Education heightens employee satisfaction with benefits, employers
Originally posted July 23, 2014 By Melissa A. Winn on https://eba.benefitnews.com
Employees are increasingly dissatisfied with their benefits, and therefore dissatisfied with their employers.
This trend, according to new research released by Unum, highlights the correlation between employers’ benefit offerings and the ability to attract and retain top talent. What’s more, the survey found employees who receive education about their employee benefits tend to be more satisfied with their benefits — and ultimately their employers. Benefit advisers working with employers can stress the importance of benefits education on employee satisfaction and how that translates into better employee attraction and retention.
The survey results released Tuesday show employee satisfaction with their benefits continues to closely relate to satisfaction with their employer. More than three-quarters (77%) of those workers who rate their benefits package as “excellent” or “very good” also rate their employer as an excellent or very good place to work. By contrast, only 17% of employees who consider their benefits package to be fair or poor rate their workplace as excellent or very good.
Also, 79% of workers who rated the education around their benefits as excellent or very good also rated their employer as excellent or very good — compared with only 30% of those who said the education they received was fair or poor.
“This research underscores the value of an effective benefits education plan because when an employee understands their benefits, they tend to value them more and in turn may then value their employers more for providing access to them,” says Bill Dalicandro, vice president of the consumer solutions group at Unum.
The Unum research reiterates recent findings from the Aflac Workforces Report that small business employees are not only dissatisfied with their employer’s benefit offerings but also willing to take a pay cut to work for an employer offering better benefits.
Unum’s online survey of 1,521 working adults, conducted by Harris Poll, finds that only half (49%) of U.S. workers rate their employer as an excellent or very good place to work and less than half (47%) of employees who were offered benefits by their employer rated their benefits as excellent or very good. This is the lowest rating of benefits in six years of conducting the research.
The survey also shows employees do not feel they are getting the information they need about the benefits they’re being offered. Only 33% of employees who were asked to review benefits in the prior year rated the benefits education they received as excellent or very good – a drop from 2012 and a reversal to the upward trend in ratings since 2009. In addition, nearly three in 10 (28%) rated their benefits education as fair or poor.
“With health care reform and other changes in employee benefit plans, employees have so much information to digest right now,” explains Dalicandro. “Employers can play such a great role in helping their employees understand their options so they will feel comfortable making benefits decisions.”
Health care employers need cure-all for retirement epidemic
Originally posted Jully 11, 2014 by Michael Giardina on https://ebn.benefitnews.com.
Like other industries, health care employers and benefit plan managers in the health care sector are struggling mightily with their ability to address the retirement preparedness of their evolving workforces.
Whether it’s the remnants of the baby boomers or introduction of millennials, the workforce dynamic in the health care industry is going through a change as the it continues to cope with the ongoing hiccups of the Affordable Care Act. Plan fiduciaries at health worksites also caution the need to motivate their employees to save adequately and helping them learn how to invest wisely.
The health care segment includes more 4,000 defined contribution plans, with approximately 5,200 retirement plan participants. In total assets, the health care sector has more $317.8 billion, which is about 40% of the overall DC not-for-profit market.
Ty Minnich, vice president, not-for-profit institutional markets at Transamerica Retirement Solutions, says the root of the problem is the “pendulum shift” from defined benefit to DC retirement plans, which adds to the retirement confusion.
“The aging population, although affecting all industries, is creating a workforce management issue – particularly in health care, where the demand for younger employees is there,” says Minnich. “The technical expertise, the knowledge they need with the sophistication of the changes in medical delivery [is critical], yet they have employees entering the retirement period of their careers and they are not retiring because they are not ready to retire, from a financial perceptive.”
According to health care retirement plan sponsors, approximately 75% say that employee engagement is one of the most significant challenges in managing a retirement plan. Of the more than 100 hospital administrators and chief financial officers surveyed by Transamerica and the American Hospital Association, most agree that helping employees save for retirement and retaining employees are top goals for their retirement plan.
Another wrench in the operation of health care businesses has been the ACA, and its overnight transformation – according to some in consultancy space – of how business is done in the field.
“[Health care] is undergoing an enormous change, from the perspective on how they get reimbursed for their delivery model,” says Minnich. “What you seeing is that the smaller regional community-type organizations just can’t exist in this marketplace.”
