IRS loosens employer mandate reporting requirements
Originally posted September 9, 2013 by Gillian Roberts on https://eba.benefitnews.com
In a follow-up to the Obama administration’s July 2 employer mandate delay, the U.S. Department of the Treasury and Internal Revenue Service issued a proposed rule late last week that would make certain reporting requirements in the provision of the Affordable Care Act voluntary. According to a statement by the department, “The regulatory proposals reflect an ongoing dialogue with representatives of employers, insurers, other reporting entities, and individual taxpayers.”
The changes include:
- “Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees.”
- “Replacing section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses, and dependents.”
- “Limited reporting for certain self-insured employers offering no-cost coverage to employees and their families.”
“Today’s proposed rules enable us to continue engaging on how best to implement the ACA reporting requirements in a more streamlined and focused manner,” said Assistant Secretary for Tax Policy Mark J. Mazur in the statement. “We will continue to consider ways, consistent with the law, to simplify the new information reporting process and bring about a smooth implementation of those new rules.”
The full statement can be found here and the full rule, with details to provide comments, can be found here.
Proposed rules would ease employers' health plan reporting burden
Originally posted September 6, 2013 by Jerry Geisel on https://www.businessinsurance.com
Newly proposed Internal Revenue Service and Treasury Department health care reform regulations would ease the amount of employee plan coverage information employers would have to report to federal regulators.
Under the proposed rules, released Thursday, employers would not be required to report cost information related to family coverage.
In addition, employers would have to report how much of the premium employees will have to pay for single coverage only.
Limiting that reporting requirement to single coverage is appropriate, the IRS and the Treasury Department said because a health care reform law affordability test applies only to single coverage — not family coverage.
Under that test, if the premium paid by employees for single coverage exceeds 9.5% of household income, the employee is eligible for a federal premium subsidy to purchase coverage in a public insurance exchange. If the employee uses the subsidy, the employer may be liable for a $3,000 penalty.
No penalty is assessed regardless of how much the employer charges for family coverage, making the need to collect such information unnecessary, regulators said.
“Because only the lowest-cost option of self-only coverage offered under any of the enrollment categories for which the employee is eligible is relevant to the determination of whether coverage is affordable — and thus to the administration of the premium tax credit and employer shared responsibility provisions — that is the only cost information proposed to be requested,” according to the proposed regulation, which is scheduled to be published in the Sept. 9 Federal Register.
While regulators have reduced the amount of information to be reported, “it is only limited relief. There still will be a massive amount of work to meet the reporting requirements,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.
The proposed rules, though, could pose problems in other areas. For example, employers would be required to report tax identification numbers of employees' dependents.
Employers do not always have such information for every dependent, said Amy Bergner, managing director of human resources in Washington for PricewaterhouseCoopers L.L.P.
White House proposes new employer mandate rules
Originally posted September 6, 2013 by Ricardo Alonso-Zaldivar on https://www.benefitspro.com
WASHINGTON (AP) — The Obama administration on Thursday released new proposals for carrying out a major requirement of the federal health care law that was postponed earlier this summer.
At issue is how to gather information that would allow the government to enforce a requirement that companies with 50 or more workers provide affordable health insurance to their full-time employees. Companies that don't comply would risk fines.
The mandate was supposed to take effect Jan. 1, but in July the White House unexpectedly announced a one-year delay until 2015. Officials said more time was needed to work out information reporting requirements so they would not be too burdensome for businesses. Delaying the mandate also defused a potential political problem for Democrats in next year's congressional elections.
The new proposal from the Treasury Department seeks comment on options to reduce or streamline reporting by employers, insurers and health plan administrators. In some instances, the administration is proposing to eliminate duplicative reports and in other cases, it's asking for less detail.
Business groups said it will take time to sort through the technicalities but praised the administration's effort to find common ground.
"Retailers are not interested in being overly burdened by bureaucratic red tape or time-wasting, duplicative reporting requirements," Neil Trautwein, the top health policy official for the National Retail Federation, said in a statement.
The information reported by employers and insurers is also critical in enforcing the law's central requirement that virtually all Americans carry health insurance starting Jan. 1. That so-called individual mandate has not been delayed and remains in full force.
The Treasury Department said it will be soliciting feedback on its proposals through early November, and will use the comments to develop final rules.
Although the one-year delay of the employer coverage requirement remains in effect, the administration says it hopes employers will voluntarily begin reporting information next year to smooth the transition in 2015.
