ACA Legislative Update, March 2016

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The 2016 limits and penalty amounts.

 

It has been a busy quarter and now that we are past part one of 2015 filing, we are diligently preparing for the IRS filing of Form 1094-C. In addition, we are working with clients to ensure they have their 2016 data loaded monthly and know where they stand regarding the 95% compliance regulation and adhering to all mandates in preparation for 2016 reporting.

Below are the major updates and information you will need to continue to manage the Affordable Care Act (ACA) for your organization in 2016.

 

Medicaid Expansion States as of February 24, 2016

Thirty-two states, including Washington, D.C., have chosen to expand Medicaid. As part of the ACA’s broader effort to ensure health insurance coverage for all U.S. residents, the federal government will pay to expand Medicaid eligibility in every state if chosen. From 2014 to 2017, the federal government will pay 100% of the difference between a state’s current Medicaid eligibility level and the ACA minimum. Federal contributions to the expansion will drop to 95% in 2017 and remain at 90% after 2020, according to the law.

The graphic above identifies those expansion states. Health E(fx) is tracking these states and the minimums to ensure affordability is calculated for each employee at the mandated level.

NOTE: As of March 13, Utah is moving forward with partial coverage expansion.

 

2016 Limits

The 2016 limits and penalty amounts have been announced and approved.

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At the end of 2015, just before the IRS announced the delay in reporting, they released Notice 2015-87. This notice gave a range of compliance issues, of course including a number of areas requesting comments that the IRS will address in future guidance. The list of broad topics as presented in the Notice are summarized for your convenience below.  Please refer to https://www.irs.gov/pub/irs-drop/n-15-87.pdf for more detail.


HRA Market Reforms
Retiree Only HRA: A retiree only HRA is not subject to the market reforms under the ACA that generally apply to group plans. This applies even if the HRA contains amounts credited during the time that the retiree was a current employee covered by a group plan with an integrated HRA. This allows for a retiree-only HRA to reimburse individual market premiums, and it is not required to be integrated with a group health plan. This DOES NOT apply to HRAs that cover current employees.

HRAs Integrated with Self-Only Coverage
An HRA integrated with self-only coverage cannot be used to reimburse expenses of a spouse or dependent (yet, transitional relief does apply for plan years starting before January 1, 2017).

Employer Payment Plans – Reimbursement for Individual Market Coverage
Reimbursement of individual health plan premiums through a cafeteria plan, via salary reduction or employer contribution, or through an HRA, is considered an employer payment plan that will fail to comply with the ACA reform requirements. Therefore, these are NOT allowed unless the coverage consists of ONLY excepted benefits (for example, stand-alone dental or vision coverage).

Affordability Safe Harbor Percentage
As shown in the chart above, 2016 Limits, the IRS stated that it will amend regulations to allow the employer affordability safe harbor percentage (9.5% per regulations) to adjust in accordance with the affordability percentage used to determine subsidy eligibility for an individual purchasing health coverage through the public exchange (9.66% in 2016).

 

Other Affordability Issues

HRA Contributions
Amounts made available for the current plan year under an integrated HRA that an employee may use to pay premiums for an eligible employer-sponsored plan are counted as an employer contribution—and reduce the dollar amount of the employee’s required contribution to determine a plan’s affordability.

Health Flex Contributions to Section 125 Plans
Any employer contributions that are limited to health expenses (flex contributions) under a Cafeteria plan will also reduce the dollar amount of an employee’s contribution. For the amount to be considered a health flex contribution, the employee:

  1. May NOT opt to receive the amount as a taxable benefit;
  2. May use the amount to pay for minimum essential coverage (MEC); and
  3. May use the amount only to pay for medical care, within the meaning of Section 213.

Transition Relief for Non-health Flex Contributions
For the purposes of Section 4980H(b) penalties for plan years beginning before January 1, 2017, employer flex contributions (even those that do not meet the definition of a health flex contribution) will be treated as reducing the dollar amount of an employee’s contribution. This relief is NOT available with respect to a non-health flex contribution that is adopted after December 16, 2015, or that substantially increases the amount of the flex contribution after December 16, 2015.

Opt-Out Payments
The IRS has made previous statements regarding opt-out payments and their “dislike” of these plans. Notice 2015-87 states that the IRS plans to issue rules specifying that unconditional opt-out payments will need to be considered for purposes of affordability. Employers will need to include the value of the opt-out incentive in determining whether a plan is affordable. The regulations will also request comments on those opt-outs that place conditions upon the receipt (that is, proof of other health coverage), and on whether such conditional opt-outs should also be considered for affordability purposes.

Fringe Benefits Offered Under the SCA or DBRA
Employer contributions made for health coverage as a fringe benefit under the McNamara-O’Hara Service Contract Act (SCA) or the Davis-Bacon Act (DBRA) are not considered employer contributions, and therefore do not reduce the amount of the employee contribution for the purpose of eligibility for premium tax subsidies or compliance with the individual mandate. The Treasury and IRS will continue to consider how the requirements of the SCA, DBRA, and 4980H may be coordinated. Until further guidance, for any plans beginning before January 1, 2017, the employer may treat contributions toward fringe benefits that may be used to cover MEC as reducing the employee’s contribution, but only to the extent that the payment does not exceed the amount required to satisfy the fringe benefit payment under the SCA or DBRA.

Transition Relief for Employer Reporting
Employers may report the reduction of the amount of the employee contribution in accordance with the transition relief noted, but employers are strongly encouraged not to do so as this may impact their ability to receive a subsidy when enrolling for health coverage through a public Exchange. Rather, the IRS would prefer that employers report on Line 15 of Form 1095-C accurately, without use of the transition relief, and reconciliation would be allowed and potential penalties forgiven if applicable. For any employers using the transition relief, they are encouraged to notify employees that they may obtain accurate information about their required contribution by contacting the employer directly.

Hours of Service
Notice 2015-87 made clarification with regard to counting hours of service for a leave of absence. The current guidance provides:

  1. Definition of Hour of Service: An hour of services DOES NOT include a) an hour for which an employee is paid during a period in which no duties are performed, if such payment is made under a plan maintained for the purpose of complying with worker’s compensation, unemployment, or disability insurance laws; or b) an hour of service for a payment that reimburses an employee for medical or medically related expenses incurred.
  1. Short- and Long-Term Disability: Periods during which an individual is not performing services but is receiving payments due to STD or LTD result in hours of service for any part of the period during which the recipient retains status as an employee unless the payments are made from an arrangement to which the employer did not contribute directly (for example, employee is paid with after-tax contributions).

Educational Organizations and the 26-Week Break in Service Rule
Educational organizations (public and private schools and universities) must treat a rehired or returning employee as an ongoing employee if the employee’s non-employment period was 26 weeks or less. For other employers, this maximum threshold is 13 weeks. The IRS has been made aware that some educational institutions are or may be hiring workers from staffing agencies and applying the 13-week service break rule instead of the 26-week rule. The Notice states that the IRS plans to amend existing final regulations to apply the 26-week period not only to employees of educational organizations, but also to any employees who provide services primarily to educational organizations and who are not offered a meaningful opportunity to provide services during the entire year.

