRS intends to issue a rule on this issue, and might treat opt-out payments differently if they are subject to additional requirements, such as proof of coverage under a spouse’s plan. The IRS will offer a transitional period for plan years beginning before January 1, 2017 based on arrangements established on or before December 16, 2015, for purposes of the employer mandate penalty and employer reporting, but individual taxpayers may consider opt-out payments as increasing the cost of coverage for application of the individual mandate or premium tax credit eligibility requirements.
Complex issues are presented by the McNamara-O’Hara Service Contract Act and the Davis-Bacon and related acts, which require federal contractors to pay prevailing wages and fringe benefits or cash out fringe benefits for workers. Until these issues are resolved employers may for purposes of the employer mandate and reporting requirements consider cash payments in lieu of fringe benefits as increasing the affordability of coverage, although employees are not required to consider the payments as making coverage more affordable for purposes of the individual mandate affordability exemption or premium tax credit eligibility. Recognizing that the disconnect between employer reporting requirements and employee premium tax credit eligibility requirements during transitional periods for this and other requirements may cause difficulties for employees in establishing tax credit eligibility, the notice urges employers to work with employees to provide necessary information.
Affordability Under The Employer Mandate
For purposes of the employer mandate affordability requirement and related regulatory requirements, including affordability safe harbors, affordability of coverage is defined as costing no more than 9.5 percent of household income (or for safe harbors, 9.5 percent of W-2 or hourly wages or the poverty level). The 9.5 standard is adjusted annually and is set at 9.56 percent for 2015 and 9.66 percent for 2016. The notice makes clear that this adjustment applies to all provisions that use the 9.5 percent standard.
The notice also provides the inflation updates for the statutory penalties under the employer mandate. The $2,000 per full-time employee penalty that applies when an employer fails to offer minimum essential coverage and an employee receives premium tax credit will increase to $2,080 for 2015 and $2,160 for 2016; while the $3,000 penalty that applies on a per-employee basis for employees who receive premium tax credits when coverage does not meet affordability or minimum value standards will increase to $3,120 for 2015 and $3,240 for 2016.
The notice provides a complex analysis of when “hours of service” that would count for crediting hours for Department of Labor regulations do or do not count as “hours of service” for calculating whether an employee is a full-time employee for purposes of the employer mandate. This analysis is beyond the scope of this post.
Service Breaks
A number of ACA rules that apply to full-time employees assume that employees are continuously employed without long breaks in service. Special rules apply for employees of educational institutions who routinely have long breaks in service between school years. Under IRS rules, employees of educational institutions cannot be treated as having terminated employment and then been rehired unless they have a break in service of at least 26 consecutive weeks.
Some educational institutions have been attempting to get around this rule by claiming that their employees are actually employed by staffing agencies with which they contract, and thus, for example, terminated at the end of the school year and rehired in the fall. The IRS is considering a rule that would provide that the educational institution exception would also apply to employees who provide services primarily to educational institutions and are not offered a meaningful opportunity to provide service during the entire year. An individual who worked in a school cafeteria nominally employed by a staffing agency rather than the school, for example, would be protected by the break in service exception unless the staffing agency offered employment in another position throughout the summer.
The notice clarifies that AmeriCorps members are not employees for purposes of the employer mandate, but that individuals offered TRICARE coverage by virtue of their employment are offered minimum essential coverage. The notice discusses how employer aggregation rules apply to government employers. It requires each separate government employer entity to have an employer identification number. The notice also discusses special rules that apply to health savings accounts contributions for individuals eligible for VA coverage and the application of COBRA continuation coverage to flexible spending account carryovers, both topics beyond the scope of this post.
Finally, the notice reiterates that the IRS will not impose penalties on employers that provide incorrect or incomplete 1094-C and 1095-C reports to employees in 2016 for 2015 coverage if they can demonstrate good faith efforts to comply with requirements. Employers who fail to file reports on a timely basis will also be provided relief from penalties if they can show reasonable cause for their failing to do so.
IRS extends due dates for ACA information reporting
Original post by Stephen Miller, shrm.org
Employers subject to the Affordable Care Act’s 2015 information reporting requirements now have extra time to give forms to employees and to file them with the government.