IRS Issues Proposed PPACA Rules on Employer-Information Reporting
Originally posted September 6, 2013 by Stephen Miller on https://www.shrm.org
On Sept. 5, 2013, the U.S. Department of the Treasury and the Internal Revenue Service issued two proposed rules intended to streamline the information-reporting requirements for certain employers and insurers under the Patient Protection and Affordable Care Act (PPACA or ACA).
The PPACA requires information reporting under Internal Revenue Code (IRC) Section 6055 by self-insuring employers and other health coverage providers. And under IRC Section 6056, information reporting is required of employers subject to the employer "shared responsibility" provisions, also known as the employer mandate—meaning those with 50 or more full-time equivalent workers, who must provide coverage for employees working an average of at least 130 hours per month (or 30 or more hours per week) looking back at a standard measurement period of not less than three but not more than 12 consecutive months—or pay a $2,000 penalty for each full-time worker above a 30-employee threshold. The shared-responsibility mandate, which was set to take effect in January 2014, has been delayed until January 2015.
One proposed rule, “Information Reporting of Minimum Essential Coverage,” pertains to IRC Section 6055, while the other proposed rule, “Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans,” pertains to IRC Section 6056.
“These reporting requirements serve distinct purposes under the ACA,” Timothy Jost, a professor at the Washington and Lee University School of Law in Virginia, explained in a commentary about the proposed rules posted on the journal Health Affairs’ blog. “The large-employer reporting requirement is necessary to determine whether large employers are complying with the employer-responsibility provisions of the ACA and will also help identify individuals who are ineligible for premium tax credits because they have been offered coverage by their employer. The minimum-essential-coverage reporting requirement will assist the IRS in determining whether individuals are complying with the ACA’s individual-responsibility requirement and also whether they are eligible for premium tax credits because they lack minimum essential coverage.”
Once the final rules have been published, employers and insurers will be encouraged to report the specified information in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.
“The absence of these rules was the reason given by the IRS for delaying the employer mandate until 2015,” Jost noted. “The IRS is encouraging voluntary reporting by employers and insurers, subject to the requirements for 2014, and should have no trouble getting the final rules in place for mandatory reporting in 2015.”
Statutory Requirements
Specifically, the PPACA calls for employers, insurers and other reporting entities to report under IRC Section 6055:
- Information about the entity providing coverage, including contact information.
- A list of individuals with identifying information and the months they were covered.
And under IRC Section 6056:
- Information about the applicable large employer offering coverage (including contact information for the company and the number of full-time employees).
- A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.
Proposed Reporting Options
The proposed rules describe a variety of options to potentially reduce or streamline information reporting, such as:
- Replacing Section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses and dependents.
- Eliminating the need to determine whether particular employees are full time if adequate coverage is offered to all potentially full-time workers.
- Allowing organizations to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.
- Allowing self-insured group health plans to avoid providing employee statements under Sections 6055 and 6056 by furnishing a single substitute statement.
- Allowing limited reporting by certain self-insured employers that offer no-cost coverage to employees and their families.
- Permitting health insurance issuers to forgo reporting, under Section 6055, on individual coverage offered through a government-run health care exchange, or marketplace (set to launch in October 2013), because that information will be provided by the marketplace.
- Permitting health insurance issuers, employers and other reporting entities, under Section 6055, to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.
According to Jost, the IRS is attempting to avoid duplication and collecting unnecessary information. “Large employers need only report the employee’s share of the lowest-cost monthly premium for self-only coverage, since a determination as to whether employer coverage is affordable for adjudicating eligibility for premium tax credits is based on the cost of self-only, rather than family, coverage,” he wrote. “Entities that must report minimum essential coverage can report birthdates, rather than Social Security numbers, for dependents if they are unable to secure the Social Security numbers after reasonable efforts.”
The IRS is soliciting comments on the Section 6055 and 6056 proposed rules through Nov. 8, 2013. The agency will take the public comments into account when developing final reporting rules on further simplifications.
Separately, the process to challenge an insurance exchange's finding that an employer's plans are unaffordable or fail to provide minimum essential coverage (thereby triggering penalties against the employer) is presented in a final rule published in the Federal Register on Aug. 30, 2013, by the U.S. Department of Health and Human Services.