Other Miscellaneous Provisions

  1. TRICARE: If an employee is offered coverage under TRICARE for any month, the employer is treated as having offered such employee minimum essential coverage for that month.
  2. COBRA and HFSA Carry-Over amounts: Notice 2015-87 explains how COBRA continuation rules coordinate with unused Health FSA amounts that carry over from one plan year to the next.
  3. HSA eligibility and veteran benefits: Notice 2015-87 allows for the contribution to an HSA for individuals who are receiving medical benefits from the Department of Veterans Affairs.

  

2015 Reporting

The reporting extension for Form 1095-C is March 31, 2016, for the employee receipt of the first tax form. As shown in the chart above, 2016 Limits, the IRS has made it clear that penalties for employees not receiving their annual form are $260 per form, to a maximum of $3,178,000. Failure to then file Form 1094-C with the IRS by the June 30, 2016, deadline will result in the same penalties, so in essence, there is the potential of paying the penalty twice. Note that there are additional penalties, which speak directly to the need for accurate and timely receipt of HR, Payroll, and Benefits data each month of the year on an ongoing basis. For any forms that must be corrected due to material changes, any form corrected on or before 30 days after the filing date has the potential for a $50 per form penalty or if corrected after the 30th day but on or before August 1 (in 2016 this is extended to November 1), the potential penalty is increased to $100 per form.

The IRS released Notice 2016-4 stating that the IRS may consider penalty waivers if the employer has errors or incomplete data but can demonstrate a good faith effort to comply. If an employer does not meet the extended due dates, they are encouraged to still furnish the forms to their employees and file with the IRS. The IRS will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause. If an employer can show the effort to prepare for reporting the required information (such as gathering and transmitting the necessary data to an agent, such as Health E(fx), to prepare the data for submission), the IRS will take this into account when considering penalty abatement. Also, the IRS has stated it will take into account the extent to which the employer is taking steps to ensure that it is available to comply with the reporting requirements for 2016.

Health E(fx) customers have all gone to print for Form 1095-C and Form 1095-B (for non-employees and COBRA participants), and we are pleased to report that more than 4.2 million forms have been processed prior to the March 31 deadline. We have successfully tested with the IRS and are ready to begin the Form 1094 process for IRS filing for each of your ALE members. In the coming week, you will receive information on the Form 1094 submission process, including step-by-step instructions, weekly webinar training, and an updated employer user guide. The Form 1094 process and review will be released to production on March 30, 2016, in time for the opening of the IRS filing period.

In the meantime, it is critical that all first quarter data is true and correct and accepted into Health E(fx). This includes all January plan year rate information. If you are having any issues with transmitting and loading your data, please contact your Client Services Manager as soon as possible. As you know, beginning on January 1, 2016, the member compliance percentage has increased to the offer of coverage to at least 95% of your full-time employees and their dependents.

  

2016 What Next?

Of course, there is no rest for us after a busy open enrollment, holiday and tax season! On February 26, 2016, the Department of Labor issued proposed revisions to the Summary of Benefits and Coverage (SBC) and related documents. As you are well aware, the ACA requires SBCs be distributed to ALL participants at the time of enrollment and prior to a plan’s annual enrollment period. Plan administrators and plan sponsors are responsible for issuing these to participants in a timely manner. The new proposed template, glossary, and instructions are for plan years beginning on or after April 1, 2017. As is customary, public comments will be requested. Some of the proposed changes are as follows: 

  1. The SBC template is a total of 5 pages instead of 8.
  2. A new heading guides participants to the glossary and a statement about premium costs and out-of-pocket expenses.
  3. A section on new questions, with better clarity on what is and is not included in out-of-pocket maximums.
  4. A revised section, “Limitations, Exceptions, and Other Important Information.”
  5. Disclosure statements with a simple “Yes” or “No” identifying if the plan provides MEC and if the plan meets MV. It explains the individual tax consequences of not enrolling in MEC coverage and eligibility for premium tax credits if not offered a MV plan.
  6. New and improved coverage examples.
  7. New instructions for providers and administrators for completing the SBC.
  8. A new uniform glossary.

We cannot forget what 2016 will bring: a new President. The ACA has been a major talking point over the last 6 years and as the candidates have jockeyed for position over the past months, but there are other issues should be kept in mind as we head toward the general election. These issues are workplace related and can have an impact on ACA determination of eligibility and affordability:

  1. Overtime Regulations: Proposed changes to federal overtime regulations would increase the pool of workers eligible for overtime pay and in turn would amount to additional take-home pay and higher income.
  2. Family Leave: Paid family leave is a hot topic and President Obama called for the mandating of paid maternity leave for all employees in his 2015 State of the Union. While this is not seen as viable on one side of Congress, many major companies have instituted such a workplace policy and it has garnered a great deal of attention.
  3. The Cadillac Tax: The excise tax has been delayed until 2020, and is still drawing a great deal of opposition and talk of full repeal, but until further guidance, employers must be diligent in preparing for the potential of the 40% nondeductible tax on health plans that provide benefits of more than $10,200 for individuals and $27,500 for families.

 

Looking Ahead: Out-of-Pocket Maximums for Non-Grandfathered Plans

March 2016 brought an announcement from the Department of Health and Human Services (HHS) regarding the finalized 2017 out-of-pocket maximums for non-grandfathered health plans. The limits are: $7,150 for self-only coverage and $14,300 for all other tiers, including family. Remember, the 2016 regulation will apply requiring all self-only maximums be applied to any individual, regardless of whether the tier is self-only or family coverage.

2015 was an exciting and challenging year and we are ready for the regulations and any changes that will come in 2016 and beyond with a new President. The new leader will most definitely influence the ongoing need for change in the healthcare space and workplace policies. As always, as changes in regulation are proposed or finalized, Health E(fx) will keep you informed and keep you compliant.

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Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

Contact a Health e(fx) Representative

 

 

Health E(fx) at Benefitfocus One Place 2016: 95% Compliant: New Year, New ACA Changes

 

In December 2015, the IRS extended the deadline for ACA reporting Forms 1094-C and 1095-C, providing some large employers with yet another opportunity to avoid ACA reporting penalties. The extension, however, overshadowed a highly impactful legislative change that became effective on January 1, 2016:

Large employers must offer affordable, minimum value health coverage to 95 percent of their full-time employees and their dependents, or incur penalties.

95% Compliance Threshold

In 2015, the ACA stated that all applicable large employers must offer affordable, minimum-value health coverage to at least 70 percent of their full-time employees and their dependents or face penalties. So while the compliance threshold is not new, as of January 1, 2016, the compliance threshold has increased to 95 percent.

What makes the change significant is that many employers in 2015 struggled to meet the 70 percent minimum or found it difficult to prove such coverage was offered to that population in a timely manner. Employers were faced with many challenges that required new process workflows, revamped data requirements and protocols, data integrity initiatives, and the realization that the data needed is often hosted in separate, disparate systems.

25% More Challenging

The reality is that managing this low margin of error can be a significant administrative burden. Depending on the reporting method an employer uses, the ACA and its mandatory year-end reporting can require monthly data and code assignments based on the offer of minimum essential coverage and all associated variations (i.e., if there was no offer of coverage, or if an offer was made but was not a qualified offer). In addition, a new code standard pertains to the regulations of affordability and how this determination is made on a monthly basis. Without the right technology—and accurate and timely data—this can be a daunting task.

Without a reliable ACA solution in place, employers who manage their benefits information incorrectly may not even realize that they are out of compliance. That is, until the IRS runs their reconciliation process.

