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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Five tips to prepare for the ACA and open enrollment season



As you keep the Affordable Care Act (ACA) and the impact it will have on the enrollment process in mind, follow these five tips to ensure the rest of your summer includes soaking up the sun and not swimming in headaches.

1. Communicate, Communicate, Communicate

Employers must notify employees at least 60 days in advance of the company plan’s effective date, and they must ensure that modifications to the change in eligibility rules are properly documented. That means if you have a January 1 medical plan effective date, you need to notify employees by November at the latest.

2. Stay in Class

The right classification of employees as variable or non-variable is essential for ACA compliance. Employees must be classified as full-time non-measurable or measurable based on a “reasonableness” test. But just because an employee is hourly does not necessarily mean he or she is automatically measurable. The classification depends on if the employer can reasonably say the employee will work more than 30 hours per week on a regular basis.

3. The Feds

The federal reporting monthly tracking for all full-time employees begins January 1, 2015. Federal reporting is required for all deemed to be an “applicable large employer,” including those between 50 and 100 full-time equivalent employees. Reporting is by month and requires programming, testing, consolidation, and integration of data to meet the required format and submission deadlines.

4. Get Ready for Self-funded Deadlines

Employers need to prepare to make the proper counts and payments for the Transitional Reinsurance fee as well as ensure they obtain a Health Plan Identifier Number.

5. Prepare for Marketplace Interest, Year Two

Now that the federal marketplace has communicated the auto enrollment of current marketplace participants in plans—and continues current subsidies until new information is provided—the number of subsidy determination notifications sent to an employer for appeal will likely increase substantially. That puts the burden of proof on the employer at an increasingly high rate.


These are just a few important ACA points of interest to keep in mind as you enter your open enrollment season.



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Are You Fully Prepared to Report?




Are You Fully Prepared to Report?


Beginning on January 1, 2015, all employers must maintain and identify, via a mandatory reporting process, detailed information about the medical coverage they offer to employees. The final regulations published in the Federal Register on March 10, 2014, discussed what would be required under the Internal Revenue Code Sections 6055 and 6056.


6055 and 6056 Requirements

IRS Code Section 6055 requires employers who administer self-funded plans and insurers managing fully insured plans to report information about the organization providing coverage, including company contact information and a detailed list of employees and the months each was covered during the applicable calendar year.

IRS Code Section 6056 requires employers to report information about the employer offering coverage and a full list of full-time employees, the coverage offered to each, by month, including the cost of coverage. Information about the employee’s covered dependents and additional information is required with the use of indicator codes.

Employers who are self-funded will be required to file both forms, while those who are fully insured will only have to file the form applicable to Section 6056. Any employer who offers both fully insured and self-insured qualified plans to all employees or a subsection of employees must be sure to report appropriately.


General Reporting Requirement

The IRS general reporting requirement includes:

• detailed information on each employee, for each calendar month;
• the total number of full-time employees;
• name, address, and Social Security Number of each full-time employee;
• whether the coverage offered to that employee was Minimum Essential Coverage;
• whether the coverage satisfied the Minimum Value requirement;
• whether it was affordable and how much the employees was required to pay; and
• whether the coverage was offered to all full-time employees and their dependents.

All employers deemed as “Applicably Large” (more than 100 FTE employees in 2015 and more than 50 FTE employees in 2016) must file these returns annually to the IRS and must provide annual statements to their full-time employees. The employee statements are due every January 31, in the same manner as Form W-2. The federal returns must be filed with the IRS by February 28 (or March 31 if filed electronically) for the applicable reporting year, which is always on the calendar, not on the employer plan year.

While the final regulations are specific to the requirements, we wait for form templates and instructions to be released to begin the “build” process. Current HR systems, including Payroll and Benefits Administration, do not currently have this capability; reports and forms need to be created, tested, and managed throughout the year to ensure proper compliance reporting on an annual basis.


Start Planning Now

Employers should not be complacent regarding this reporting requirement. While reports are not due until February/March 2016, employers MUST begin to start planning their reporting process now. Collection, maintenance, and audit will require careful cross-functional assistance in all departments – HR, Payroll, Benefits, and IT must be in lock step and ensure all the necessary data are captured and systems are capable of aggregating all the necessary data for annual reporting.

It is imperative that employers not assume current vendors and internal ERP or HR systems will be capable of reporting without significant process changes and updates as well as possible upgrades and likely additional costs.