In Notice 2016-4, issued by the IRS on Dec. 28, the agency extended these reporting deadlines:
| Previous IRS Due Date | New IRS Due Date |
| Forms 1095-B and 1095-C were due to employees by Feb. 1, 2016 | March 31, 2016 |
| Forms 1094-B, 1095-B, 1094-C and 1095-C were required to be filed with the IRS if filing on paper by Feb. 29, 2016 | May 31, 2016 |
| Forms 1094-B, 1095-B, 1094-C and 1095-C were required to be filed with the IRS if filing electronically by March 31, 2016 | June 30, 2016 |
| Source: ADP, based on IRS Notice 2016-4. | |
• For furnishing employees with the 2015 Form 1095-B (Health Coverage) and Form 1095-C (Employer-Provided Health Insurance Offer and Coverage), the deadline has been extended from Feb. 1, 2016, to March 31, 2016.
• For filing with the IRS the 2015 Form 1094-B (Transmittal of Health Coverage Information Returns), Form 1095-B, Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and Form 1095-C, the deadline has been extended from Feb. 29, 2016, to May 31, 2016 if not filing electronically, and from March 31, 2016, to June 30, 2016 if filing electronically.
Any employer filing 250 or more information returns during the calendar year must file the returns electronically. For employers with fewer than 250 returns, electronic filing is voluntary.
“Earlier guidance would have been preferred, but the last-minute relief will still be helpful for employers that have been working to understand the complexities of compiling all the information needed and completing the forms, or gathering the information needed to work with their reporting vendors,” said Ann Marie Breheny, a senior legislative adviser at Towers Watson in Arlington, Va.
The notice also provides guidance to employees who might not receive a Form 1095-B or Form 1095-C by the time they file their 2015 tax returns.
Employers Sought Extension
Employer groups had been seeking filing extensions. Because instructions for filing the reporting forms were released late in the year, “employers have been struggling with logistical issues” related to reporting, said Chatrane Birbal, the Society for Human Resource Management’s senior advisor for government relations.
The IRS deadline extension “is appreciated and will provide employers relief,” she said. “The ACA reporting forms require specific information on each employee’s insurance coverage—and their spouse’s and dependents’, if applicable—such as employer identification number, taxpayer identification number, addresses, employee’s full-time status and length of full-time status, proof of minimal essential coverage offered, coverage dates, and employees’ share of coverage premium costs. Collecting required information to ensure accurate reporting is an administrative burden for employers.”
While HR professionals have the relevant data requested, she noted, “this information is not contained in a central repository. Most employers will have to use multiple sources to obtain the data necessary to complete the reporting forms, including their benefits carrier or broker, HR information system, payroll company, time-off tracking software and other sources.”
The administrative burden and penalties related to missed deadlines and incorrect filing “will inevitably add to the employer’s cost of providing benefits to employees,” she noted.
Similarly, the American Benefits Council, in a Dec. 24 letter to IRS Commissioner John Koskinen, wrote that employers “have expressed significant concerns about their ability to furnish accurate Forms 1095-C and Forms 1095-B to employees by the Feb. 1, 2016 deadline.”
“The data that needs to be reported—particularly on the Form 1095-C—relates to information that many employers did not previously maintain in a format that facilitated reporting,” said Kathryn Wilber, senior counsel for health policy at the council. “As a result, employers’ attempts to establish systems that can accommodate the reporting requirements have generated logistical complications and we continue to hear about new difficulties from employers on a regular basis.”.
Earlier Filing Encouraged
The IRS said it is still prepared to accept filings of the information returns on Forms 1094-B, 1095-B, 1094-C and 1095-C beginning in January 2016. “Following consultation with stakeholders, however, the Department of the Treasury and the [IRS] have determined that some employers, insurers, and other providers of minimum essential coverage need additional time to adapt and implement systems and procedures to gather, analyze and report this information,” the IRS said in its notice. “Notwithstanding the extensions provided in this notice, employers and other coverage providers are encouraged to furnish statements and file the information returns as soon as they are ready.”
