Final Employer Responsibility Regulations Released
Originally posted by Melissa Duffy on https://www.the-alliance.org
The federal government has released final rules governing the Affordable Care Act's Employer Responsibility (aka Pay or Play) provisions that will take effect in 2015 for many Alliance members. Once in effect, the ACA will impose penalties on employers that do not offer "affordable" and "minimum value" coverage to certain full-time workers, currently defined as an average of 30 hours or more per week.
The IRS has posted Frequently Asked Questions to help employers understand the new guidelines and the safe harbors that were created to help employers avoid penalties. Penalties are triggered only when one or more of a company’s full-time workers accesses tax credits to purchase coverage on the public exchange.
The final regulations include some changes to the proposed regulation that were released more than a year ago. Key changes include:
- An exemption from penalties for employers in 2015 that have 50-99 workers as long as they certify that they have not reduced their workforce to fall under the 100 employee threshold. Employers of this size would be subject to penalties in 2016 if their regulations are not changed once again.
- More wiggle room for employers that do not offer all employees coverage. Under the new rules, an employer with 100 or more workers will not be subject to the "4980H(a)" penalty ($2,000 X all FT employees minus 30) as long as they offer coverage to at least 70 percent of employees in 2015. This threshold increases to 95 percent in 2016. However, employers will still be subject to "4980H(b)" penalties equaling $3,000 per year for any full-time employee that is able to access exchange tax credits or cost sharing reductions.
- A new definition for "seasonal employees" to apply to those positions for which customary annual employment is six months or less. For these individuals, the offer of coverage can wait until the end of a measurement period. This is not to be confused with the term “seasonal worker” used for the purposes of determining whether an employer is large enough to be subject to penalties.
Congress Considers Changing the Definition of Full-Time
In a related note, a Congressional committee has approved one of several bills introduced this session to modify the Employer Responsibility provisions in the Affordable Care Act. The bill, which would define full-time as 40 hours for the purposes of the ACA, passed the House Ways and Means Committee on a party-line vote with Republicans on the committee supporting the measure and Democrats opposing it. Similar bills have gained bipartisan support but are stalled in the Senate.
Click here to view testimony from the public hearing held on this issue.
401(k) contribution remittance: What’s an employer to do?
Originally posted March 19, 2014 by Kerri Norment on https://eba.benefitnews.com
Over the past several years the U.S. Department of Labor’s Employee Benefits Security Administration has identified delinquent employee contributions as an ongoing national policy priority. With assets in 401(k)-type plans reaching $2.8 trillion on behalf of more than 50 million active participants, protecting employee contributions has become more important for the government, particularly since employees have been forced to take more responsibility for their retirement savings.
On the other hand, employers and sponsors of 401(k) plans are responsible for ensuring plans comply with federal law. But ever-changing interpretations of government regulations have resulted in employers being out of compliance with certain rules and not even knowing it.
One particular regulation that has been a source of confusion for employers — and in some cases, has landed them in hot water with the DOL — is the timely deposit of employee contributions into 401(k) plans. The regulation states employers should remit employee contributions on the earliest date they can reasonably be segregated from the employer’s general assets, but no later than the 15th business day of the following month. While this has come to be known as the "15 day rule," the reality is that deposits — for small and large plans — are expected to be made much sooner.
In fact, the DOL issued an amendment to the regulation in January 2010 to create a safe harbor rule under which small plans — classified as plans with fewer than 100 participants — would be considered in compliance if employee contributions were deposited within seven business days. The DOL has not issued a similar safe harbor rule for large plans. However, most in the industry believe larger plans will be held to an equal, if not higher, standard, meaning deposits should be made within two to three business days.
If you are scratching your head on this one, you’re not alone. When the regulation was implemented, there were no automated payroll processing systems that allowed for contributions to be easily segregated from general assets. With advancements in technology, this process is essentially instantaneous. And because of it, the DOL has changed its expectations on remittance, despite not rewriting the rule.
So what’s an employer to do? The best advice is to be consistent. If an employer demonstrates the ability to remit contributions within one business day, the employer better make sure all remittances happen within one business day each pay period — no exceptions! The second best advice, don’t rely on safe harbor rules to protect you.