Employers have been surprised and thankful for frequent delays and changes to the law. However, the complexities surrounding eligibility, communication, and reporting should not be taken lightly; early preparation and adoption should be top of the task list for Q3 and Q4 of 2014.

It is important to remember that the reporting requirement is for both the IRS and employees. A process for data collection, segregation, and aggregation of data will be needed, along with a full compliance process to ensure employers are reporting as required based on a number of factors.

Incorrect, improper, and delinquent reporting will not be taken lightly: under the regulations there is a cost associated with improper penalties. The penalty may be $30 to $100 per incorrect return capped at $1.5M per year. An additional penalty may be applied for each failure to file a correct employee statement in the same amount ($30 to $100) and applied in the same manner as the penalty for failure to timely file the IRS returns. Exceptions may apply (de minimis failures), but absolute disregard of the rules may cause much steeper penalties to be imposed.

Being confident in a process and system that ensures the required information is collected and managed for timely and correct reporting to the IRS and all employees is critical for an employer to remain compliant without additional labor costs, capital expenditures, and reliance on current vendors.



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Committing to Compliance Under the ACA



Employers have had some time to digest the overwhelming compliance requirements faced under the Affordable Care Act (ACA) regulations, and many still are likely pondering the “how” and “who” in meeting this new regulatory landscape. The final reporting requirements are significant. What is termed “simplified” in the final regulations released on March 10, 2014, in the Federal Register is actually quite complicated given that reporting to this detailed level has never been required before.

A definition of “full-time” that is different from the standard Fair Labor Standards Act that all employers have managed is hard enough. Add to that the determination of eligibility and affordability; documentation of the offer of coverage and elections; new hire mandated communication; mandated federal reporting; annual employee statements; and, we can’t forget, ensuring plans are designed to be compliant, cost effective to the employer and employee, AND do not breach the government’s definition of “too expensive” is enough to make any HR executive wonder “how” and “who” on a regular basis.


Technology and ACA Compliance

The complexity of the ACA and managing to the level of detail required is only possible through technology. Spreadsheets and point in time calculators will not be sufficient when it comes to the required annual reporting. And, those methods may not meet the organization’s strategic goals in terms of utilizing safe harbors for eligibility and affordability. A strong, data-driven structure is necessary to ensure full adherence with the law, especially reporting.

Many employers may realize that their current internal infrastructure is not sufficient and will therefore turn to their consultants and advisors to assist with the process. Implementations that will require wholesale changes to current systems – including HRIS, Payroll, and Benefits Administration – will likely require business case justification; lengthy RFP processes; and long, labor-intensive implementations. Given the effective date of January 1, 2015, for all employers with more than 100 full-time equivalent employees, time is running short to accomplish this and be prepared for enrollment processes and compliance activities.

For those employers who are not currently outsourcing full HR activities via the use of a Professional Employer Organization (PEO), the question remains as to how compliance and reporting will be completed and adhered to as needed.


Compliance Services

Payroll and Benefits Administration providers have begun to offer their partners compliance services. Measurement by job class/code, tracking service hours (as long as all service hours are managed/fed into the system), and identifying the eligible population is possible with a great deal of programming, data exchange, and HR staff effort.

Although reports can be generated and built as needed, hierarchy reporting for workforce management may not be possible without great effort. Payroll receives benefit deductions for the employee. Federal reporting requires employee and dependent information regarding coverage on a monthly basis. But neither Payroll nor HRIS has this information. Benefits Administration does, but all Payroll information would need to be fed to the Benefits System on a regular basis to generate the year-end reports. Who will create the employee statements? And what will the cost be for each employee if this is an added feature?

In addition, current contracts need to be validated and managed to ensure any new features are included in contract language. There is also the issue of renewal and data capture. If an employer has multiple providers (or even a single provider for both Payroll and Benefits Administration), should employer data be “held captive”? Should renewal become less of a negotiation and more of a “whatever it takes” given the requirements and timing of reporting? And what about defending and managing company enrollments and Exchange Open Enrollment?

An independent compliance system that manages all data without regard to system, platform, or provider will give the employer clarity, compliance, and control in managing the myriad of regulations and ensure all requirements are met; audit capabilities are sound; and required employer risk is mitigated through regular reports, hierarchical capabilities for workforce management, and call center support for employees, without additional HR, IT labor costs, and capital expenditures.