Employers that don’t comply with these extended due dates will be subject to penalties under ACA section 6722 or 6721 for failure to timely furnish and file, the IRS said. The agency added that even if employers or other coverage providers miss the extended due dates, they are still encouraged to furnish and file, “and the service will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.”
“The IRS said it will take a good-faith enforcement approach to this first year of reporting,” said Breheny. “As the deadlines approach, there have been many questions from reporting entities about these complex requirements and the systems involved, so this is a welcome development.”
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Despite delay, employers adopt ‘Cadillac Tax’ strategies
Original post by John Scorza, shrm.org
Hope for the best, but prepare for the worst, may be the best advice for employers when it comes to the uncertain future of the “Cadillac tax.”
The Affordable Care Act’s (ACA’s) 40 percent excise tax is now slated to be levied on costly employer-sponsored health insurance coverage beginning in 2020. The plans subject to the tax are those with benefits valued above $10,200 for single coverage and $27,500 for family (other than self-only) coverage, indexed annually for inflation.
The levy—popularly known as the “Cadillac tax”—has employers on edge, with many acting to reduce their risk of exposure while keeping an eye on repeal efforts. A brief repreive was provided by the Consolidated Appropriations of 2016, enacted in December 2015.
As regards the Cadillac tax, the omnibus measure:
- Delayed the effective date by two years, from 2018 to 2020.
- Made the excise tax deductible by businesses.
“The two-year delay gives Congress more time to devise a longer-term solution to the excise tax, including potentially amendment or repeal,” commented Kathryn Bakich, J.D., national health care compliance practice leader at Segal Consulting in Washington, D.C.
Even with this delay, it's wise for employers not to bank on its ultimate repeal, as noted below, and to use any expanded breathing room to consider steps to avoid the tax's grasp—or just to keep health benefit spending under control.
Restraining Spending & Raising Revenue
The excise tax was designed to accomplish two primary goals:
- Lower overall spending on health care by making employer-sponsored health plans less comprehensive, and thereby fostering more cost-conscious spending decisions by employees.
- Generate federal revenue to pay for other provisions of the ACA, including subsidies provided through federal and state health exchanges for low-to-moderate-income employees who lack affordable coverage through their employer.
The Cadillac tax is estimated to raise nearly $90 billion through 2025. Twenty-five percent of those funds will come directly from employers. The other 75 percent will be generated by taxes on higher employee wages that presumably would result from lower health care costs—although there’s no guarantee that companies will raise wages as health costs go down. “There’s evidence both for and against” that assumption, noted Paul Fronstin, director of the Employee Benefit Research Institute’s (EBRI’s) health research and education program, at a Dec. 10 EBRI policy forum in Washington, D.C.
Opposition to the tax is strong. The tax eventually will affect nearly all 175 million Americans with employer-sponsored health plans, said Katy Spangler, senior vice president of health policy at the American Benefits Council. That’s because the thresholds that trigger the tax are indexed to the consumer price index (CPI), but medical inflation rises much faster than the CPI. As a result, more and more plans will become subject to the tax, Spangler said. Additionally, the tax is forcing employers to shift costs to employees in the form of higher deductibles and co-pays, she said.
That’s the main tactic employers are using to prepare for the tax, according to Richard Stover, principal with Buck Consultants. He identified five possible employer strategies:
- Shift costs. Many companies are doing this, at least as a component of their overall strategy, by imposing higher deductibles, reducing medical benefits, implementing high-deductible health plans combined with health savings accounts (HSAs) and offering voluntary benefits that help employees cover medical expenses. “Unfortunately, the primary way [to achieve significant cost-savings], the easiest way to do it, is to shift costs to employees,” Stover said.
- Absorb the cost. This is not a viable long-term strategy because of the cost impact and the administrative burden that would result, Stover said. “No one wants to absorb the cost,” he remarked.
- Improve plan efficiency. Employers can consider three broad approaches here, according to Stover. First, manage utilization through tactics such as onsite clinics, high-performance networks, and telehealth and transparency tools. Second, manage unit costs by using medical and prescription discounts and finding more effective vendors, for instance. Third, promote health through wellness and disease-management programs.