David Zetter, of Zetter Healthcare Management Consultants, explains that he is seeing similar shifts in all aspects of benefits and services – from small practices to large groups and health systems that the health care accounting and consulting firm works with.
“I don’t see how health care practices are going to do it,” explains Zetter, also a board member of the National Society of Certified Healthcare Business Consultants. “It’s just getting so expensive, and reimbursements are going down. It’s tough for a doctor to make ends meet at this point in time and if they keep wanting to be the employer of choice they are going to have to ante up. Unfortunately that’s going to cost them quite a bit of money, especially from a benefits standpoint.”
Meanwhile, there has been a change in how plan sponsors measure plan success in the medical industry. There is more of a focus around retirement readiness rather just solely participation rates, according to the study. And this intensified focus on improving employee interaction and tailoring print and electronic education touch points exemplifies how health care retirement plan sponsors are reacting.
“It all indicates that the plan sponsors are not only realizing they have to do more to help participants get ready for retirement, but also helping participant to help themselves,” says Grace Basile, assistant director of market research at Transamerica Retirement Solutions. “There’s no more ‘set it and forget it,’ there’s no more just getting into the plan.” Instead, she says it’s all about “increasing [engagement] over time, [and] making sure your investments are appropriate for where you are in your age and career.”
Overall, employers and their employees have been riddled with uncertainty of retirement since the recession. However, according to the Employee Benefit Research Institute, retirement confidence reported some meager gains from the losses over the past five years. Approximately 18% of Americans are very confident and 37% are somewhat confident with the future financial needs.
Nevin Adams, co-director of the Employee Benefit Research Institute Center for Research on Retirement Income, adds that all employers – not just those in the health care space – are faced with the challenges of finding the sweet spot of automatic enrollment, default rates and participation.
“One of the things that we are really hearing from employers is that employee benefits are going to continue to be sort of a differentiating factor,” Adams tells EBN. He says that demographic shifts are one of the biggest challenges for employers to deal with.
“The baby boomers [are] kind of hanging around, and the millenials looking for a place to come in,” he notes. “The benefit package and how it’s put together really will make a difference.”
Hobby Lobby ruling spilling over to corporate world
Originally posted July 10, 2014 by Alan Goforth on https://www.benefitspro.com.
Both proponents and opponents of the recent ruling by the U.S. Supreme Court in the Hobby Lobby contraception case agree on at least one thing: The case may be settled, but how it will play out in the workplace is far from certain.
The court ruled that the 1993 Religious Freedom Restoration Act prevents certain employers from being forced to pay for contraceptives they oppose for religious reasons. However, the definition of which types of corporations are excluded remains murky.
"Nobody really knows where it is going to go," said Richard Primus, professor of constitutional law at the University of Michigan. "I assume that many more businesses will seek exemptions, not just from the [Patient Protection and] Affordable Care Act, but from all sorts of things they want to be exempt from, and it will put courts in a difficult position of having to decide what is a compelling government interest."
About 50 lawsuits filed by corporations nationwide, which were put on hold during the Hobby Lobby appeal, must now be resolved or re-evaluated. "We don't know ... how the courts will apply that standard," Primus said.
The decision also has ramifications beyond the courtroom. Even closely held companies with sincere religious beliefs must carefully consider the potential marketplace ramifications of crafting health-care coverage according to religious beliefs.
"Many owners of companies don't want to distinguish the difference between what's good for them personally and what's good for their business," said John Stanton, professor of food marketing at Saint Joseph University in Philadelphia. "I believe that if a business owner believes something is the right thing to do — more power to them. That's his business. However, he's got to be ready for the negative repercussions."
Eden Foods of Clinton, Mich., a natural-foods manufacturer, has filed a lawsuit and is balancing religious beliefs and business concerns. Since Eden initially filed its lawsuit last year over mandates to cover birth control in PPACA, some customers have taken to social media to express disapproval and outrage, even threatening a social boycott. However, the corporation also has gained new customers who support its stance.
"It's very conceivable they could lose business," said Michael Layne, president of Marx Lane, a public relations firm in Farmington Hills, Mich. "And they could lose employees, too."
Experts agree that the myriad issues raised by the Hobby Lobby decision could take a while to play out. "I think there will be a rush of litigation in the next year or two," Primus said. "I think that the exemptions are likely to get broader before they are limited."