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Government Mandated Reporting Under the ACA: A New Definition of "Simple"



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Reproduced with permission from Benefits Magazine, Volume 51 Number 6, June 2014, pages 44-49, published by the International Foundation of Employee Benefit Plans (www.ifebp.org), Brookfield, Wisconsin. All rights reserved. Statements or opinions expressed in this article are those of the author and do not necessarily represent the views or positions of the International Foundation, its officers, directors or staff. No further transmission or electronic distribution of this material is permitted. Subscriptions are available (www.ifebp.org/subscriptions).



The highly anticipated final regulations for employer reporting were released on March 6, 2014. It is no secret that most employers, plan administrators, insurance brokers and consultants were eager to see how Treasury and the IRS finalized the details of the regulations. This has been a source of heated debate and a great deal of public commentary.

According to the Assistant Secretary for Tax Policy, Mark J. Mazur, “[The] 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. 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.”

At first glance, this description of new rules that “streamline and simplify” reporting and compliance was a wonderful relief. But this bubble of relief soon bursts when you dig into the actual regulatory requirements. These reporting mandates are far from simple and the employer impact and risks are substantial.

This article is a review of the major components and employer responsibilities under the recently released final and “simplified” reporting requirements.


The “What” of Required Reporting: IRC §6056 and §6055

6056 requires employers to report to the IRS about healthcare coverage they offered to full-time employees to assure that the employer shared responsibility provisions of section 4980H of the Code are being implemented. §6056 also requires employers to furnish statements to employees that the employees can use to determine whether they may claim a premium tax credit under section 36B (premium tax credit) on their individual tax returns.

6055 requires all employers that provide minimum essential coverage to an individual during a calendar year to report information relating to the individual shared responsibility section provisions. Like the §6056, individual employee statements must also be reported to the IRS. These IRS transmissions are due no later than February 28 each year (March 31, if filed electronically), and 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).


The “Why and How” of Final Reporting: Key Provisions

The final rules include the following key provisions and provide the basic structure of employer data to be collected, accumulated (and, in the employer interest, maintained for potential future audit), with reporting beginning in 2016 for the 2015 calendar year.

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 §6056 and §6055, thereby simplifying the process and avoiding duplicate information submissions. The combined report (an as yet-to-be-released template) will include two sections. Section one will be for information required for §6056 reporting, and section two will include the information required for §6055, with these key provisions:

  • 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 (ALE)[1]” are subject to the final reporting requirements. Those who self-insure will complete both sections of the combined form.
  • ALEs that do not self-insure will complete only the section pertaining to §6056 information requirements.
  • Insurers and other providers of health coverage will only report information pertaining to §6055, via a separate form specific to this purpose.

Simplified Option for Employer Reporting. The “simplified” option is provided for employers that extend a qualifying offer of coverage to any of their full-time employees. This is an alternative to the monthly, employee-specific information that the general rules require, with these key provisions:

  • A qualifying offer of coverage is one that provides minimum value coverage where employee-only coverage is at a cost to the employee that is no more than 9.5% of income (approximately $1,100 in 2015, which is 9.5% of the Federal Poverty Level), and is combined with an offer of coverage for the employee’s family.
  • 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 that the employee received a full-year qualifying offer. Employees will receive a copy of this simplified report or a standard statement from the employer for use when filing their 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 an indicator code) that the offer was made within that month.
  • Employers certifying that they have made a qualifying offer to at least 95% of their full-time employees (including an offer to cover their families) will be able to use an even more simple alternative for reporting in 2015. In keeping with the phase-in approach to the regulations, these employers will be able to use this simplified reporting method for their entire workforce, including any employees to whom a qualifying offer for the full year has not been made. 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 include in the report only 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.

Under §6056, each ALE member with full-time employees will be responsible for filing and furnishing statements with respect to its full-time employees. This means that the control group standards for determining ALE status is treated exactly the same as 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 TPA may be used to create and send the reports, but the ultimate responsibility and liability (including penalty risk) remains at the employer level under the law.

As stated previously, there is a general method that also exists for reporting to the IRS and supplying employee statements set forth in the regulations. The general method is available for all employers with respect to reporting for all full-time employees. The regulations do provide for simplified alternative reporting methods, but these may only be available for certain groups or groups of employees. In cases where an alternative method cannot be used, the general method stands. The alternatives are optional so any employer may choose to report for any or all of its full-time employees using the general method, even if an alternative method is available.