- Eliminate ancillary health benefits. Options here include reducing or eliminating employer HSA contributions and limiting or eliminating employee pretax HSA contributions (see the SHRM Online article HSA Strategies to Avoid the Cadillac Tax).
- End health plan sponsorship. Just as most employers are not willing to absorb the costs of the tax, most are not considering dropping their health plans, either. Organizations that terminate their plans will likely face significant recruiting and retention problems unless they provide employees with additional wages to purchase coverage on a public exchange. But even that is no panacea. “There’s really no tax-effective way to do that,” Stover said.
Regarding these five strategies, Stover stressed that “No one of these levers is enough. Employers are looking at combinations of these approaches that they could use to better manage the costs of their programs.”
Repeal Sought
Spangler at the American Benefits Council is optimistic that Congress will ultimately repeal the excise tax. The council is a member of the Alliance to Fight the 40, a coalition of nearly 90 organizations opposed to the levy.
Others have noted, however, that revenues lost due to repeal would need to be replaced with other income sources.
In the immediate future, President Barack Obama has pledged to veto any repeal measure. In any event, benefit advisors are telling employers not to leave themselves vulnerable to triggering the tax, if and when it should take effect.
John Scorza is associate editor of HR Magazine.
Don't forget to update benefit plan documents
Original post thinkhr.com
This year came with notable compliance changes that may require updating group health plan materials extending into the new year. Employers should review these requirements and make the necessary changes to materials offered to participants at plan renewal.
The Affordable Care Act’s (ACA) employer shared responsibility provision (§ 4980H), also referred to as “play or pay,” took effect January 1, 2015. Under the employer mandate, large employers may be assessed a penalty for failure to offer health coverage to full-time employees if at least one employee receives a government subsidy to buy individual coverage through an Exchange (Marketplace). However, some employers were able to take advantage of one or more transition relief provisions to avoid potential penalties for part or all of 2015 (and part of 2016, in some cases). This relief expires in 2016, along with transition relief impacting calculations of the possible assessable payment.
Applicable large employers (ALEs) must ensure their group health plans are designed to meet minimum value coverage and are deemed affordable to limit assessment of penalty. For plan years after 2015, the required contribution percentage under the affordability safe harbor is 9.5 percent, based on employee-only coverage. ALEs who have variable hour employees should establish and document their designated measurement periods for determination of “full-time” employees.
The employer shared responsibility provision also establishes employer reporting requirements. For calendar year 2015, the first reports are due February 1, 2016 and are required annually thereafter on January 31st. These reporting requirements include:
- Under I.R.C. § 6056, large employers must report information about health coverage offered to full-time employees.
- Under I.R.C. § 6055, large employers with self-funded plans must report information about the coverage provided to each individual.
ALEs should review their Summary Plan Descriptions (SPDs) to ensure measurement periods used in the determination of the employee counts are documented. To comply with the Employee Retirement Income Security Act (ERISA), the health plan’s SPD must describe the plan’s eligibility requirements. The SPD’s description of the measurement method should clearly define the measurement periods and plan eligibility requirements so that it is understandable to the average participant.
Employers should review their ability to maintain grandfathered status for 2016. While grandfathered plans can continue, ALEs will need to determine if offering these plans conforms to the play or pay rules to limit assessable payment. If the plan will lose its status, the plan should include all of the additional patient rights and benefits required by the ACA for nongrandfathered plans (e.g. coverage of preventive care without cost‐sharing requirements).
Several indexed inflation increases have been announced, which may require updates to Summary of Benefits and Coverage (SBC) documents and other participant plan materials, such as contributions to health savings accounts (HSAs), out-of-pocket spending under high deductible health plans (HDHPs), and essential health benefits (EHBs).
The annual cost-sharing and out-of-pocket maximums increase for plan years beginning on or after January 1, 2016. A health plan’s out‐of‐pocket maximum for EHBs may not exceed $6,850 for self‐only coverage, and $13,700 for family coverage.
The out‐of‐pocket maximum, however, continues to apply to all nongrandfathered group health plans, including self‐insured health plans and insured plans.
The minimum annual deductible and out-of-pocket expenses for HDHPs renewing on or after January 1, 2016 have increased in 2016:
- The minimum annual deductibles under an HDHP must be at least $1,300 for self-only coverage (no change from 2015) and $2,600 for family coverage (no change from 2015).