If you find your plan is not in compliance with the new interpretation of the regulation, it is recommended you self-correct the plan. The DOL website provides a guide for correcting under the Voluntary Fiduciary Correction Program that even includes a user-friendly online calculator for lost earnings.
As in most cases, knowledge is power. Whether that knowledge is obtained through the use of a reputable service provider, consultant, or HR expert, employers and plan sponsors must stay on top of changes in government regulations and rules.
IRS Issues Additional Final Regulations for Play or Pay Rule
Originally posted on March 05, 2014 on https://www.treasury.gov
On March 05, 2014, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released final rules to implement the information reporting provisions for insurers and certain employers under the ACA that take effect in 2015.
“Today’s announcement is part of the Administration’s effort to provide certainty and early guidance about major health policies so employers, small business owners and other individuals can plan for 2015,” said Assistant Secretary for Tax Policy Mark J. Mazur. “Treasury’s final rules significantly streamline and simplify information reporting while making it easier for employers and insurers of all sizes to provide the quality, affordable health coverage that every American deserves.”
While 96 percent of employers are not subject to ACA reporting requirements or the employer responsibility provision because they have fewer than 50 employees, in 2015 requirements begin to phase-in for the remaining four percent of employers that are required to offer quality, affordable coverage to employees or make a payment. The final regulations released today on information reporting by those employers will substantially streamline reporting requirements for employers, particularly those that offer highly affordable coverage to full-time employees. Final rules were also released today to provide guidance for reporting by insurers and other parties that provide health coverage under the ACA. Together, these rules respond to feedback from stakeholders and will help employers and insurers effectively comply with their responsibilities.
These additional final rules include the following key provisions:
Single, Combined Form for Information Reporting
Employers that “self-insure” will have a streamlined way to report under both the employer and insurer reporting provisions. Responding to widespread requests, the final rules provide for a single, consolidated form that employers will use to report to the IRS and employees under both sections 6055 and 6056, thereby simplifying the process and avoiding duplicative reporting. The combined form will have two sections: the top half includes the information needed for section 6056 reporting, while the bottom half includes the information needed for section 6055.
- Employers that have fewer than 50 full-time employees are exempt from the ACA employer shared responsibility provisions and therefore from the employer reporting requirements.
- Employers that are large enough to be subject to the employer responsibility provisions and that “self-insure” will complete both parts of the combined form for information reporting.
- Employers that are subject to employer responsibility but do not “self-insure” will complete only the top section of the combined form (reporting for section 6056). Insurers and other providers of health coverage will report only under section 6055, using a separate form for that purpose. Insurers do not have to report on enrollees in the Health Insurance Marketplace, since the Marketplace will already be providing information on individuals’ coverage there.
Simplified Option for Employer Reporting
- For employers that provide a “qualifying offer” to any of their full time employees, the final rules provide a simplified alternative to reporting monthly, employee-specific information on those employees.
- A qualifying offer is an offer of minimum value coverage that provides employee-only coverage at a cost to the employee of no more than about $1,100 in 2015 (9.5 percent of the Federal Poverty Level), combined with an offer of coverage for the employee’s family.
- For employees who receive qualifying offers for all 12 months of the year, employers will need to report only the names, addresses, and taxpayer identification numbers (TINs) of those employees and the fact that they received a full-year qualifying offer. Employers will also give the employees a copy of that simplified report or a standard statement indicating that the employee received a full-year qualifying offer.
- For employees who receive a qualifying offer for fewer than all 12 months of the year, employers will be able to simplify reporting to the IRS and to employees for each of those months by simply entering a code indicating that the qualifying offer was made.
- To provide for a phase-in of the simplified option, employers certifying that they have made a qualifying offer to at least 95% of their full-time employees (plus an offer to their families) will be able to use an even simpler alternative reporting method for 2015. Those employers will be able to use the simplified, streamlined reporting method for their entire workforce, including for any employees who do not receive a qualifying offer for the full year. Those employers will provide employees with standard statements relating to their possible eligibility for premium tax credits.
The final regulations also give employers the option to avoid identifying in the report which of its employees are full-time, and instead to just include in the report those employees who may be full-time. To take advantage of this option, the employer must certify that it offered affordable, minimum value coverage to at least 98 percent of the employees on whom it is reporting.