So, It’s Just that Simple, Huh?

The final regulations do attempt to simplify and streamline the reporting requirements, at least as far as a general method for all employers. The regulations provide that the §6056 return may be made by filing Form 1094-C (a transmittal) and Form 1095-C (an employee statement), or “other forms the IRS may designate.” Alternatively, the §6056 return may be made by filing a substitute form that must include all of the information required to be reported on both forms 1094-C and 1095-C (or, again, “any other forms the IRS designates”). As with any substitute returns, these must comply with applicable revenue procedures or other published guidance. The §6055 information will be submitted on a Form 1095-B, and as stated will be submitted with the §6056 information by self-insured employers or by the insurers of fully insured plans.



The final regulations require the following information for reporting the §6056 return by March 31, 2016, for the 2015 calendar year (if electronically filed; if paper filed, the due date is February 29, 2016):

  • Name, address, and Employer Identification Number of the ALE, and the calendar year for which the information is reported;
  • Name and telephone number of the ALE’s contact person;
  • A certification as to whether the ALE offered to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan, by calendar month;
  • The number of full-time employees for each calendar month during the calendar year;
  • For each full-time employee, the months during the calendar year for which minimum essential coverage under the plan was available;
  • For each full-time employee, the employee’s share of the lowest cost monthly premium for self-only coverage providing minimum value offered to that full-time employee under an eligible employer-sponsored plan, by calendar month; and
  • The name, address, and taxpayer identification number of each full-time employee and each individual covered under the policy during the calendar year and the months, if any, during which the employee was covered under an eligible-employer-sponsored plan. The employer must make at least two attempts to ensure the TIN of covered dependents is acquired. Any report that is filed without the TIN will result in IRS correspondence to the individual for verification. There are no penalties assessed on the employer for not having the TIN of covered dependents.


§6056: What WILL NOT Be Required

The final regulations DO NOT require reporting on the following data. (However, note the areas where it is likely that an indicator code will be requested due to the applicability to the administration of the code.):

  • Reporting of the length of any permissible waiting periods under Section 4980H. Although the length of a waiting period is not relevant for administration of the premium tax credit or for an individual to prepare his or her tax return, Treasury and the IRS anticipate that information will be requested, using an indicator code, regarding whether coverage was not offered to an employee during certain months because of a permissible waiting period, since it is relevant to the administration of 4980H.
  • Reporting of the employer’s share of the total allowed costs of benefits provided under the plan, because this is not relevant to the administration of the premium tax credit and section 4980H. However, since minimum value is relevant, Treasury and the IRS anticipate that information will be requested using an indicator code.
  • Reporting of the monthly premium for the lowest-cost option in each of the enrollment categories under the plan (i.e., employee only, family, etc.).
  • Reporting of the months, if any, during which any of the employee’s dependents were covered under the plan.


§6056: But Wait…There’s More!

To assist in administering §4980H and the premium tax credit, the IRS requires certain information not specifically set forth under §6056, but which is authorized under §6056(b)(2)(F). Under the general method for reporting, the following information will be reported through the use of indicator codes for some information (as part of the return and the employee statements):

  • Information as to whether coverage offered to full-time employees and their dependents provides minimum value, and whether the employee had the opportunity to enroll his or her spouse in the coverage;
  • The total number of employees by calendar month;
  • Whether an employee’s effective date of coverage was impacted by a permissible waiting period, by calendar month;
  • Whether the ALE had no employees or otherwise credited any hours of service during any particular month, by calendar month;
  • Whether the ALE is a person who is a member of an aggregated group and, if applicable, the name and EIN of each employer member of the aggregated group constituting the applicable large employer on any day of the calendar year for which information is reported;
  • If an appropriately designated person is reporting on behalf of an ALE that is a governmental unit or any agency, the name, address and identification number of the designated person;
  • If an ALE is a contributing employer to a multiemployer plan, whether, with respect to a full-time employee, the employer is not subject to an assessable payment under Section 4980H due to the employer’s contributions to the multiemployer plan; and
  • If a third party is reporting for an ALE with respect to the ALE’s full-time employees, the name, address and identification number of the third party – in addition to the name, address and EIN of the ALE already required under the final regulations.