Here’s a summary of the significant ACA changes taking place in 2016:

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Of all the ACA changes in 2016, the requirement of offering health coverage to all but five percent of the full-time population will likely be the most challenging and the most impactful to employers. If not managed correctly, this could potentially mean millions of dollars in annual penalties for large employers. A reliable and trusted ACA audit and compliance solution can help ensure employers remain compliant by managing data, fulfilling reporting obligations, and helping employers strategically plan benefits for their employee populations.

To gain deeper insight into strategies that can help you cope with the 95 percent compliance threshold, register now to join us at Benefitfocus One Place 2016, where Allison Manno, Vice President of Compliance — Health E(fx), will be hosting a breakout session, 95%: A Study of ACA Compliance Sustainability. You’ll have the opportunity to earn CEU credits and meet with peers who are facing the same ACA challenges as you!

 

 

 

Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

Contact a Health e(fx) Representative

 

 

ACA Legislative Update Fall 2015

The next phase of the Employer Shared Responsibility (ESR) mandate.

 

As we move into the next phase of the Employer Shared Responsibility (ESR) mandate and organize systems for 2016 eligibility requirements, we wanted to share critical updates and information you’ll need to be aware of as you continue to manage Affordable Care Act (ACA) requirements for your organization:
  1. Auto-enrollment Provision Repealed
  2. States that Expanded Medicaid as of November 3, 2015
  3. 2016 Limits
  4. Updates on Transitional Reinsurance Fee (TRF)
  5. 1095-C: Filing for an Extension
  6. Health E(fx) Updates


1. Auto-enrollment Provision Repealed

On November 2, 2015, President Obama signed H.R. 1314, the “Bipartisan Budget Act of 2015,” which among other things, repealed the Fair Labor Standards Act’s auto-enrollment requirement. Essentially, employers that were subject to the FLSA and employed more than 200 full-time employees, now do not have to auto-enroll new, full-time employees into one of the employer’s health plans.

2. States that Expanded Medicaid as of November 3, 2015

The Supreme Court’s 2012 ACA ruling allowed each state’s governor and leadership to decide upon its participation in Medicaid. As of Tuesday, November 3, 30 states and the District of Columbia chose to expand Medicaid (see figure above).

Background: This was part of the ACA’s broader effort to ensure health insurance coverage for all U.S. residents. From 2014 to 2017, the federal government will pay 100% of the difference between a state’s current Medicaid eligibility level and the ACA minimum. In 2017, this drops to 95% and after 2020, moves and remains at 90%.

Health E(fx) is tracking these states and their minimums to ensure affordability is calculated for each employee at the mandated level.



3. 2016 Limits 

While 2016 limits and penalty amounts have been announced, please note the IRS has not announced the specific penalty amounts that will apply. (As you may remember, last year’s suggested amounts included an increase to penalties but were not applied.)

As final rulings are published, Health E(fx) will notify you and all system parameters will be adjusted accordingly.

  2015 2016
Failure to offer MEC $2,080 $2,160
Not affordable or MV $3,120 $3,240
Affordability 9.56% 9.66%
Safe Harbor 9.5% 9.5%
PCORI $2.08 $2.17
Transitional Reinsurance Fee $44 $27
Max OOP (non-grandfathered)
**Must embed self only OOP Limit
$6,600 (individual)
$13,200 (family)
$6,850 (individual)
$13,700 (family)

 

4. Updates on Transitional Reinsurance Fee (TRF)

It’s that time again – the 2015 ACA Transitional Reinsurance Program (TRP) annual enrollment and contributions submission form (2015 Form) is online at Pay.Gov/public/form/start/70746962. Forms must be submitted no later than Monday, November 16, 2015.

For help and information on completing this form or creating supporting documentation, use the 2015 Reinsurance Contributions Form Completion and Submission Web-Based Training.

Answers to 3 Common TRP Questions
Section 1341 of the ACA established a TRP to stabilize premiums in the individual market both in and out of marketplaces. The TRP collects from contributing entities to fund reinsurance payments to issuers of non-grandfathered, ACA-compliant, reinsurance-eligible individual market plans; the administrative costs of operating the reinsurance program; and the U.S. Treasury’s General Fund from 2014 through 2016.

Q: Who makes contributions?
A: Pursuant to 45 CFR 153.20, a contributing entity means:

1) A health insurance issuer, or

2) For the 2014 benefit year: a self-insured group health plan whether or not it uses a third-party administrator, and
A self-insured group health plan includes a group health plan that is partially self-insured and partially insured, where the health insurance coverage does not constitute major medical coverage.

3) For 2015 and 2016 benefit years: a self-insured group health plan that uses a third-party administrator in connection with a) claims processing; b) adjudication (including the management of internal appeals); or c) plan enrollment for services other than for pharmacy benefits or excepted benefits within the meaning of section 2791(c) of the PHS Act.

  • A self-insured group health plan includes a group health plan that is partially self-insured and partially insured, where the health insurance coverage does not constitute major medical coverage.

4) To note: Notwithstanding the information above, a self-insured group health plan that uses an unrelated third party to obtain provider network and related claim re-pricing services, or for up to five percent of claims processing or adjudication or plan enrollment will not be deemed to use a third-party administrator, based on either the number of transactions processed by the third party, or the value of the claims processing and adjudication and plan enrollment services provided by the third party. 

Reinsurance contributions are required for major medical coverage that is considered part of a commercial book of business. For the purpose of reinsurance contributions, “major medical coverage” is defined in 45 CFR 153.20 as a catastrophic plan, an individual or a small group market plan subject to the actuarial value requirements under 45 CFR 156.140, or health coverage for a broad range of services and treatments provided in various settings that provides minimum value as defined in 45 CFR 156.145. A contributing entity must make reinsurance contributions on behalf of its enrollees in plans that provide “major medical coverage,” as defined under 45 CFR 153.20, unless one of the exceptions provided under 45 CFR 153.400 applies to such coverage.

Although a contributing entity is responsible for the reinsurance contributions, it may elect to use a third-party administrator or administrative services-only contractor for submission of enrollment data and the transfer of the reinsurance contributions.


Q: How are reinsurance contributions made?
A. HHS implemented a streamlined approach to complete the contributions process through Pay.Gov. To successfully complete the reinsurance contribution process, contributing entities, or third-party administrators, or administrative services-only contractors on their behalf, must register on this site.

If you created a Pay.Gov account for the 2014 benefit year, you can use it for the 2015 benefit year. This is required regardless of if you are in a transitional year or have a non-calendar year plan.

How it works:
1) Pay.Gov allows you to access 2014’s ACA Transitional Reinsurance Program Annual Enrollment Contributions Submission Form.

2) Enter the annual enrollment count for the 2014 benefit year.

3) From there, access the 2015 ACA Transitional Reinsurance Program Annual Enrollment Contributions Submission Form and enter the annual enrollment count for the 2015 benefit year. (Please note that there are specific forms for each benefit year.)

4) The form auto-calculates the annual contribution amount owed based on the annual enrollment count.

5) From there, schedule a payment for the calculated reinsurance contributions on the payment page.

Q: What are the payment options?
A: For the 2015 benefit year, HHS offers contributing entities two ways to pay:

1) the entire 2015 benefit year contribution in one payment no later than January 15, 2016, reflecting $44 per covered life; or

2) in two separate payments for the 2015 benefit year:
a. The first due by January 15, 2016, reflecting $33 per covered life
b. The second due by November 15, 2016, reflecting $11 per covered life.