For more information, see sections 6055 and 6056 final regulations here.
“Play or Pay” Rules Delayed Until 2016 for Smaller Employers
Originally posted by https://blog.thinkhr.com
The Department of the Treasury and the Internal Revenue Service announced today that the Affordable Care Act’s health coverage mandate for employers with more than 50 employees but fewer than 100 employees working at least 30 hours per week will be delayed another year until 2016.
Employers with over 100 employees working at least 30 hours per week will become subject to the health coverage mandate under the Affordable Care Act (ACA) as previously announced beginning in January 2015. If these employers decide not to offer insurance to their employees, they will make an employer shared responsibility payment beginning in 2015 to help offset the costs to taxpayers for employees getting tax credits through the Health Insurance Marketplace.
“While about 96 percent of employers are not subject to the employer responsibility provision, for those employers that are, we will continue to make the compliance process simpler and easier to navigate,” said Assistant Secretary for Tax Policy Mark J. Mazur in the Treasury press release. “Today’s final regulations phase in the standards to ensure that larger employers either offer quality, affordable coverage or make an employer responsibility payment starting in 2015 to help offset the cost to taxpayers of coverage or subsidies to their employees.”
Today’s announcement included final regulations for implementing the employer shared responsibility provisions under the ACA, often referred to as the “Play or Pay” rules that will take effect in 2015.
To avoid this payment for the failure to offer affordable coverage meeting the minimum requirements as set forth in the regulations, these large employers will need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent starting in 2016. Full-time employment is defined as regularly working at 30 or more hours per week.
The immediate practical impact for employers includes:
- For employers with fewer than 50 employees: No impact, as this group was not subject to the employer shared responsibility provisions previously.
- For employers with 50 to 99 employees: For employers in this group that do not provide full-time employees with quality affordable health insurance, they will not have to pay any employer responsibility penalties in 2015. For 2015, this group will still be subject to provide an employee and coverage report as outlined in the ACA rules but will have until 2016 before the employer responsibility payments begin.
- For employers with 100 or more employees: Employers in this group are still subject to the mandate starting in 2015. What follows below are the highlights of the final regulations released today impacting the mandate for these employees to comply in 2015.
Key Elements of the Final Rules Impacting Employers with 100+ Employees in 2015
According to the Treasury Department Fact Sheet, the final regulations include the following changes:
- Coverage Thresholds: To avoid a payment for failing to offer health coverage, employers need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent starting in 2016. The original ACA rules required the 95 percent coverage beginning immediately.
- Full-time Employee Definitions:
- Volunteers: Bona fide volunteers for a government or tax-exempt entity, such as volunteer firefighters and emergency responders, will not be considered full-time employees.
- Educational employees: Teachers and other educational employees will not be treated as part-time for the year simply because their school is closed or operating on a limited schedule during the summer.
- Seasonal employees: Those in positions for which the customary annual employment is six months or less generally will not be considered full-time employees.
- Student work-study programs: Service performed by students under federal or state-sponsored work-study programs will not be counted in determining whether they are full-time employees.
- Adjunct faculty: Until further guidance is issued, employers of adjunct faculty are to use a method of crediting hours of service for those employees that is reasonable in the circumstances and consistent with the employer responsibility provisions. However, to accommodate the need for predictability and ease of administration and consistency, the final regulations expressly allow crediting an adjunct faculty member with 2 ¼ hours of service per week for each hour of teaching or classroom time as a reasonable method for this purpose.
- Full-time Employee Measurements: The final rules remain unchanged from the proposed rules that allow employers to use an optional look-back measurement method to determine whether employees with varying hours and seasonal employees are full-time. On a one-time basis, in 2014 preparing for 2015, plans may use a measurement period of six months even with respect to a stability period – the time during which an employee with variable hours must be offered coverage – of up to 12 months.
- Affordability Safe Harbors: As with the proposed regulations, the final rules provide safe harbors for employers to determine whether the coverage they offer is affordable to employees, including the W-2 wages, employees’ hourly rates, or the federal poverty level.
- Other Provisions of the Final Regulations:
- Employers first subject to shared responsibility provision: Employers can determine whether they had at least 100 full-time or full-time equivalent employees in the previous year by reference to a period of at least six consecutive months, instead of a full year.