- The maximum out-of-pocket expense limit for self-only HDHP coverage for 2016 is $6,550, which is up from $6,450 in 2015. For family HDHP coverage, the maximum out-of-pocket expense limit for 2016 is $13,100, which is up from $12,900 in 2015.
The annual dollar limit on the combination of employer and employee contributions to HSAs remains at $3,350 for an individual with self-only coverage under a HDHP; however, this limit increases to $6,750 for an individual with family coverage under an HDHP (an increase of $100 dollars from 2015).
Note: The HDHP maximums for HSA-qualified HDHPs are lower than the ACA out-of-pocket maximums. Employers offering HSA-qualified plans will need to ensure they satisfy these lower HDHP out-of-pocket maximums.
The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSAs) is $2,550 (no change from 2015).
Under the small business health care tax credit, the employer must employ fewer than 25 full-time equivalent employees (FTEs) whose average annual wages are less than $50,800 (indexed for 2015). The tax credit phases out for eligible small employers when the number of its FTEs exceeds 10 or when the average annual FTE wages exceeds $25,900 for tax year 2016 (up from $25,800 in 2015). Only qualified health plan coverage purchased through a Small Business Health Options Program (SHOP) marketplace is available for the tax credit, and it is available only for a two-consecutive year period.
Employers managing compliance with benefits-related mandates under the ACA and other benefits rules for coverage, documentation, and reporting requirements should be aware of applicable penalties that compliance failures may trigger. Potential fines and penalties vary depending upon the provision under the Internal Revenue Code, ERISA, or the Department of Health and Human Services and Department of Labor rules. While these agencies are working towards helping plan sponsors comply with the new rules, compliance failures can be costly. Take the best approach and make it a new year’s resolution to be aware of the compliance requirements and develop plans for meeting them!
Congress vote delays Cadillac tax by 2 years
Original post by Shelby Livingston, businessinsurance.com
The $1.1 trillion budget deal that Congress approved Friday would delay the notoriously unpopular Cadillac tax for two years and put a repeal in reach of the congressional leaders and business groups who oppose it.
But benefits experts say delaying the excise tax until 2020 is unlikely to ease the aggressive strategies companies have put in place to avoid triggering it.
The House voted 316-113 Friday to approve the omnibus spending deal that congressional leaders unveiled earlier in the week. The Senate followed quickly with a 65-33 vote to approve the package and send it to President Barack Obama, who indicated he would not veto the measure.
Opponents of the 40% excise tax, which would be imposed on the portion of group health plan premiums that exceed $10,200 for single coverage and $27,500 for family coverage under the Patient Protection and Affordable Care Act, say the two-year delay is a major win for employers.
“The ACA relief is welcome and appreciated,” the National Retail Federation said in a statement.
The delay is “the first step toward full repeal,” the Alliance to Fight the 40, a lobbying group opposed to the tax, said in a statement.
For Victoria Nolan, risk and benefits manager for Hillsboro, Oregon-based Clean Water Services, a water resources management utility, the delay would “provide more breathing room to look at what additional things can be done to keep under the Cadillac tax in the future.”
Others say postponing the excise tax signals a repeal is on the way.
“We see the two-year delay as a down payment on a full repeal,” said Katy Spangler, senior vice president of health policy at the Washington-based American Benefits Council, which has backed repealing the tax on behalf of the hundreds of large employers it represents.
“If we keep the pressure on Congress, the delay may help us move toward” a repeal, American Benefits Council President James Klein said.
Geoffrey Manville, principal of government relations at Mercer L.L.C. in Washington, said the congressional vote “really increases the odds that this tax will not go into effect,” but he added the final decision would come down to “the next Congress and the next president.”
The odds for a repeal are “better than even,” he said.
While delaying the tax gives employers more time to find ways to reduce their exposure, it's unlikely to halt much of the aggressive cost-management strategies employers have already set in motion to avoid triggering the tax, sources said.