Health E(fx) note: For our customers who are fully implemented, we provide the count methods and contribution amounts:

1) Log into Health E(fx).

2) Go to Communications/Federal Returns/Transitional Reinsurance fee calculations. Enter your 5500 numbers (if applicable).

3) Click “Run Report.”

4) You’ll also see a PCORI calculator for your annual PCORI fee calculation for your Form 720 filing.


5. 1095-C: Filing for an Extension

This past July, the IRS indicated that employers could request ACA deadline extensions for filing information returns and furnishing ACA statements to payees.

While these reporting requirements were initially scheduled for 2014, the IRS postponed them until 2015 – and now everyone is moving to meet the deadlines. Here are the dates to be aware of:

  • By February 1, 2016: Employers need to furnish Form 1095-B or Form 1095-C to employees,beginning with the 2015 tax year.

  • By March 1, 2016: Employers need to furnish Form 1095-B or Form 1095-C to the IRS,beginning with the 2015 tax year. Filing this electronically? You have until March 31, 2016.

How to request an extension for these 2016 deadlines
On a July 2 conference call, an IRS spokesperson stated that deadlines extensions are available for the 1094-C, 1094-B, 1095-C, and 1095-B.

To request an extension, file IRS Form 8809, Application for Extension of Time to File Information Returns, which is already used to request filing extensions deadlines for Forms W-2 and 1099.

IRS regulations allow filers to request an automatic 30-day extension on Form 8809, and an additional 30-day extension if:

1) the first automatic 30-day extension was granted by the IRS.

2) the additional extension is filed before the expiration of the automatic 30-day extension.

3) NOTE: The deadline extension to furnish ACA forms to employees is noted in Publication 1220 Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G. Please click here for more information, page 120.

While employers can also request an extension to furnish Forms 1094-C,1095-B, and 1095-C to recipients, these requests are not automatically approved. And, if approved, extensions allow only a maximum of 30 days from the original due date.

To request this extension, employers must submit a letter to the IRS with the following information: Payer or employer name, TIN, address, type of return, specify that the extension request is to provide statements to recipients, reason for the delay, signature of payer or duly authorized person, file name (for electronic file transmission).

The letter can be sent by mail or fax:

Internal Revenue Service
Attention: Extension of Time Coordinator
240 Murall Drive Mail Stop 4360
Kearneysville, WV 25430

Fax: 877-477-0572 or 304-579-4105

The request must be postmarked no later than the date the statements are due to the recipients. Only the payer or authorized agent may sign the letter requesting the extension for recipient copies; however, if a transmitter has a contractual agreement with a payer to file extension requests on the payer’s behalf, the transmitter should state so in the letter requesting the extension.

Please note:

  • Refer to Form 8809’s instructions for more on Form 5498-QA extension requests. When requesting an extension for recipient copies, be sure to include the reason an extension is needed.

  • The paper Form 8809 and the online fill-in Form 8809 cannot be used to request an extension of time to furnish statements to recipients.

6. Health E(fx) Updates

The next Health E(fx) release will be completed on November 24, 2015. This will include the fully operational and functional audit process and submission readiness for print/mail and IRS filing. Training modules and webinars will be available shortly after the release, and release notes will be sent to you in the coming days.

 

 

Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

Contact a Health e(fx) Representative

 

 

Legislative Changes Employers Should Be Aware of for 2015 and Beyond

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Legislative Changes Employers Should Be Aware of for 2015 and Beyond

 

Since early June, conversations about the Affordable Care Act have ranged from the Supreme Court decision and the impact of the court’s decision to penalty updates, reporting changes, and updates to benefit maximums.

As we move into fall, we have recapped some of the legislative changes to watch for in Q3 and Q4 of 2015 and how these inform your decisions for 2016. Each change will have a direct impact on the offer of coverage and ACA mandated requirements.

King v. Burwell: A Decision in Favor of the ACA
The court ruled 6 to 3 in favor of the White House, which essentially kept the Affordable Care Act (ACA) in place. The justices decided that the five contested words in the ACA (“exchange established by the state”) are not and were not intended to be interpreted that people in the 34 states without healthcare exchanges are not eligible for federal tax credits or subsidies. Subsidies will remain available in all states with federally established or partnership exchanges, thereby maintaining the mandate under which employers may be subject to potential penalties with respect to the granting of subsidies or tax credits.

After this decision, many companies found that an end-of-summer start to 2015 ACA compliance was very difficult, if not impossible. Companies providing ACA compliance announced as early as mid-July that they were no longer accepting new clients as timelines were too short for reporting accuracy by year-end.

While Health E(fx) was also forced to make the same announcement, we are currently bringing on new clients and working with existing ones to prepare for 2016 ACA compliance requirements and detailing the role 2015 data plays in the process.

For more information on the King v. Burwell decision, visit our full blog post here. 

Medicaid Expansion: States News
Many states held off on Medicaid expansion when the Supreme Court decided to hear the King v. Burwell case. With the case decided, here is a summary of Medicaid’s “state of the union”:

5 states are expanding Medicaid using an alternative to traditional expansion (as outlined under the ACA): Arkansas, Indiana, Iowa, Michigan, New Hampshire

1 state is expanding Medicaid pending federal approval: Montana

24 states are expanding Medicaid: Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Rhode Island, Vermont, Washington, West Virginia

1 state is transitioning from alternative Medicaid expansion to traditional expansion: Pennsylvania

1 state has an ongoing update: Utah
HCR 12: A resolution was passed stating the governor, lieutenant governor, and legislative leaders will find a compromise to the Healthy Utah Plan by July 31, 2015. If an agreement is reached, the governor will call a special legislative session to vote on the plan. If agreement is met, goal is a January 1, 2016, effective date.

The remaining states are not expanding Medicaid. 

 

2016: Plan Change Requirements
While late guidance caused a frenzy for insurers and employers, we’re seeing some areas where plan changes could save families hundreds or possibly thousands of dollars in out-of-pocket medical costs annually. In 2016, this could have a major impact on how much families pay for plans, as we’ve described below.

An overview of out-of-pocket maximums

In 2015, nearly all medical plans met minimum essential coverage and value and offered members the protection of an annual, out-of-pocket maximum for in-network care for essential health benefits.

An out-of-pocket maximum is the most a family or individual pays within a year for health coverage, including deductibles, coinsurance, or copays. Once the maximum is reached, the health plan steps in and pays 100% of the allowed amount of covered services.

There was a governmental limit on how much these out-of-pocket maximums could be. Family health plans, which include spouse, children, or spouse and children, could have a single, out-of-pocket maximum for the entire family; these were allowed to be twice the max of an individual’s health plan. In 2015, plans could count each family member’s expenses until the family maximum was reached. At that point, the plan would start covering all family members’ in-network care in full. This is about to change.

As of 2016, regardless of whether a plan covers a single person or a family, there is a limit on how much one person can be required to spend.

- For individuals, plans cannot require a person to pay more than the maximum amount.

- For families, when one member hits an individual limit, the plan must cover that person’s allowed bills in full for the rest of the year. The other family members continue to pay their deductibles, coinsurance, or copays until they reach the individual maximum, or the total family maximum is reached.


The individual maximum can be up to $6,850 and the family maximum up to $13,700. For high-deductible plans that are compatible with HSAs, amounts are reduced: $6,550 and $13,100, respectively.