- Non-calendar year plans: Employers with plan years that do not start on January 1 will be able to begin compliance with employer responsibility at the start of their plan years in 2015 rather than on January 1, 2015, and the conditions for this relief are expanded to include more plan sponsors.
- Dependent coverage: The policy that employers offer coverage to their full-time employees’ dependents will not apply in 2015 to employers that are taking steps to arrange for such coverage to begin in 2016.
Treasury and the IRS stated that additional final regulations will be forthcoming to streamline the ACA reporting requirements. Final rules will be published in the Federal Register on February 12th. We will continue to provide updates as more information is known.
For more information:
Treasury Press Release: https://www.treasury.gov/press-center/press-releases/Pages/jl2290.aspx
Treasury Fact Sheet: https://www.treasury.gov/press-center/press-releases/Documents/Fact%20Sheet%20021014.pdf
IRS Regulations (227 pages): https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-03082.pdf
IRS eases same-sex health care tax break rules
Originally posted December 17, 2013 by Allen Greenberg on https://www.benefitspro.com
Thanks to last-minute action by the IRS, employee benefits administrators this year will have one more important change to communicate to employees as soon as possible: legally married same-sex couples can claim tax benefits this year if they’re enrolled in a flexible spending account, health care savings account or cafeteria plan.
The IRS – responding to the Supreme Court’s ruling in June invalidating part of the Defense of Marriage Act – said plans also are able to allow a midyear election change for participants marrying a same-sex spouse after the so-called Windsor decision.
Although it’ll mean more work, IRS Notice 2014-1 shouldn’t be a big surprise to HR managers. In August, the government said same-sex couples will be viewed as married for federal tax purposes, regardless of whether their marriages were recognized by the state in which they lived.
Carol Calhoun, a Washington, D.C., based attorney and former IRS official, said employers will need to move quickly to take advantage of relief granted under the latest guidance.
Calhoun said employees can use benefits remaining in their 2013 FSA accounts for same-sex spousal benefits, even in the case of FSAs set up as self-only FSAs.
“This information obviously needs to be communicated to those responsible for processing FSA benefits,” she said in a post on her firm’s website.
Employers, she wrote, also can now correct inadvertent overwithholding or underwithholding due to the recognition of an employee’s marital status, “but only if they act quickly to do so before the end of the year.”
The IRS notice will affect the amount reportable as income on W-2s, she said, so it’s important for HR departments to be aware of the new guidance as soon as possible.
Retirement plan sponsors are still awaiting IRS guidance on whether they will be compelled to retroactively apply the DOMA decision in calculating spousal and other benefits to same-sex partners.
Here are excerpts from the latest notice, offered by the IRS in Q&A form:
Question: If a cafeteria plan participant was lawfully married to a same-sex spouse as of the date of the Windsor decision, may the plan permit the participant to make a mid-year election change on the basis that the participant has experienced a change in legal marital status?
Answer: Yes. A cafeteria plan may treat a participant who was married to a same-sex spouse as of the date of the Windsor decision (June 26, 2013) as if the participant experienced a change in legal marital status for purposes of Treas. Reg. § 1.125-4(c).
Accordingly, a cafeteria plan may permit such a participant to revoke an existing election and make a new election in a manner consistent with the change in legal marital status. For purposes of election changes due to the Windsor decision, an election may be accepted by the cafeteria plan if filed at any time during the cafeteria plan year that includes June 26, 2013, or the cafeteria plan year that includes December 16, 2013.
A cafeteria plan may also permit a participant who marries a same-sex spouse after June 26, 2013, to make a mid-year election change due to a change in legal marital status.
Q: May a cafeteria plan permit a participant with a same-sex spouse to make a midyear election change under Treas. Reg. § 1.125-4(f) on the basis that the change in tax treatment of health coverage for a same-sex spouse resulted in a significant change in the cost of coverage?
A: A change in the tax treatment of a benefit offered under a cafeteria plan generally does not constitute a significant change in the cost of coverage for purposes of Treas. Reg. § 1.125-4(f). Given the legal uncertainty created by the Windsor decision, however, cafeteria plans may have permitted mid-year election changes under Treas. Reg. § 1.125-4(f) prior to the publication of this notice.