PPACA expected to aggravate job absences
Originally posted August 23, 2013 by Dan Cook on https://www.benefitspro.com
Under pressure to meet the basic requirements of the Patient Protection and Affordable Care Act, employers may be overlooking the law’s implications for employees’ attendance at work.
This observation comes from a survey of employers and insurance providers sponsored by the Disability Management Employer Coalition and Pacific Resources.
The researchers polled 169 benefits policy decision-makers in large organizations and 118 senior professionals in the insurance industry involved with absence management and disability issues. It asked a series of questions designed to measure their employers’ preparedness for the act’s full implementation, including whether they had thoughtfully considered how the reforms might change employee attendance at work and issues around worker disability.
Most have not, the researchers concluded. “While organizations may be prepared for the changes to health care and health insurance, most were not thinking about the impact of PPACA on disability and absence management,” the study said.
Another major finding: both employers and insurers surveyed anticipate “increased incidence and duration of long-term absences.”
Both employers and insurers tended to believe that employee absences will be more frequent and longer. The reason? With more Americans enjoying the benefits of health coverage, there will be longer waiting periods for access to care providers. This will be exacerbated, the report said, by the dwindling numbers of primary care physicians entering the profession.
“Most respondents believe access to routine care will change – 42 percent believe that the ability of employees to see a physician for routine care in a timely manner will get worse, while only 21 percent believe it will improve,” the study reported.
But when it came to questions about the act’s influence on disability issues, there was less clarity among respondents.
“There is more uncertainty about how PPACA will impact the number of disability claims, although those who feel knowledgeable enough to predict what will happen are more likely to believe the number of claims will rise due to employees no longer fearing a loss of health care coverage from a long-term absence,” the study said.
Overall, insurers took a more pessimistic view of the ways in which Obamacare might influence attendance and disability.
“Carriers are more likely than employers to think that PPACA will have an impact on absence and disability,” the study said. “A third of employers and a majority of carriers believe PPACA will increase the incidence and duration of absences and disability. However, many have not yet considered this aspect of the law, as a quarter are not sure what will happen to absence and disability outcomes.”
More on the Oct. 1 ACA notices: Who has to provide them
Originally posted by Keith R. McMurdy on https://eba.benefitnews.com
After last week’s reminder about the Oct. 1 deadline for Affordable Care Act communications, the following question came up frequently — Does the notice requirement apply to employers with less than 50 employees?
Further clarification is provided in Technical Release 2013-02 called “Guidance on the Notice to Employees of Coverage Options under Fair Labor Standards Act 18B and Updated Model Election Notice under the Consolidated Omnibus Budget Reconciliation Act of 1985.” Section 18B of the FLSA was added as a result of the ACA. And it is 18B of the FLSA that contains the notice requirement that employers must communicate about the ACA with their employees. Overall, it says that every employer that is subject to the FLSA must provide the notice about coverage options. Fact Sheet 14 from the U.S. Department of Labor tells us that businesses covered by the FLSA must have at least two employees, and are those that have an annual dollar volume of sales or business revenue of at least $500,000 or are hospitals, businesses providing medical or nursing care for residents, schools and preschools or government agencies.
So, if your business is subject to the FLSA, you have to give the notice to employees of coverage options to existing employees by Oct. 1, and to all new hires within 14 days. It does not matter if you have 10 or 35 or 50 or 100 employees. If you are subject to the FLSA, you have to provide the notice.
Keith R. McMurdy is a partner with Fox Rothschild, focusing on labor and employment issues. He can be reached at kmcmurdy@foxrothschild.com or 212-878-7919.
This alert is intended for general information and educational purposes and should not be taken as specific legal advice.
Five misconceptions that come with health care exchanges
Originally posted by Samuel H. Fleet on https://ebn.benefitnews.com
The creation of health care exchanges has done little to quiet the noise. Exchanges require that retirees navigate this uncertainty on their own, buying directly from the carrier with no familiarity or direction. Additional options come with more questions, but working with the right partner helps ease the minds of an organization’s former employees so they can enjoy their retirement. Group plans have customer advocacy centers that cater specifically to an elderly population and can reinforce trust during such an ambiguous time.
The following misconceptions about health care exchanges will help shine light on some of this misinformation and show how group plans are a better option that individual plans in the post-65 space.