“The majority of employers will continue down that road like they have been before the excise tax — whether or not it's delayed or repealed,” said Steve Wojcik, vice president of public policy with Washington-based National Business Group on Health, of many employers' shift to high-deductible health plans. “As long as overall spending for health care continues to climb faster than general inflation, there's going to be this pressure.”
Seventy-two percent of employers expect at least one of their benefit plans to hit the excise tax in 2020 if they don't control costs, according to an NBGH survey in August. Mr. Wojcik said that number could potentially be reduced with the delay.
Delaying the tax also does nothing to fix ongoing cost increases squeezing employers' benefits plans, prompting them to shift more costs to workers, sources said.
Employers saw group health plan costs rise 3.8% in 2015 to an average $11,635 per employee, according to Mercer.
Supporters of the excise tax see it as a way to slow U.S. heath care spending, which the U.S. Centers for Medicare and Medicaid Services said topped $3 trillion in 2014.
According to the bipartisan nonprofit Committee for a Responsible Federal Budget, delaying the Cadillac tax until 2020 would cost the government $16 billion. Repealing it would cost $91.1 billion over the next 10 years, the committee said last week.
In addition to the two-year delay Congress passed Friday, the omnibus budget bill also calls for a study by the U.S. comptroller general and the National Association of Insurance Commissioners of whether the ACA uses “suitable” benchmarks to determine if the tax should be adjusted to reflect age and gender factors in setting the excise tax thresholds.
Still, the delay means Clean Water Services has more time before it might need to reduce the amount workers are allowed to contribute to their flexible spending accounts, a strategy the company is considering because pretax contributions to FSAs — as well as health savings accounts and health reimbursement arrangements — would be included in the excise tax calculation, Ms. Nolan said.
But a full repeal of the Cadillac tax would eliminate the company's need to reduce the FSA limit on contributions altogether, she said.
ACA reporting: Why 12 minutes is such an important metric
Original post hrbenefitsalert.com
If you’re wondering how long the actual ACA reporting process is likely to take, the IRS may be able to help.
When the Service released the final instructions for 1095-C reporting, it included another critical piece of information: The amount of time its likely to take employers to complete each ACA return.
The IRS estimates it’ll take employers an average of 12 minutes to complete each 1095-C return.
12 X 50, 100, 150 …
When you consider that at the bare minimum, employers subject to the ACA reporting requirements will be completing 50 returns, the reporting process is a significant time commitment. At 12 minutes per form, those 50 returns should take 600 minutes or 10 hours to complete.
Of course, this is just an estimate and, considering this is a brand-new, high-stakes process, it’s likely to take many employers longer than the average amount of time the IRS estimates. Still, the estimate does help give you some type of perspective on the time-commitment necessary for the actual reporting process.
Lines 14 and 15
While you’ll no doubt want to go over the IRS’ instructions with all parties involved in the reporting process, there are two lines in the instructions that are likely to be particularly helpful when it comes time to do the actual reporting:
Line 14: This line deals with the reporting process when an employee is terminated and COBRA continuation coverage is offered. If the terminated employee enrolls, the instructions say to use the appropriate indicator code. The indicator codes are listed on page 10 of the final instructions.
The IRS instructions also tell you what code to use on this line if an employee is terminated and denies an offer of COBRA continuation coverage.
When this occurs, you just use code 1H (no offer of coverage) for any month that the offer of COBRA continuation coverage applies.
Line 15: For this line, the IRS offered a quick way to calculate the lowest cost of the monthly premiums available for each employee.
To determine an employee’s monthly contribution, employers will divide the total employee share of the premium for the plan year by the number of months in the plan year.
FAQs about Form 1095-C
Employers are facing the daunting task of putting the pieces together to meet the Affordable Care Act reporting requirements. On the list of must dos is providing a Form 1095-C to employees.
Lexology.com compiled a list of frequently asked questions about the Form 1095-C.
Q: Which form(s) do I need to complete: the 1095-C or the 1095-B?
A: The form or forms you will need to complete depends on whether your organization is an “Applicable Large Employer” (ALE) and how your health benefits are funded. If you are an ALE, you must provide your full-time employees with Form 1095-C regardless of whether you provide fully-insured or self-funded coverage to your employees. Furthermore, if you are an ALE that sponsors a self-funded plan, you will also provide Form 1095-C to any part-time employees who are enrolled in the plan.