Q: When does an election made by a participant in connection with the Windsor decision take effect?
A: An election made under a cafeteria plan with respect to a same-sex spouse as a result of the Windsor decision generally takes effect as of the date that any other change in coverage becomes effective for a qualifying benefit that is offered through the cafeteria plan.
With respect to a change in status election that was made by a participant in connection with the Windsor decision between June 26, 2013 and Dec. 16, 2013, the cafeteria plan will not be treated as having failed to meet the requirements of section 125 or Treas. Reg. § 1.125-4 to the extent that coverage under the cafeteria plan becomes effective no later than the later of (a) the date that coverage under the cafeteria plan would be added under the cafeteria plan’s usual procedures for change in status elections, or (b) a reasonable period of time after Dec. 16, 2013.
The rules set forth (in the questions above) are illustrated by the following examples:
Example 1. Employer sponsors a cafeteria plan with a calendar year plan year.
Employee A married same-sex Spouse B in October 2012 in a state that recognized same-sex marriages. During open enrollment for the 2013 plan year, Employee A elected to pay for the employee portion of the cost of self-only health coverage through salary reduction under the cafeteria plan. Employer permits same-sex spouses to participate in its health plan. On Oct. 5, 2013, Employee A elected to add health coverage for Spouse B under Employer’s health plan, and made a new salary reduction election under the cafeteria plan to pay for the employee portion of the cost of Spouse B’s health coverage. Employer was not certain whether such an election change was permissible, and accordingly declined to implement the election change until the publication of this notice.
After publication of this notice, Employer determines that Employee A’s revised election is permissible as a change in status election in accordance with this notice. Employer enrolls Spouse B in the health plan as of Dec. 20, 2013, and begins making appropriate salary reductions from the compensation of Employee A for Spouse B’s coverage beginning with the pay period starting Dec. 20, 2013. The cafeteria plan is administered in accordance with this notice.
Example 2. Same facts as Example 1, except that Employee A submitted the election to add health coverage for Spouse B under Employer’s cafeteria plan on Sept. 1, 2013. Prior to publication of this notice, Employer implemented the election change and enrolled Spouse B in the health plan as of Oct. 1, 2013, and began making appropriate salary reductions from the compensation of Employee A for Spouse B’s coverage beginning with the pay period starting Oct. 1, 2013. The cafeteria plan was administered in accordance with this notice.
Q: How does the Windsor decision affect the tax treatment of health coverage for a same-sex spouse in the case of a cafeteria plan participant who had been paying for the cost of same-sex spouse coverage on an after-tax basis?
A: In the case of a cafeteria plan participant who elected to pay for the employee cost of health coverage for the employee on a pre-tax basis through salary reduction under a cafeteria plan and also paid for the employee cost of health coverage for a same-sex spouse under the employer’s health plan on an after-tax basis, the participant’s salary reduction election under the cafeteria plan is deemed to include the employee cost of spousal coverage, even if the employer reports the amounts as taxable income and wages to the participant. Accordingly, the amount that the participant pays for spousal coverage is excluded from the gross income of the participant and is not subject to federal income or federal employment taxes. This rule applies to the cafeteria plan year including Dec. 16, 2013, and any prior years for which the applicable limitations period under section 6511 has not expired.
Another PPACA deadline delayed
Originally posted December 12, 2013 by Allison Bell on https://www.benefitspro.com
The Obama administration has issued new regs that public exchanges – and participating carriers – can use to cope with startup problems. Most importantly, it pushes the selection and payment deadline for Jan.1 plan coverage to Dec. 23.
The Centers for Medicare & Medicaid Services has given the batch of “interim final regulations” the title “Maximizing January 1, 2014, Coverage Opportunities” and is preparing to publish the regs in the Federal Register next week.
The Dec. 23 deadline applies to all sorts of exchange plans, including Small Business Health Options Program QHPs, multi-state plans and standalone dental pans, officials said. The original deadline was Dec. 15.
Insurers selling commercial plans through the exchanges with coverage dates starting Jan. 1 now must accept premium payments as late as Dec. 31.
State-based exchanges can set later deadlines for either individual or SHOP coverage.