1. Individual plans are cheaper than group plans
Not necessarily. A retiree who is 65 may be able to find an inexpensive individual plan, but that likelihood decreases exponentially as an individual ages. One reason is because individual plans have costs built into them to help the carrier recover adverse selection. And because there is a “take it or leave it” component built into individual plans, meaning the individual can always go look for another plan if one isn’t to their liking, they will often have a charge (usually around 10%) to protect themselves.
Some carriers try to build-in other underwriting characteristics in an attempt to circumnavigate this situation, often with a questionnaire. Individuals who “pass” the underwriting questionnaire may then receive a preferred rate, but it isn’t an exact science. This maneuvering doesn’t exist with group plans, which are rated across the entire retiree segment rather than on an individual’s particular characteristics. Additionally, multiple plans are available to a retiree in a group setting, but with literally hundreds of individual plans available it can be difficult for one to feel assured that he or she is choosing the right plan. A retiree can certainly pick the most inexpensive plan, but going that route almost guarantees poor coverage.
2. Moving to an exchange eliminates employer financial liability
FASB106 liability is based on an obligation to pay for retiree benefits, regardless of whether these benefits are offered to the individual or a group. The reality is that these liabilities will continue to exist as long as the employer makes contributions in any form, and in any amount, to a retiree’s plan. This standard requires reporting of costs as well as advance mechanisms that ensure future payments to retirees will be available.
3. Retirees want more coverage options at different price points
Choice is a good thing, but too much choice is often overwhelming. In a recent survey conducted by AmWINS Group Benefits, a pool of more than 1,500 retirees enrolled in a group plan was asked if they wanted more options, and responses came back 50/50. Of those who wanted more, 82% said they only wanted two or three options at the most. Health care is critical to an aging population, and retirees are likely to have many questions when it comes to choosing their individual plans. Retirees want comfort in not only their coverage, but the stability that comes with consistent care.
4. Exchanges eliminate the employer’s administrative burdens
Because health care is critical to an aging population, they are likely to have questions and concerns along the way. A large American auto manufacturer switched to an exchange model and knew what to expect – the noise level from retirees was deafening and it continued for nearly a year. The company had no choice but to take it. If administrative obligations and burdens are a concern, consider changes to the administrator, not the plan.
5. The move to an exchange won’t cause any disruption for the retiree
The confusion that comes with a shift to an exchange model is likely to have a detrimental impact on the retiree, which can cause great disruption within the employer’s organizational structure. Retirees, the same group that built the company and carried it through hard times to prosperity, can feel forgotten once they are thrown into the exchange model. Often the people who made promises to former employees about their health care needs in the future are long gone, replaced by players in a management structure with no relationship with these retirees.
While inevitable, change is never easy. It’s not too late to support loyal, former employees in the midst of health care reform by removing some of the anxiety around change and overwhelming choices.
Should exchanges be part of your company's plan?
Originally posted August 06, 2013 by Justyn Harkin on https://ebn.benefitnews.com
Although considering the new health care exchanges may have seemed radical a few weeks ago, now that everybody gets to drop ten and punton the employer mandate penalty in 2014, the idea may not be so strange.
Sure, migrating employees to the exchanges isn’t right for every organization. If the move would upset your workforce, then keeping your current group plan is probably best. But if employees would view exchange offerings as equal or better than what they current have, then there could be plenty of upsides.
If you think the exchanges would be better than what you have now for both your company and your employees, or even if you just want to get a leg up on communications (and believe me, that’s never a bad idea), then you and your employees have three options — public exchanges, private exchanges (fully insured), private exchanges (self-insured).
Which one might be best for your organization? Let's see.
Public exchanges
One of the most attractive ideas about moving to a public exchange has to be handing over the considerable financial and administrative burdens for running your company’s health benefits.
For some organizations, the move might be cheaper than what they are doing now. Even when you factor in the likely, eventual activation of the $2,000-per-employee fine for not providing insurance, you could still be paying less than what you would if you were covering premiums.
Of course, sending employees to public exchanges isn’t necessarily a slam-dunk move. Your workforce could straight-up riot if you tell them you’re cutting health benefits, and even if you raise salaries (oh, hello there, higher payroll taxes) to help them cover the costs of buying their own insurance, your recruiting efforts could take a hit if your competitors keep their health benefits.
Private exchanges with fully insured plans
Perhaps the biggest advantage of using a private exchange is the ability to shift some of the rising costs of health care to employees and give them the ability to control their spending.
In a private exchange, employees get an allowance from their employer that can be used to buy insurance. The idea is that giving employees control of the purchasing decision takes some of the heat off of your company. After all, if the cost of health care rises, that’s not your fault?