Upcoming PCORI Fee Due July 31
Source: https://www.irs.gov
The Affordable Care Act imposes a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fee, required to be reported only once a year on the second quarter Form 720 and paid by its due date, July 31, is based on the average number of lives covered under the policy or plan.
The fee applies to policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019. The Patient-Centered Outcomes Research Institute fee is filed using Form 720, Quarterly Federal Excise Tax Return. Although Form 720 is a quarterly return, for PCORI, Form 720 is filed annually only, by July 31.
Specified Health Insurance Policies and Applicable Self-Insured Health Plans
The fee is imposed on an issuer of a specified health insurance policy and a plan sponsor of an applicable self-insured health plan. For more information on whether a type of insurance coverage or arrangement is subject to the fee, see this chart.
Calculating the Fee
Specified Health Insurance Policies
For issuers of specified health insurance policies, the fee for a policy year ending before Oct. 1, 2013, is $1, multiplied by the average number of lives covered under the policy for that policy year. Generally, issuers of specified health insurance policies must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year.
- Actual Count Method: For policy years that end on or after Oct. 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year.
- Snapshot Method: For policy years that end on or after Oct. 1, 2013, but began before May 14, 2012, issuers using the snapshot method may use counts from the quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy.
- Member Months Method and 4. State Form Method: The member months data and the data reported on state forms are based on the calendar year. To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. For example, the issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012.
For more information on these methods to determine the average number of lives covered under a policy for the policy year, please see the final regulations (PDF).
Applicable Self-Insured Health Plans
For plan sponsors of applicable self-insured health plans, the fee for a plan year ending before Oct. 1, 2013, is $1, multiplied by the average number of lives covered under the plan for that plan year. Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year.
- Actual Count Method: A plan sponsor may determine the average number of lives covered under a plan for a plan year by adding the totals of lives covered for each day of the play year and dividing that total by the total number of days in the plan year.
- Snapshot Method: A plan sponsor may determine the average number of lives covered under an applicable self-insured health plan for a plan year based on the total number of lives covered on one date (or more dates if an equal number of dates is used in each quarter) during the first, second or third month of each quarter, and dividing that total by the number of dates on which a count was made.
- Form 5500 Method: An eligible plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on the Form 5500, Annual Return/Report of Employee Benefit Plan, or the Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.
However, for plan years beginning before July 11, 2012, and ending on or after Oct. 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method.
For more information on these methods to determine the average number of lives covered under applicable self-insured health plans for the plan year, please see the final regulations (PDF).
Reporting and Paying the Fee
File the second quarter Form 720 annually to report and pay the fee no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Issuers and plan sponsors who are required to pay the fee but are not required to report any other liabilities on a Form 720 will be required to file a Form 720 only once a year. They will not be required to file a Form 720 for the first, third or fourth quarters of the year. Deposits are not required for this fee, so issuers and plans sponsors are not required to pay the fee using EFTPS.
Please see the instructions for Form 720 on how to fill out the form and calculate the fee. If for any reason you need to make corrections after filing your annual Form 720 for PCORI, write “Amended PCORI” at the top of the second filing.
The payment, if paid through the Electronic Federal Tax Payment System, should be applied to the second quarter (in EFTPS, select Q2 for the Quarter under Tax Period on the "Business Tax Payment" page).
Employers want workers to be accountable for their own health: Survey
Originally posted May 19, 2014 by Stephanie Goldberg on www.businessinsurance.com.
DALLAS — Employers are implementing healthy lifestyle programs and activities for workers and developing workplace cultures in which employees are responsible for their own health, Julie Stone, leader of business process benefits, health and group benefits at Towers Watson & Co., said of the new health care landscape.
“The commitment to workforce health is clear, and that translates in many different ways in organizations — from building a culture … in your worksite, onsite health care, to just how you design your plans and what you incent people to do or not do,” Ms. Stone said Monday during a session on navigating health care reform at WorldatWork's 2014 Total Rewards Conference in Dallas.
Towers Watson and the National Business Group on Health asked employers what their top priorities were via the 2014 “Employer Survey on Purchasing Value in Health Care,” released in March. Ms. Stone, who is based in Parsippany, New Jersey, said developing a workplace culture where employees feel personally accountable for their health was at the top of employers' list.