Managers of state-based exchanges who want to offer more flexibility can push the payment deadline for coverage that starts Jan. 1 back to Jan. 31, “if a QHP issuer is willing to accept such enrollments,” officials said.
Officials also included rules for provider directories.
If a QHP issuer has trouble keeping its provider directory up to date, it should add consumer safeguards, such as using the version of a provider directory available to consumers in a given month to determine whether care from a provider will be classified as in-network care, officials said.
It was the second PPACA-related delay a day after HHS Secretary Kathleen Sebelius testified before Congress.
Ohio State Minimum Wage Requirement
Can you believe it’s nearly 2014? This is just a friendly reminder that with the new year comes a new minimum wage requirement for employees in the state of Ohio. On January 1, 2014, the state minimum wage will increase to $7.95 per hour for non-tipped employees and $3.98 per hour (plus tips) for tipped employees. This increase only applies to employers with annual gross receipts of more than $292,000. The federal minimum wage of $7.25 per hour still applies to companies with annual gross receipts of less than $292,000 after January 1, 2014.
In addition to increasing the hourly rate of any employee who is currently making less than the new state minimum wage, you must also update your Ohio Minimum Wage poster. The poster must be displayed in a conspicuous place, to which all employees have regular access. For your convenience, here is a link to the updated poster: https://www.com.ohio.gov/documents/dico_2014Minimumwageposter.pdf
Need help making sure you’re compliant with wage and hour laws? Give us a call or send us an email! We’re here to help!
IRS Finalizes Rules on Additional Medicare Tax
Originally posted December 02, 2013 by Michael Cohn on https://www.accountingtoday.com
The Internal Revenue Service has released the final regulations for the 0.9 percent Additional Medicare Tax that was imposed as part of the Affordable Care Act.
The final regulations that were released last week more or less adhere to the proposed regulations that were released last year for the Additional Hospital Insurance Tax on income above threshold amounts, usually referred to as the Additional Medicare Tax (see Tax Strategy: Proposed Guidance on Medicare Contribution Taxes). The tax took effect on January 1 of this year and applies to wages, compensation, and self-employment income above a threshold amount received in taxable years beginning after Dec. 31, 2012. The threshold amounts are $200,000 for single taxpayers and $250,000 for married filing jointly (or $125,000 for married filing separately) taxpayers.
The IRS also released final regulations last week on another tax that was included in the Affordable Care Act, the 3.8 percent Net Investment Income Tax (see IRS Releases Final Rules for Net Investment Income Tax).
The 0.9 percent Additional Medicare Tax applies to wages, railroad retirement compensation, and self-employment income over certain thresholds. Employers are responsible for withholding the tax on wages and Railroad Retirement Tax Act compensation in certain circumstances.
The only major change from the proposed regulations that were issued last December is that the proposed regulations had provided that if the employer deducts less than the correct amount of Additional Medicare Tax, it is nonetheless liable for the correct amount of tax that it was required to withhold, unless the employee pays the tax. The proposed regulations also provided that if an employee subsequently pays the tax that the employer failed to deduct, the tax would not be collected from the employer.
The final regulations, however, further say that an employer is not relieved of its liability for payment of any Additional Medicare Tax that is required to be withheld unless it can show that the tax has been paid by the employee. Employers will use Form 4669, “Statement of Payments Received,” and Form 4670, “Request for Relief from Payment of Income Tax Withholding,” the same forms used for requesting federal income tax withholding relief, to request relief from paying Additional Medicare Tax that has already been paid by the employee.
The final regulations also amend the proposed regulations to comply with the formatting requirements of the Office of the Federal Register.
However, the IRS rejected a number of requests from various people who had commented on the proposed regulations. One commenter had expressed concern about the impact of the regulations on the small business and individual taxpayer community. The commenter disagreed with the IRS’s conclusion in the proposed regulations that no regulatory assessment or regulatory flexibility analysis were required because the rulemaking was not a significant regulatory action and would not have a significant economic impact on a substantial number of small entities.
A 1993 executive order requires agencies to prepare a regulatory assessment for "significant regulatory actions" and economically significant regulations, that is, regulatory actions that are likely to have an annual effect on the economy of $100 million or more. The commenter contended that the skills equivalent to a junior associate accountant would be needed to comply with the regulations. The commentator further argued that, assuming a junior associate reasonably bills for services at the rate of $100 per hour, and using the estimated annual reporting or recordkeeping burden for these regulations of 1.9 million hours, the estimated annual effect on the economy would $190 million.