Many plans are already set up this way, yet many must change. For 2016, family plans can be set up one of two ways:

 

1. A family plan maximum that is no more than the maximum for individual coverage.

2. A higher family maximum but with an individual maximum “embedded” in the plan. Once one person’s allowed bills reach the maximum, his or her bills are covered in full for the rest of the year. Other family members will continue to pay their share of their bills until one of them also reaches the individual maximum, or the family maximum is reached.

As you can see, for a family member who has the majority of the medical expenses, this change could mean thousands of dollars in out-of-pocket savings for the family. However, this enhanced coverage may come at a price. Insurers and plan providers have to calculate how much more this enhanced coverage will cost, and set prices accordingly, ensuring the affordability requirements are maintained.

Employers have to choose the plan design that meets the needs of their employees as well as the affordability maximums set by the ACA. The process of determining the employee contribution will be key to ensuring these requirements are met and costs are managed appropriately.

Extensions for Certain ACA Information Reporting Deadlines
During a July 2, 2015, conference call, the IRS told a group of payroll industry participants that employers will be able to request an extension of the ACA filing deadline for filing information returns with the IRS, and furnishing ACA statements to payees. These reporting requirements were initially scheduled to go into effect beginning with the 2014 coverage year, but the IRS provided transitional relief and postponed them until 2015.

Code Sec. 6055(a)
This code generally requires every health insurance issuer, the sponsor of a self-insured health plan, a government agency that administers government-sponsored health insurance programs, and other entities that provide “minimum essential coverage” (defined in Code Sec. 5000A(f)) to file annual returns reporting information for each individual for whom such coverage is provided.

Companies and organizations filing an information return reporting minimum essential coverage (MEC) must also provide a written statement to each employee listed on the return that shows their information was reported to the IRS (Code Sec. 6055(c)(1)). The purpose of this is to allow taxpayers to establish, and for the IRS to verify, that taxpayers were covered by MEC and their months of enrollment during a calendar year.

Reporting entities subject to Code Sec. 6055’s requirements use Form 1094-B, Transmittal of Health Coverage Information Returns, and Form 1095-B, Health Coverage, or another form that the IRS designates to report minimum essential coverage.

Code Sec. 6056
Code Sec. 6056 requires large employers* to report annual information regarding health insurance that they do or do not offer to full-time employees. The code also requires employers to furnish related statements to these employees.


What employers report allows the IRS to administer the Code Sec. 4980H employer shared responsibility provisions. This also allows employees to determine whether they may claim a Code Sec. 36B premium tax credit on their individual tax returns for each month of the calendar year.

Employers can meet the Code Sec. 6056 requirements by filing the following:

- Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns;
- Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance; or
- other form(s) designated by the IRS, or a substitute form.


By filing each Form 1095-C and the transmittal Form 1094-C with the IRS, employers meet the requirement for fulfilling Code Sec. 6056 (Reg. § 301.6056-1(c)(1)).


Dates to know:

  • By February 1, 2016: Many employers will have to furnish Form 1095-B or Form 1095-C to employees, beginning with the 2015 tax year.

  • By March 31, 2016: If employers are filing electronically, this is the filing deadline for all of the above forms with the IRS.

 

How to Make an Extension Request
The forms that can be extended include: Form 1094-C, Form 1095-C, Form 1094-B, and Form 1095-B.

Employers may request an extension of the information return filing deadline with the IRS on Form 8809, Application for Extension of Time To File Information Returns. This form is already used to request a deadline extension for Forms W-2 and 1099. The IRS is currently revising the form to include boxes that can be selected for the ACA information returns. The IRS regulations allow filers to request an automatic 30-day extension for the information return filing deadline on Form 8809, and an additional 30-day extension if:

- the first automatic 30-day extension was granted by the IRS, and
- the additional extension is filed before the expiration of the automatic 30-day extension.

The deadline extension to furnish the ACA forms to employees will be noted in an upcoming revision to IRS Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G. You can request an extension by submitting a letter to the IRS that contains certain information. These requests are not automatically approved. An extension of the deadline that is approved will allow for a maximum of 30 additional days from the original due date.

Please note, it will be required that each employer file Form 8809. As we await the revision to IRS Publication 1220, there is no assumption that Health E(fx) will be able to file this extension on a client’s behalf; Health E(fx) is, however, fully prepared and ready to file as expected, February 1, 2016, for employee statements and March 31, 2016, for IRS transmissions.

 

Thank You

It’s been quite a year for everyone, and this summer’s King v. Burwell decision was certainly a benchmark for the ACA.

We are all entering a busy time of year, one that is more critical with the addition of new required reporting following on the heels of open enrollment, the holiday season, and the beginning of 2016’s first quarter. Moving forward, Health E(fx) will keep you up-to-date as additional legislative changes are implemented. Please send questions on Health E(fx) to clientservices@healthefx.us

If you have any questions regarding topics in this newsletter, including legislative changes, please contact your benefits broker/consultant or legal team for interpretation and implementation at your organization.

 

* As defined in Code Sec. 4980H; in general, employers that employed an average of at least 50 “full-time employees” during the preceding calendar year.

 

Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

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King vs. Burwell – Nothing Changes

SupremeCourt_ACARuling

As most are aware, the U.S. Supreme Court issued its King vs. Burwell ruling on Thursday, June 25.

The court ruled 6 to 3 in favor of the White House, essentially keeping the Affordable Care Act (ACA) in place. They ruled that five contested words in the ACA (“exchange established by the state”) are not and were not intended to be interpreted that citizens of the 34 states that have not created exchanges are not eligible for federal tax credits or subsidies. Subsidies will remain available in all states with federally established or partnership exchanges, thereby maintaining the mandate under which employers may be subject to potential penalties with respect to the granting of subsidies or tax credits.

The commentary of the Supreme Court Justices on the ruling is a concise and strong rebuke of the plaintiffs. “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” Chief Justice John Roberts wrote. There is little room for further interpretation as to whether the ACA will remain or not – it is here to stay.

This decision, while politically charged, was expected by many. The ruling is also consistent with both the messages and information from the IRS indicating there will be no further delays, and annual reporting will proceed as scheduled for 2015, with the first 1094 and 1095 submissions due in 2016. The IRS has communicated a new reporting format, a testing schedule for both the 2014 voluntary year as well as the 2015 mandatory reporting year, and released 2015 draft forms. The regulations are set and reporting continues to move forward.

What does this mean for U.S. employers?

Employers that have been managing the ACA and the required reporting data know that the preparation for tracking and managing full-time eligibility determination is difficult. Add to this the required data aggregation, business policy decisions/changes, erroneous data cleanup, and meeting IRS-required reporting standards – and compliance is nothing less than daunting. Those employers that have not started or are just beginning the process must work quickly to fully prepare their 2015 data for reporting. It is almost July, month 7 of 12. Time is of the essence as the reporting deadline rapidly approaches.

Is there any chance that employers will get another “free” year to put their plans in motion?

This is not likely and is a very risky strategy to expect such. The law, for better and worse, has been in effect for five years. A major Supreme Court ruling in 2012, 50 attempts to repeal, and now a decisive Supreme Court ruling demonstrate that the law is just that – the law.

King vs. Burwell was likely the last major decision regarding the Affordable Care Act. Of course, there will continue to be lawsuits filed, and the 2016 general election will be filled with partisan discussion of repeal and “what if” scenarios. However, ignoring the inevitable may be a costly risk for any organization. ACA compliance is now critical to every organization. Data is key. If you do not have a plan, now is the time. 1094 B/C will need to be filed for this year. And 1095-B/C are due to employees/covered individuals by February 1, 2016.