If you are not an ALE and you sponsor a self-funded plan, you will report that coverage on Form 1095-B to any employees covered by that plan.
Regardless of whether you are an ALE, if you sponsor a fully-insured plan, the insurance carrier will report that coverage to your covered employees on a Form 1095-B.
Q: Which company’s EIN do I use on Line 8 of Form 1095-C: the employer’s or the plan sponsor’s?
A: The ACA’s reporting obligations fall on the common law employer. That means that each employer should report its employees under its own employer identification number (EIN), regardless of which company is the sponsor of the plan covering those employees. For example, an employer that is a subsidiary of a parent company that sponsors the health plan should report for its own employees under its own EIN, not under the parent company’s EIN.
Q: How do I know whether I am an ALE for 2015?
A: For 2015, the ALE determination is based on the organization’s employee count for any consecutive six-month period in 2014. If the organization had 50 or more full-time employees (including full-time equivalents) for any consecutive 6-month period in 2014, it is an ALE for 2015. To determine the number of full-time employees you have, you must aggregate the employees of all companies that are considered to be a controlled group or otherwise under common control under the Internal Revenue Code.
Q: How do I count my full-time equivalent employees for purposes of determining whether I am an ALE in 2015?
A: First, count each employee who averaged 130 hours or more of work per month in 2014 (or during the 6-month period in 2014 that you are using). Those are your full-time employees. For any employee who averaged less than 130 hours, count his or her actual monthly hours up to a cap of 120. Then, total all the hours of your non-full-time employees and divide the result by 120 (or 60 if you are using a one-month period for your calculations). The resulting number is the number of full-time equivalent employees you have. Add the number of full-time equivalent employees to your full-time employee count to determine whether you have reached the ALE threshold.
Q: How do I count my seasonal workers for purposes of determining whether I am an ALE in 2015?
A: For this purpose, “seasonal workers” are those individuals who perform services on a seasonal basis as defined by the Secretary of Labor. “Seasonal workers” also includes retail workers employed only during the holidays. Employers that have 50 or more full-time employees (including full-time equivalents) employed for 120 or fewer days during the prior calendar year can disregard those seasonal workers who were employed for 120 or fewer days when determining whether they meet the ALE threshold.
Q: I thought I did not have to comply with the ACA employer mandate in 2015 if I had fewer than 100 employees! What is the rule?
A: For 2015 only, employers with 50 to 99 full-time employees (plus full-time equivalents) are exempt from complying with the employer mandate. However, these employers still must comply with the law’s reporting obligations and complete Forms 1095-C and 1094-C.
Q: Why don’t the instructions for Line 14 and Line 16 on Form 1095-C match?
A: The lines are used to report different information. Line 14 tracks whether an ALE has made a sufficient offer of coverage to meet the ACA’s Shared Responsibility provisions, commonly known as the “employer mandate.” An employer must offer coverage for every day of the month in order for it to count as an “offer” on Line 14. For any month in which you have not made an offer, you will use the 1H “No Offer” code.
By contrast, Line 16 reports whether the employee was covered for at least one day of the month. If so, you will use the Code 2C. This information, along with the information in Part III of the form, allows the IRS to determine whether the individual met the individual mandate under the ACA. If the employee is not covered, these are the months when a penalty assessment might be triggered against the employer if the employee instead purchases subsidized coverage through an Exchange. For this reason, ALEs use Line 16 to report their defense to any penalty, most commonly using one of the affordability codes, that—in conjunction with the dollar amount on Line 15 and the offer code on Line 14—tells the IRS that the employer offered sufficient coverage to meet the employer mandate and that the individual should not have been eligible for subsidized coverage on an Exchange. Be sure to complete Line 16 carefully.
Q: How do I report for new hires?
A: Prior to hire, use Code 1H on Line 14 and Code 2A on Line 16. After the hire date, you will continue to use Code 1H on Line 14 during any waiting or stability period, and use Code 2D on Line 16 to reflect that you have no obligation to offer coverage during any limited non-assessment period. Once coverage is offered, you will use the appropriate offer code on Line 14 (depending upon the type of coverage you have offered and whether your offer includes a spouse and any dependents) and Code 2C on Line 16 if the employee enrolls in coverage. If the employee does not enroll in coverage, you generally should use one of the affordability codes on Line 16, assuming you have offered affordable coverage.