However, The Treasury Department and the IRS said they did “not agree with the commenter’s assertion that all individuals and entities subject to the regulations will require the services of an accountant. Many employers utilize payroll service providers that are equipped to comply with these regulations and that will include Additional Medicare Tax as part of the payroll services they provide. Other employers and individuals will be able to comply with these regulations without assistance by following the instructions that accompany tax forms and by utilizing other information provided by the IRS. Therefore, neither the proposed regulations, nor these final regulations, are significant regulatory actions within the meaning of E.O. 12866, and a regulatory assessment is not required.”
Final mental health parity regulations have arrived
Originally posted December 02, 2013 by Jessica Webb-Ayer on https://hr.blr.com
The Departments of Labor, Health and Human Services, and the Treasury (Departments) recently released mental health parity final regulations that implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).
The MHPAEA applies to most employers with more than 50 employees and is designed to provide mental health parity by making sure mental health and/or substance use disorder benefits offered by health plans are equivalent to the medical/surgical benefits the plans offer.
The U.S. Congress passed the MHPAEA in October 2008, and in February 2010, the Departments jointly issued interim final regulations to aid employers and group health insurers in implementing the MHPAEA’s requirements. The new final regulations are not a whole lot different from those initial regulations and mainly just provide new clarifications on various issues.
Classification of benefits
The interim final regulations made clear that parity analysis must be conducted on a classification-by-classification basis and divided benefits into the following six classifications:
- Inpatient, in-network;
- Inpatient, out-of-network;
- Outpatient, in-network;
- Outpatient, out-of-network;
- Emergency care; and
- Prescription drugs.
The new final regulations retain those six classifications, but they do allow plans and issuers to divide benefits furnished on an outpatient basis into two sub-classifications:
- Office visits (e.g., physician visits); and
- All other outpatient items and services (e.g., outpatient surgery, facility charges for day treatment centers, laboratory charges, and other medical items).
The final regulations also provide that if a plan (or health insurance coverage) provides in-network benefits through multiple tiers of in-network providers, the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect those network tiers. However, such tiering must be based on reasonable factors and without regard to whether a provider is a mental health or substance use disorder provider or a medical/surgical provider.
Other clarifications
The mental health parity final regulations also provide other clarifications. For example, they:
- Make minor, technical changes to the meaning of the terms “medical/surgical benefits,” “mental health benefits,” and “substance use disorder benefits;”
- Clarify that a plan or issuer is not required to perform the parity analysis each plan year unless there is a change in plan benefit design, cost-sharing structure, or utilization that would affect a financial requirement or treatment limitation within a classification or sub-classification;
- Remove a specific exception for “recognized clinically appropriate standards of care” regarding nonquantitative treatment limitations (NQTLs);
- Add two additional examples of NQTLs: (1) network tier design and (2) restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage;
- Add a new section that addresses claiming an increased cost exemption under the MHPAEA;
- Add more examples throughout the regulations to help plans and issuers understand the provisions.
Effective dates and FAQs
The mental health parity final regulations are effective January 13, 2014, and they apply to group health plans and health insurance issuers for plan years beginning on or after July 1, 2014. Until then, plans and issuers must continue to comply with the interim final regulations.
Along with the new regulations, the Departments also published another set of mental health parity FAQs, which request comments on whether and how to ensure greater transparency and compliance.
Mental Health Parity Resources
- Topic Analysis: Healthcare Insurance
- Benefits Complete Compliance
- Administration to issue long-awaited mental health parity regulations
- Affordable Care Act and mental health: Are employers ready?
- Topic Analysis: Healthcare Benefits
States to decide which plans are PPACA-compliant
Originally posted November 21, 2013 by Arthur D. Postal on https://www.lifehealthpro.com
States will be the ultimate determinant as to whether they will allow insurers to renew existing health insurances plans in 2014 even though these policies may not comply with the new Affordable Care Act, President Obama and state insurance regulators agreed at a White House meeting last night.