Ensuring your data is ACA reporting ready must begin now to meet deadlines.

 

Learn more about how Health E(fx).

Contact a Health e(fx) Representative

 

Beyond 1094 and 1095 automation: 5 Things Your Data Should Be Telling You

iStock_000033830536_XXXSMALL

While the complexity of meeting Affordable Care Act (ACA) requirements is a challenge for some employers, other forward-thinking organizations are transforming compliance requirements into a strategic advantage.

By seamlessly integrating data from all HR systems, including benefits administration, payroll, and HRIS to track eligibility and affordability, these employers are unlocking the keys to better decision making and strategic analysis.

In addition to meeting compliance requirements, your ACA data should be:

  1. Determining your most advantageous safe harbor based on current employee income and the employee premium for the lowest cost, minimum value plan offered.

  2. Calculating all relevant ACA taxes and penalties, including transitional reinsurance fees, and Patient-Centered Outcomes Research Institute (PCORI) fees.
  1. Supporting optimization of medical benefits design with decision modeling on ACA-dependent variables.
  1. Providing period-based cost trend analyses over time — by month, quarter, and year.
  1. Forecasting adoption rates and impact, and determining the effects adoption rates have on overall plan design costs. 

If your current ACA solution isn’t supporting your company’s fiscal planning strategies, consider Health E(fx) for clarity, compliance, and control. As an award-winning, cloud-based solution for compliance, audit, reporting, and data analytics under the ACA, Health E(fx) combines automated oversight with strategic insight. You cannot escape the ACA requirements, but you can leverage the data to improve your business intelligence and your bottom line, and Health E(fx) can help.

 

 

Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

Contact a Health e(fx) Representative

 

The Employer Mandate is Here: From Measuring and Tracking to Reporting and Appeal—Are You Fully Prepared?

 

 

After four long years of discussion, confusion, delay, and public exchange glitches, the Affordable Care Act (ACA) has gone into full effect. For those employers that are prepared, it is mostly business as usual. For those that delayed and thought it would be easy to implement closer to reporting time, the realization that requirements may not be so simple is likely beginning to set in.

 

Most employers have taken the necessary steps to ensure the offer of minimum essential and minimum value coverage for their eligible populations for 2015. However, there is continued confusion regarding who is measurable under the definition of a full-time employee—both new employees as well as those considered ongoing.

 

Also, the reporting hurdle (with correct and timely information as demanded by the IRS to ensure validation and reconciliation of the Employer and Employee Responsibility Mandates under the law that is both auditable and defensible) is not so simple. The major complicating factor for reporting is that all of the required information has never been housed in any one system before. Disparate data, in multiple systems, must be managed, accumulated, and reported, along with the offer of coverage and new indicator codes specific to 4980H. This is complex information that is not currently managed or calculated in most employer systems.

 

IRC §6055 and §6056—Required Reporting

Below is a summary of what must be reported to employees and the IRS annually beginning in January 2016 for the 2015 plan year and every year thereafter.

Section 6056 requires employers to report information to the IRS about health care coverage offered to full-time employees in order to administer the employer shared responsibility provisions of section 4980H of the code. Section 6056 also requires those employers to furnish related statements to employees that may be used to determine (for each month of the calendar year) whether they may claim a premium tax credit on their individual tax returns under section 36B.

 

Section 6055 requires information reporting by any person who provides minimum essential coverage to an individual during a calendar year, which relates to the individual shared responsibility section provisions. Like Section 6056, transmittals to the IRS, as well as individual employee statements, are required. IRS transmissions are due no later than February 28 each year (March 31 if filed electronically). Employee statements must be furnished on or before January 31 of the year immediately following the calendar year to which the employee statements relate (i.e., the same day as Form W-2).

 

Key Reporting Provisions

The final reporting regulations include the following key provisions, which give the basic structure of what must be collected, accumulated, and reported beginning in 2016 for the 2015 calendar year.

 

1. Single, Combined Form for Information Reporting—Employers that self-insure are allowed to report in a single, consolidated form that can be used to report to the IRS and employees under both §6055 and §6056, thereby simplifying the process and avoiding duplicative information submissions. The combined report includes two sections: the top is for information required for §6056 reporting; the bottom includes the information required for §6055.

- Employers with less than 50 full-time employees are exempt from the employer shared responsibility provisions and are not required to report.
 
- Employers that are considered Applicable Large Employers (ALEs) are subject to the final reporting requirements. Those who self-insure will complete both sections of the combined form. [NOTE: An Applicable Large Employer with respect to a calendar year is defined in Section 4980H(c)(2) as an employer that employed on average at least 50 full-time employees on business days during the preceding calendar year.]
 
- ALEs that do not self-insure will complete only the top section of the report, or information pertaining to §6056. Insurers and other providers of health coverage will only report under the bottom section (information pertaining to §6055) via a separate form for that sole purpose.
 

2. Simplified Option for Employer Reporting—The simplified option is provided for employers that offer a qualifying offer of coverage to any of their full-time employees. This is a simplified alternative to the monthly, employee-specific information that the general rules require.

- A qualifying offer of coverage is one that provides an offer of minimum value coverage where employee-only coverage is at a cost to the employee of no more than 9.56% of income under the General Rule. If an employer chooses to use one of the affordability safe harbors, this cost reverts to the original 9.5% of the employee’s income.
 
- For employees who receive a qualifying offer for all 12 months of the calendar year, employers will need to report only the names, addresses, and taxpayer identification numbers of those employees and an indicator of the fact they received a full-year qualifying offer. Employees will receive a copy of this simplified report or a standard statement for use when filing the individual tax return.
 
- For employees who receive a qualifying offer for less than a full 12 months of the year, employers will be able to simplify reporting to the IRS and to employees for each of those months with the use of a code indicating that the offer was made within that month.
 
- In keeping with the phase-in approach to the regulations, 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 for reporting in 2015. These employers will be able to use the simplified reporting method for their entire workforce, including any employees who do not receive a qualifying offer for the full year. These employers will provide employees with standard statements relating to their potential eligibility for premium tax credits.
 
- The final regulations also give employers the opportunity to avoid identifying those employees who are full-time and just include in the report those employees who may be full-time. In order to take advantage of this option, the employer must certify that it offered affordable, minimum value coverage to at least 98% of the employees for whom it is reporting.
 

Each ALE member with full-time employees is the entity responsible for filing and furnishing statements with respect to its full-time employees under §6056. This means that the control group standards for determining ALE status is treated just like the assessment of penalties for non-compliance under the Employer Shared Responsibility provisions of 4980H. The responsibility for penalty payment and reporting lies with the ALE member. A third-party administrator (TPA) may be used to create and send the reports, but the ultimate liability remains at the employer level.

 

Summary

The data requirements, draft forms, and mandates on both the employer and employee are now in full effect. Large employers must begin the task of ensuring all the proper data is gathered, accumulated, and maintained. Given that much of the data required will be reported (with new and complex indicator codes), a great deal of programming and testing will be required to ensure that correct and timely reporting is ready for the 2015 calendar year if the plan is to mange this task in-house.