Q: What do I report if someone’s employment is terminated during the year?
A: You must complete Line 14 for all months of the year. You will use Code IH (“no offer”) for any month after the termination of employment if coverage is not offered to the employee for the entire month. On Line 16, you should generally use Code 2B for the month in which the former employee’s employment was terminated and Code 2A for any month when the individual was not employed at all.
Q: Do I still have to report for employees who are offered COBRA and decline coverage?
A: Yes. For months in which an employee is offered and declines health benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), you should generally use 1H on Line 14. On Line 16, you should report using Code 2B in any month in which the employee was employed at least one day of the month (e.g., the month employment terminates), and Code 2A for any month in which the employee was not employed at all.
Q: How do I report for employees who have elected COBRA coverage?
A: For the months in which COBRA is offered, instead of reporting the employee’s lowest cost of employee-only coverage on Line 15, report the COBRA premium for the lowest cost self-only coverage. If the employee enrolls in COBRA coverage, you will continue to use Code 2C on Line 16 for the months the employee is enrolled.
Q: Must I report for my union employees?
A: Yes, if your union employees are covered under a plan that you sponsor, you must report for them just as you would for any other employee. If they are offered coverage by a separate plan that is administered by a board of trustees comprised of representatives from the union and participating employers to which you contribute, then special reporting rules may apply. Commonly known as “Taft-Hartley funds” or “multiemployer plans,” health plans that you cosponsor with the union will report coverage to your union employees on the Form 1095-B. However, if you are an ALE, you must still file a Form 1095-C for your union employees.
Q: How do I report multiemployer plan coverage for my union employees?
A: For 2015, you may qualify for special transition relief if you are required by a collective bargaining agreement or other written agreement to contribute to a multiemployer plan for your union employees. If that plan provides “minimum essential coverage” that is “minimum value,” and if any premium charged to the union employee for coverage is “affordable” under the employer mandate provisions, then you may use Code 1H on Line 14 and Code 2E on Line 16 to report the offer of coverage on the Form 1095-C.
Senate approves bill repealing ACA's Cadillac tax
It's unlikely to make it passed President Obama's desk, but Thursday evening the Senate passed legislation repealing key provisions of the Affordable Care Act.
The Senate passed the health care reform law-related provisions in the broader budget reconciliation bill - H.R. 3762. The bill passed the House of Representatives in October, and is excpected to accept the Senate measure.
Provisions, as laid out by BusinessInsurance.com, include:
• Repeal of the 40% excise tax, set to begin in 2018, on the portion of group health care plan premiums that exceed $10,200 f. or single coverage and $27,500 for family coverage. That provision was added, on a 90-10 vote, to the broader bill, and replaces an earlier version that would have only ended the tax through 2025. The Senate vote “is another strong bipartisan recognition that this tax must be repealed to preserve employer-sponsored health coverage,” James Klein, president of the American Benefits Council in Washington, said in a statement.
• Elimination of the $2,000-per-employee penalty employers face if they do not offer coverage to at least 70% of their full-time employees in 2015 and to 95% in 2016 and succeeding years.
• Elimination of the $3,000 penalty for each employee who is eligible for a federal premium subsidy and uses it to purchase coverage in a public health insurance exchange. That penalty is triggered if the portion of the premium an employer charges for single coverage exceeds 9.5% of an employee's household income and the employee is eligible for and uses a federal premium subsidy to purchase coverage in a public exchange.
• Elimination of the 2.3% federal excise tax imposed on manufacturers of medical devices.
RELATED: 5 signs the Cadillac tax may be repealed
The White House has said President Obama plans to veto the measure. And with the legislation narrowly passing the Senate, there's not expected to be enough votes to overturn a presidential veto.
However, some of the health care law repeal provisions could be included in so-called "must pass" legislation to extend expiring tax code provisions. Observers say such a bill could emerge next week.