So what’s the downside to this type of exchange? Well, in the worse-case scenario it’s a less healthy, less productive workforce. Because employees will be making purchasing decisions, they may choose lower premiums over better coverage, and that can contribute to poorer health and higher rates of absenteeism.
Private exchanges with self-insured plans
The last of your exchange options are private exchanges with self-insured plans. Compared with the types of plans offered on public exchanges and private exchanges with fully insured plans, the plans available on private exchanges with self-insured plans can seem very attractive employees — generally lower premiums, more generous plan features, and more in-network doctors — but they will be more expensive.
The self-insured private exchange option might be slightly more expensive than what you could do with a fully insured private exchange, that’s true, but the available plans would be more oriented toward long-term health.
Still, using self-insured plans means you’ll have to assume all the risk and pay for all your employees’ claims. Also your employees will become customers of the private exchange insurance companies, and that means you won’t have the same influence (over the companies or choices) that you would otherwise have.
How will you spend the bonus year?
Assistant Secretary for Tax Policy Mark J. Mazur’s July 3 announcement might have seemed like the best health care reform–related thing to happen to employers all year.
If you take the “transition year” at face value, meaning the mandatory employer and insurer reporting requirements are being postponed, then you have the perfect chance to carefully consider your company’s next moves.
Maybe you’ll decide to take the plunge. Perhaps you’ll rule out the exchanges altogether. You might even decide to let other companies test the waters first so you can be prepared later on.
No matter what path you chose, though, the most important thing is taking the time to make the best decision for your company and your employees. And then communicate that decision in a clear and engaging way. Good luck!
House-passed bill would bar IRS enforcement of health care reform law
Originally posted August 2, 2013 by Jerry Geisel by https://www.businessinsurance.com
The House of Representatives approved legislation Friday that would bar the U.S. Treasury Department and Internal Revenue Service from enforcing the health care reform law.
The Republican-backed measure cleared the House on a 232-185 vote.
Under the bill, H.R. 2009, regulators would be unable to enforce key health care reform law provisions such as the requirement — delayed last month by the Treasury Department to 2015 — that employers with at least 50 full-time employees offer coverage or pay a fee and a 2014 requirement that individuals enroll in a health plan or pay a fine.
The bill — as has been the case with other measures approved by the House to repeal all or part of the Patient Protection and Affordable Care Act — is unlikely to be taken up by the Senate, where Democrats hold the majority.
Even if the Senate were to pass the House measure, President Barack Obama would veto it.
The legislation “would raise health insurance premiums and increase the number of uninsured Americans and represents another attempt to repeal the Affordable Care Act, with no plan to replace it or policy to improve it,” the administration said in a statement by the Office of Management and Budget earlier this week.
Instead of attempting to repeal the reform law, lawmakers should work with the administration on an agenda to provide greater economic security to the middle class, the administration said in the statement.
Rep. Tom Price, R-Ga., who introduced the latest House measure to repeal the law, said earlier that “we ought to take this common sense step to take the IRS out of health care.”
Feds add exchange employer site
Originally posted August 2, 2013 by Allison Bell on https://www.benefitspro.com
Three federal agencies have joined to set up a Patient Protection and Affordable Care Act website for small businesses.
Business.USA.gov/healthcare offers a "wizard," or interactive tool, that offers to help business owners understand what they need to know about the new PPACA insurance options in a few quick steps.
The Small Business Administration worked with the U.S. Department of Health and Human Services and the U.S. Treasury Department to set up the site.
The wizard starts by asking visitors about their companies' location and size.
On the size menu, for example, the wizard asks whether the user is self-employed with no employees, has fewer than 25 employees, has up to 50 employees, or has 50 or more employees.
The site includes an explanation of how an employer can determine whether it has 50 or more full-time or full-time equivalent employees.
Users who, say, might want to set up group health plans will see information about the new PPACA Small Business Health Options Program small-group exchange program.
In most states, in the pages of information for employers interested in setting up health plans, the SBA gives an answer to the question, "Can I use an agent or broker to buy health insurance in the marketplace?"
"You will be able to use a licensed agent or broker to provide help or handle your SHOP business," the SBA says. "You won't pay more if you use a SHOP agent or broker."
For users in Vermont, a state that is trying to eliminate small-group market broker commissions, the SBA makes no mention of agents and brokers.