 

If systems are already in place to measure eligibility and annual form creation and submission is not programmed or a vendor has not yet been selected, the requirement to meet the data specification requirements to create and submit these forms is needed sooner rather than later. Further, because this consolidated data, with indicator codes, has never been required previously for reporting by the employer, this data has usually been housed in multiple disparate systems that are not specifically designed for audit and compliance management, which presents significant data quality risks. With the ALE responsible for both reporting and penalties, the complexity of managing this task is indeed difficult with existing system limitations.

 

And no system can calculate the needed data and codes without an entire year of employee (and their dependents!) information and a basis for managing how the full-time population is determined and offered minimum value coverage.

 

 

__________________

Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

 

 Contact a Health e(fx) Representative

 

 

Gain a top-level view into the power of Health E(fx) to track eligibility, manage workforce, automate reporting, analyze data, and optimize compliance, benefits, and financial strategies under the ACA. Watch the video "Health E(fx): The Affordable Care Act Made Simple" here:

 

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Health E(fx) Legislative Alert: Deadline for the ACA’s Transitional Reinsurance Fee

November_15_Deadline

November 15, 2014, is the deadline for submitting the required information and scheduling the transitional reinsurance payment, which must be done through Pay.gov.

 

 

What Is the Transitional Reinsurance Fee?

The Affordable Care Act (ACA) provides for a transitional reinsurance program to help stabilize premiums for coverage in the individual health insurance market during the first three years of operation of the Health Insurance Marketplaces (2014-2016). The program is designed primarily to transfer funds from the group market to the individual market, where high-risk individuals are more likely to be covered.

Payments to individual market insurers under the reinsurance program are funded by “contributions”; and although some refer to this payment as a “tax,” we will refer to these contributions as “fees.” These fees are payable by health insurance issuers and third-party administrators on behalf of self-insured group health plans. However, under the regulations, self-insured group health plans are ultimately responsible for the payment.

Final regulations were published on March 16, 2012. These regulations have been modified frequently and the most current may be found at §45 C.F.R. 153.400, et seq.

 

Fee Amount

The transitional reinsurance fee requirement applies on a per capita basis with respect to each individual covered by a plan subject to the fee (“covered life”). The total amount for 2014 is $63 per covered life, and decreases to $44 per covered life in 2015.

 

Who Is Responsible for the Fee?

The fee, as defined, is imposed on the “contributing entity,” defined as an insurer (fully insured coverage) or the group health plan offering self-insured coverage. TPAs, ASO and others may submit on behalf of contributing entities; however, CMS has clearly stated that these groups have no requirement to do so under the law. Since the fee is imposed on the self-insured plan, not the sponsor as an entity, plan assets may be used to pay the assessment. The IRS has noted that plan sponsors may treat the fee as an ordinary and necessary business expense for tax purposes, thereby making it deductible to the company.

In the case where a plan offers options that are both self-insured and fully insured, and any option that separately provides major medical coverage, the insurer would be responsible for the fee under the insured benefit options and the plan would be responsible for the fee with respect to covered lives under the self-insured benefit options. Special and specific rules apply for plans that may be partially self-funded and partially fully insured or if a plan changes from self-funded to fully insured (or vice versa) during a calendar plan year.

 

How to Count Lives

Covered lives are not just your employees. In benefits, we refer to these as members or “belly buttons.” So everyone covered under the plan (including spouse, dependents, retirees, and COBRA participants) must be included. There are permissible counting methods that may be used. The methods of counting lives for the reinsurance fee are similar to the methods for the Patient-Centered Outcomes Research Institute (PCORI) fee, but plans should not rely on the PCORI method. You may choose any allowed method, but the same method must be used for a full benefit year and across all plans. The counting period is generally the first nine months of the calendar year (except for the 5500 method) regardless of the plan year.

 

Counting Options for Insured Plans

Actual Method: Add the total number of covered lives for each day of the first nine months of the benefit year, and then divide that total by the number of days in those nine months.

Snapshot Count Method: Add the total number of covered lives on any date during the same corresponding month in each of the first three quarters of the year, and then divide that by the number of dates on which a count was made. The date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter.

Member Months/State Form Method: Multiply the average number of policies in effect for the first nine months of the benefit year by the ratio of covered lives per policy in effect, calculated using prior NAIC exhibit or a form with the issuer’s state of domicile.

 

Counting Options for Self-Insured Plans

Actual Method: Add the total number of covered lives for each day of the first nine months of the benefit year, and then divide that total by the number of days in those nine months.

Snapshot Count and Snapshot Factor Method:

  • Count: Add the total number of covered lives on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters of the year, then divide that by the number of dates on which the count was made. Note that the date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter.

  • Factor: Add the total number of covered lives on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters of the benefit year, divided by the number of dates on which a count was made (note that the date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter). Then, add the number of participants with self-only coverage and the product of the number of participants with coverage other than self-only coverage and a factor of 2.35.

Form 5500 Method: For a plan offering more than self-only coverage (dependent or spousal coverage), add the number of participants at the beginning and end of the plan year from the most current Form 5500 (line 5 and 6a-6c). For a plan offering self-only coverage, perform the same calculation, but divide this number by 2.

 

Note: Your choice of method may have a significant impact on the calculation of covered lives and therefore the fee owed. Choose a method that minimizes the fee, because once you register and set the count, the fee is auto-calculated and you must set payment timing and method. You must also maintain full documentation of the count for at least 10 years. CMS may audit a plan to assess its compliance with the program requirements, and it will be crucial to be able to produce this information. Health E(fx) is validating the configuration of the current methods (Form 5500 method will require your form input for full calculation) and will release these in the coming days.

 

Submitting the Fee

The entire process will take place on Pay.gov. CMS opened the form on October 24, 2014; however, CMS has not issued guidance regarding any delay to the November 15, 2014, deadline. Given that HPID was delayed, everyone was hopeful. But given the late date, it is best to assume the November 15 deadline is here to stay. In order to successfully and fully complete the transitional reinsurance fee submission, you must:

  • Register on Pay.gov
  • Fill out the Transitional Reinsurance Form
  • Attach supporting documentation
  • Schedule your payment

The form requires basic company and contact information, payment type, benefit year, and the annual enrollment count using one of the methods discussed.

You will be required to upload a Supporting Documentation CSV file that must contain specific company information, and the annual enrollment count and the benefit year. Note that the file has certain technical requirements, including file size and prohibition on certain special characters.

Last but not least, is the payment. The form will auto-calculate the amount owed. Plans will need to schedule payment for this amount, the form will not submit without payment information. Plans can choose to remit payment for the entire benefit year at once (the full $63 per covered life), or plans may submit two separate payments for the year. If the separate payment method is selected, the first payment ($52.50 per covered life) is due January 15, 2015, and the second payment ($10.50) is due November 15, 2015. CMS suggests leaving 30 days between the form submission and payment date. The payment must be scheduled by November 15, 2014, regardless of the method chosen. If the two-payment option is chosen, you will need to submit the same form and supporting documentation, with the exact information, twice.

ACH payment is currently the only accepted payment method, but an invoice may be sent should there be problems with your payment. Plans need to add a particular ALC+2 value with the applicable bank to ensure the payment is processed correctly; the company name for ACH purposes is “USDEPTHHSCMS.”

 

What Should You Do to Prepare?

To prepare for the November 15, 2014, deadline, first collect your count information. (Health E(fx) current self-insured customers with full history of nine months of data can refer to the system for count information—all methods other than 5500 at this time. For those customers who are in implementation, you will need to file this year without Health E(fx) and can use the system for the 2015 filing). Second, prepare a CSV file, and third, notify your bank of the applicable ALC+2 value.