Healthy workers tend to be more productive, present and fully functioning, which has a direct link to the employer's bottom line, Ms. Stone said.
“The healthier your workforce, the lower your cost,” she said. “It's another way of reducing your spend before the excise tax without having to take away from a benefit design perspective.”
She said it's important for employers to build a strategy around the health care reform law's 40% excise tax on high-cost health coverage that takes effect in 2018.
“About 60% of the organizations that we've surveyed and work with are likely to hit the excise tax if there aren't changes made to the costs of benefits,” Ms. Stone said, adding that 71% of employers surveyed expect to change their health plans in preparation for the excise tax.
Most newly insured Americans covered by employers, study finds
Originally posted April 8, 2014 on www.modernhealthcare.com by Virgil Dickson.
More than 9 million Americans obtained health insurance between September and mid-March, but most did so through employer-sponsored plans rather than through HealthCare.gov or the state exchanges, a survey by the RAND American Life Panel found.
Only 1.4 million of the 3.9 million individuals who enrolled in Patient Protection and Affordable Care Act-related exchange plans through mid-March were previously uninsured, researchers found. The survey concluded before the final enrollment surge that pushed overall marketplace enrollment past 7 million, RAND noted.
Of the 40.7 million estimated uninsured Americans in 2013, 14.5 million gained coverage, but 5.2 million of the insured lost coverage, for a net coverage gain of approximately 9.3 million. That means the share of the population that was uninsured fell from 20.5% to 15.8%, according to RAND.
Less than 1 million citizens who previously had individual market coverage became uninsured, researchers found. RAND was unable to deduce if those people lost their insurance due to cancellation, or because coverage costs were too high. People in this category represented less than 1% of those between the ages of 18 and 64.
Overall, the ACA did not change health coverage choices for most insured Americans, as 80% of those surveyed still had the same type of coverage in March 2014 as in September 2013, according to RAND.
The RAND figures comprised not only signups under the new ACA-established marketplaces, but also new enrollments in employer coverage and Medicaid. Results were extrapolated from a survey of 2,425 adults between the ages of 18 and 64, who responded to the RAND survey in both March 2014 and September 2013.
Seven Steps to the Pay or Play Rule
Originally posted April 02, 2014 by Darla Dernovsek on https://www.the-alliance.org
Avoiding any missteps in Affordable Care Act (ACA) "Employer Responsibility" compliance relies on checking your health benefit practices against a list of seven crucial steps. Fortunately, employers who have started preparing for this provision of the ACA can already cross some of these steps off their "to-do" list.
Step One: Understand General Rules. The first step is learning the general rules for employers. Beginning Jan. 1, 2015, employers with 100 or more employees who fail to offer coverage to employees and their dependents will trigger a penalty. Employers with 50 to 99 employees have until Jan. 1, 2016; employers with less than 50 employees are exempt.
Step Two: Is the Employer a Large Employer? Knowing when and how to count employee "hours of service" is essential for full-time workers, seasonal workers, part-time workers and other employees. An employee who works 30 hours or more per week - the Internal Revenue Service (IRS) definition of full-time - must be offered benefits to avoid ACA fines. Barlament described the rules as "very pro-employee" in determining what qualifies as an hour of service, including how to count hours for employees who are on-call or do not work on an hourly basis.
Step Three: Will Employees Receive Subsidized Exchange Coverage? Employers can design health plans that avoid ACA "Pay or Play" penalties by meeting three requirements:
- They offer "minimum essential coverage" (see below) to full-time employees and dependents who would otherwise be eligible for subsidized coverage from an exchange.
- The employer's plan provides "minimum value."
- The employee's share of premiums is "affordable" for self-only coverage for the employer's lowest-cost, minimum value plan.
"If you don't remember anything else, remember this," Barlament said about step three.
Step Four: Did the Employer Offer Minimum Essential Coverage? Barlament called this an "easy test" because employers who offer major medical benefits should meet the standard. There are still additional rules that require attention, such as the IRS requirement that employees have the opportunity to enroll once a year.
Step Five: Does the Plan Provide Minimum Value? The IRS has predicted that 98 percent of all employer-sponsored plans would satisfy this test, which requires plans to cover 60 percent of the cost of all benefits. An online calculator is available. Employers should be prepared to prove they met the requirement year after year by laminating or notarizing a copy of their plan and then storing it safely.