The meeting with several insurance commissioners and Ben Nelson, chief executive officer of the National Association of Insurance Commissioners, was held as the White House continued itsefforts to smooth the troubled political waters caused by the rocky rollout of the federal exchange that will be used by residents of 36 states to buy individual and small group policies mandated by the law.
The state regulators used the occasion to raise other issues with the president, including their relationship with federal insurance regulators given a voice in insurance regulation left to the states for 150 years. A major issue brought up with the president was the role they want to play in establishing international insurance standards.
As for the healthcare, law, under the Patient Protection and Affordable Care Act, everyone must have health insurance by March 31, 2014, or pay a penalty. However, the exchange website unveiled Oct. 1 has proved unequal to its task, and there are questions whether it will be fully up to speed by the end of the month, as promised by the administration.
The inability of people to access the website, plus the realization that the president’s commitment to allow everyone to “keep their existing policies if they like them” contradicts the law’s mandate that each insurance policy must contain certain essential benefits, has generated a major political problem for the president.
These essential benefits include providing insurance to people with pre-existing conditions, free preventative care, maternity coverage and other benefits. Also included is a requirement to provide contraceptives for women.
However, the realization that most existing policies didn’t include such benefits created a major practical problem as insurers notified thousands of affected consumers that their existing policies would be cancelled.
As the meeting was being held, CareFirst BlueCross Blue Shield, which serves Maryland, announced that it would allow more than 55,000 policyholders to retain their policies for one year even though the policies don’t contain some of the essential benefits mandated by the new law. CareFirst acted one day after the Maryland insurance commissioner said he would approve such action. Other health insurers in the state said they would also do so; others said they would not.
Other states, like Florida, said they would also allow consumers to keep their existing policies for one year. But, others, like New York, Washington and Indiana, said they would not comply. CaliforniaInsurance Department officials said they would announce their decision today.
At the meeting, the state insurance regulators emphasized their concern that different rules for different policies would be detrimental to the overall insurance marketplace and could result in higher premiums for consumers, without addressing the underlying concern of gaps in coverage. They also emphasized the importance of deferring to the states to protect consumers, and highlighted the track record of effective regulation by insurance departments across the country.
However, they acknowledged that they are just standard-setters, not policymakers and reiterated, as stated by Jim Donelon, NAIC President and Louisiana insurance commissioner, that PPACA is “the law of the land."
“Since the passage of ACA, state regulators have been working to ensure that plans are compliant with the new rules,” Donelon said at the meeting.
He said the proposed changes announced by the president in an executive order last Thursday in response to the uproar over the cancellations and the difficulty consumers are having buying policies on the federal website has creating “a level of uncertainty that we must work together to alleviate.”
Donelon made clear, however that state regulators “share the President’s goal of affordable coverage for consumers, and we will work with the insurance companies in our states to implement changes that make sense while following our mandate of consumer protection.”
Donelon attended the meeting with NAIC Chief Executive Officer Senator Ben Nelson, Connecticut Insurance Commissioner Thomas B. Leonardi, and North Carolina Insurance Commissioner Wayne Goodwin.
The group discussed practical implications of implementing the delay in enforcement as well as outstanding questions regarding what specific provisions would be impacted, and talked to reporters at length at what was accomplished at the meeting in a conference call afterwards.
Amongst the presidential aides attending the meeting was Kathleen Sebelius, secretary of the Department of Health and Human Services. Sebelius and officials of the Centers of Medicare and Medicaid Services, which oversaw development of the website, have been under intense fire because the website has failed because of the huge numbers of people who sought access to it, and because testing designed to prove it worked was not even started until a week or so before the Oct. 1 rollout.
The White House released a statement saying the state regulators had been given full authority as to whether to accept the grandfathering. According to the statement, Obama said that his executive order requires that health plans that offer such renewals provide consumers with clear information about consumer protections lacking in those plans and their options and possible tax credits through the exchanges. The statements said that Obama acknowledged that, “States have different populations with unique needs, and it is up to the insurance commissioner and health insurance companies to decide which insurance products can be offered to existing customers next year.”
Additionally, according to the White House statement, the president emphasized that he wants to hear any ideas that insurance commissioners “may have as implementation continues to ensure that Americans across the country have the information they need to get affordable, quality coverage for themselves and their families.”