Please contact your Health E(fx) Client Team or your Benefits Consultant for additional information.

 

__________________

Many of our customers have done extensive research to find the best and most trusted ACA tracking and compliance management solution on the market. Their final choice: Health E(fx).

 

 Contact a Health e(fx) Representative

 

 

Gain a top-level view into the power of Health E(fx) to track eligibility, manage workforce, automate reporting, analyze data, and optimize compliance, benefits, and financial strategies under the ACA. Watch the video "Health E(fx): The Affordable Care Act Made Simple" here:

 

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The Health Plan Identifier Number

Important Deadline and Action Required: The Health Plan Identifier Number: HIPAA Expansion Under the ACA

It is hard to believe that the Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted almost 20 years ago. In its overly complicated and technical requirements, it included provisions that began the compliance rules regarding the integration of security, privacy, and administrative simplification. These requirements included standards for electronic healthcare transactions, which the government believed would improve efficiency and reduce costs in the nation’s healthcare system.

The ACA expanded these HIPAA transaction standards and directed HHS to craft regulations and standards for electronic transactions. The result of this expansion is the requirement that by November 7, 2016, all entities that meet the definition of a “health plan” must obtain a Health Plan Identifier (HPID). As with other HIPAA compliance standards, fully insured plans will be able to depend on the insurance carrier for compliance and will be covered by their insurance carrier’s unique identifier. Self-insured group plans are considered “covered entities” and must be compliant with the HPID mandate.

Self-insured health plans with more than $5 million in annual claims are required to register for a unique HPID by November 5, 2014. Those health plans with less than $5 million in annual claims are not required to obtain this HPID until November 5, 2015.

As with any regulations, especially regarding HIPAA and the ACA, simple and easy is not common. First, a plan must meet the definition of a “health plan.” The definition, for the purpose of the administrative simplification requirements, includes self-insured plans, as stated above. There are, of course, new rules that separate plans into two categories: Controlling Health Plan (CHP) and Sub-Health Plan (SHP).

Controlling Health Plan (CHP): This is a health plan that controls its own business activities, actions, or policies; OR

a. Is controlled by an entity that is not a health plan; and

b. If it has a sub-health plan(s), exercises sufficient control over the sub-health plan(s) to direct its/their business activities, actions, or policies.

Sub-health plan (SHP): SHP is defined as a health plan whose business activities, actions, or policies are directed by a controlling health plan. A self-insured plan that is an SHP may obtain a Health Plan Identifier number, but it is not directly required to do so.

The final regulations get more confusing in that they require any CHP self-insured plan to obtain a HPID, even if it does not conduct any of the electronic transactions and the identifier will not be used for this purpose. So, should all self-insured plans automatically obtain a HPID? Since no electronic transactions are being passed, it seems unnecessary. However, the regulations state that the HPID can be used for “any other lawful purpose,” so we must assume that at some future time, which could be next year or some day in the very distant future, this identifier will be used for some reporting purpose; therefore, it is best to follow the steps and obtain the number. Compliance is never a bad thing.

Health FSAs and HRAs

HIPAA treats FSAs and HRAs as self-insured and are typically subject to all HIPAA requirements. If an employer is using an insured plan, but offering a Health FSA or HRA (or both), the HPID requirement exists for these related plans. Self-insured health plans using these accounts would be responsible for obtaining separate identifiers, unless they meet the definition of the SHP.

November 5, 2014, is not that far away! The Centers for Medicare and Medicaid Services (CMS) created a website that has information about the HPID process. You can find it here.

They also provide a user guide for assistance in the application process.

Do not delay! November 5, 2014, will be here soon!

90-Day Waiting Period Limitation — Final Rule

 

The full implementation of the Employer Responsibility Penalty begins in a few months for all “applicable large employers” with more than 100 full-time equivalent employees. Make sure you understand the new rule and what it means for you.

What is it?
On June 25, 2014, the Departments of Labor, Health and Human Services, and the Treasury published a final rule on the 90-day waiting period limitation and the allowed employee orientation period.

The final rule adopts the language in the proposed rule from February 2012: The maximum length of the waiting period for all eligible employees remains a90 days, and any orientation period is one month. This final rule applies for plan years beginning on or after January 1, 2015.


What does it say?
Under the final regulations, a group health plan and a health insurance issuer offering group health insurance coverage may not apply any waiting period that exceeds 90 days.

 Here are some terms and their definitions to help you wade through this final rule.

Waiting Period: This is the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the group health plan can become effective. Being “otherwise eligible to enroll” is defined as having met the plan’s substantive eligibility conditions such as being in an eligible job classification, achieving job-related licensure requirements specified in the plan terms, or satisfying a reasonable and bona fide employment-based orientation period. This last part, the addition that a plan can require that an individual “satisfy a reasonable and bona fide employment-based orientation period” prior to receiving an offer of coverage, has been incorporated into the final rules without any substantive changes.    

Is 90 days REALLY 90 days: Ninety days refers to calendar days — not three months or a quarter — and includes weekends and holidays.

Orientation Period: The departments envision that an employer and employee will evaluate whether the employment situation is satisfactory for each party, and standard orientation and training processes will begin. This period is limited to one month. One month would be determined by adding one calendar month and subtracting one calendar day, measured from an employee’s start date in a position that is otherwise eligible for coverage.

So, does that mean the offer of coverage can be made after the one-month orientation period and a 90-day wait without triggering the Employer Responsibility Penalty?

Compliance with these final regulations IS NOT DETERMINATIVE of compliance with section 4980H of the code. In other words, an employer plan may not be able to impose the full one-month orientation period and the full 90-day waiting period without potentially becoming subject to an assessable payment. So, yes, an orientation period may be imposed, but you must ensure that coverage is effective on the first day of the fourth full calendar month to avoid a possible penalty.

Here’s an example: If an employee is hired as a full-time employee on January 6, a plan may offer coverage effective May 6 (one month orientation plus a 90-day wait period). This employer may be subject to a penalty, however, as this does not meet the offer of coverage on the first day of the fourth calendar month.

Eligibility: A group plan may impose conditions on plan eligibility as long as those conditions are not used to circumvent the 90-day limitation.     

Cumulative Hours of Service Requirements: Plans that require completion of cumulative hours of service may do so as long as the hours-of-service requirement does not exceed 1,200 hours.

Variable Hour Employees: If on an employee’s start date, it cannot be determined that he or she is reasonably expected to regularly work on average 30 or more hours per week, the plan may have up to 12 months to measure whether the employee meets the eligibility criteria. In that case, coverage must begin no later than 13 months from the employee’s start date (if the start date was not the first day of the month, then the time remaining until the first day of the next month).

Operating Structures: The departments recognized that multi-employer plans, due to collective bargaining agreements, may have eligibility arrangements that differ from individual employer plans. The final regulations allow union plan rules and structures that are not designed to avoid compliance with the 90-day limitation for waiting periods.

Preexisting Condition Prohibition and the Elimination of Certificates of Creditable Coverage: After December 31, 2014, plans will no longer be required to issue certificates of creditable coverage, which were introduced by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Since some plans were able to impose some preexisting limitation exclusions through December 31, 2014, these certificates were required to be continued. Any services that are handled by a third-party vendor should be discontinued at the end of 2014.

 

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