Step Six: Is Plan Coverage Affordable? The employee's share of cost for "self-only" coverage for the lowest-cost, minimum value plan cannot be more than 9.5 percent of the employee's household income. Barlament noted that employers are typically unaware of employees' household income, so many employers will instead rely on three "safe harbors" built into the ACA. One option is to set up your plan based on the federal poverty line guidelines that were in effect six months prior to the start of the plan year. Under current guidelines, that would limit the employee share for self-only health benefits to $92 a month.
Step Seven: Determine "Full-Time" Status. "It's the worst step," Barlament said. Three options are available. For example, employers can measure status on a monthly basis, with employees who work 130 hours or more gaining full-time status. However, this method may only be viable for employees that are clearly well above or well below the 30-hour mark with no chance for movement. There's also an option to utilize a measurement period over a block of time and then lock in or lock out the employee's status for a comparable block of time. Finally, the two methods can be combined. The recommended approach varies depending on whether the employee is ongoing; new; new and full-time; new and works variable hours; new and works seasonal hours; or part-time. Barlament said the first step for employers is to put every employee into one of those categories.
IRS Simplifies Employer Reporting Requirements in Final Rules
Originally posted on https://www.the-alliance.org
The IRS has issued final regulations to implement Sections 6056 and 6055 of the Affordable Care Act (ACA) that require employers to report information to the IRS about whether they provide coverage to employees and to whom they offer minimum essential coverage. These reporting requirements that were scheduled to take effect in 2014 have been delayed until 2015 under IRS Notice 2013-45.
Self-funded employers with more than 50 employees must begin reporting under both sections in 2015, although the IRS will now provide a single, consolidated form that employers can use to report both to the IRS and to employees regarding the coverage that is available. The top half of the new form will satisfy Section 6056 reporting, which includes information required to be given to the IRS and to employees about the health care coverage employers have or have not offered to workers. The data elements requested are intended to help the IRS enforce employer "pay or play" penalties and help the IRS verify information provided by consumers as to whether they are eligible for premium tax credits under the ACA.
The bottom half of the form would satisfy 6055 reporting that requires certain information on individuals that are provided minimum essential coverage in order to help the IRS enforce individual mandate penalties and determine an individual's eligibility for premium tax credits. Data elements employers will be required to report include:
- Name, address and TIN of the employer
- The name and telephone number of a contact person at the company
- Certification as to whether the employer offered a group health plan to employees and dependents, by calendar month
- The number of full-time employees, by month
- For each full-time employee, the months that the employee was offered coverage
- For each full-time employee, the employee's share of the lowest cost monthly premium for self-only coverage providing minimum value, by month
- For each full-time employee, the name, address and TIN of each full-time employee during the calendar year, and the months in which each employee was covered under an employer sponsored plan.
Related statements to employees must be provided to workers on or before Jan. 31 of each year (although the first required statement in 2016 will be due Feb. 1 due to Jan. 31 falling on a Sunday). These statements are intended to help employees determine for which months during the preceding year, if any, they can claim a premium tax credit on their tax returns for coverage purchased through the exchange.
In the final rule, the IRS outlines some simplified alternatives for reporting data in certain circumstances, as follows
- Employers can file a shorter form in relation to employees that are offered coverage that meets the 60 percent "minimum value" test where the employee contribution for self-only coverage does not exceed 9.5 percent of the federal poverty line (about $1,100 per year in 2015). The form would require the names, addresses and TINs for employees who receive qualifying offers for all 12 months of the year. For employees that receive a qualifying offer of fewer than all 12 months of the year, employers will be able to enter a code indicating months that the qualifying offer was made.
- In 2015 only, an employer that can certify that it has made a qualifying offer to at least 95 percent of its full-time employees and their spouses and dependents can provide a simplified notice to employees describing the coverage provided;
- An employer that can certify that it has made an offer of minimum value and affordable coverage to at least 98 percent of its employees and dependents does not have to determine whether each employee is a full-time employee or report the number of full-time employees.
Additional Resources:
- Final Rules governing Section 6056 can be found here.
- Final rules governing Section 6055 can be found here.
The Alliance does not provide legal advice. If you have questions about your plan's compliance with these requirements or how to implement them, please contact your attorney.
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.
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.