It is also contemplated that the following information will be reported with respect to each full-time employee for each calendar month using a code:

  • Minimum essential coverage meeting minimum value was offered to:
o   The employee only;
o   The employee and the employee’s dependents only;
o   The employee and the employee’s spouse only;
o   The employee, the employee’s spouse and dependents;
  • Coverage was not offered to the employee and:
o   Any failure to offer coverage will not result in a payment under Section 4980H;
o   The employee was not a full-time employee;
o   The employee was not employed by the ALE during that month; or
o   No other code exception applies
  • Coverage was offered to the employee for the month although the employee was not a full-time employee for that month;
  • The employee was covered under the plan; and
  • The ALE met one of the affordability safe harbors with respect to the employee.

As with other government statements/returns, a large employer may furnish the §6056 employee statement in an electronic format in lieu of a paper format, provided that the format meets the requirements of the regulations. The recipient must have affirmatively consented to receive the statement in electronic format. The consent may be withdrawn as long is it is withdrawn before the statement is furnished. A paper statement must then be provided until further notice. A notice to the recipient is required when there is a material risk that a hardware or software change may prevent recipient access to the statement. The furnisher must issue the notice prior to changing the hardware or software, and provide the recipient with notice of the change.


So What Should Employers Do Now?

Employers now have the data requirements. Large employers should begin the task of ensuring all the necessary data can be gathered, accumulated and maintained as they wait for the form templates and instructions regarding form submission to be released.

Given that much of the data required will be reported with new indicator codes, employers will need to develop processes and systems to ensure correct and timely reporting is ready for the 2015 calendar year. And, as many employers began to breathe a sign of relief upon seeing “simplified” in the reporting description, it is now becoming clearer that most employers will not be able to utilize any of the streamlined reporting mechanisms. Further, and if it is possible, regulations for compliance must also be assessed annually, potentially requiring updates to systems and reporting decisions. Therefore, planning for the general method may be the most efficient and cost-effective employer plan.

Many are looking to third parties to manage and report the data given much of the required information resides in multiple, disparate (and often inaccurate) data sources within the HR system environment.

While the reporting is not due until 2016, time is of the essence when preparing the data. Incorrect data submission carries substantial penalties that can be avoided with thorough planning and preparation.



[1] 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.



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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How Will Employers Communicate with Exchanges?

We received the proposed regulations for reporting requirements under IRS 6055 and 6056 and they are under review. These reports are meant to inform the IRS, Treasury Department, and individual-covered employees of qualified coverage, and coverage and cost by each month covered. This information will ensure that the appropriate true up can be done at tax filing time, and that employees have what they need to file their 1040 each year.

Wouldn’t it be great if employers were linked to the federal hub—the database where the Exchanges will be able to tap into information from the IRS, DOL, HHS, and SSA—and quickly and easily certify qualified plans and monthly cost, and update employee information in real time? Such “blue-sky” ideas require a direct communication link between employers with both state and federal Exchanges, regardless of their offer of employer-sponsored health coverage.

Employers currently file corporate taxes and supply W-2 data to the IRS for employees and 1099s for its independent contractors. In addition, beginning in 2015, employers will be required to submit very thorough information under 6055 and 6056 regarding every employee and dependent name, SSN, plan coverage, and cost of coverage for every month that the employee is/was employed. All we know right now is the general information that will be needed and when it is due. Given that this information will be held in this government hub, shouldn't it be possible to enable employers, in addition to the state Exchanges, to access this same or a “like” database that will allow for up-to-date information regarding an employee, their eligibility, and the required plan cost information? Not all organizations have long-term employees who have long tenure. Many companies have highly variable employees who, based on the nature of their jobs, have income that changes monthly or even weekly. This fact alone begs the question of how it is that individuals and employers alike will all be providing the most up-to-date and proper information to the entities that are making what may be deemed a very important decision for an individual regarding health coverage and financial assistance?

With some “high-tech” thinking, as an employee submits an application to an exchange, rather than have the applicant return to the employer to gather the required information to take with them, the applicant could complete the application online or submit via paper. The Exchange could then verify employment/eligibility via a database using the applicant’s SSN. A regular feed to this database would occur from participating employers so that all new hires, ongoing employees, and employee status is kept current—thereby ensuring the Exchange knows immediately if the applicant:

1) has been offered affordable coverage of minimum value,
2) is in a measurement or wait period, or
3) has waived an offer of affordable coverage by the employer.

This could be a secure database employers automatically feed information to on their qualified health plans, whether an employee is in a wait or measurement period, and when they became eligible and were offered a qualified plan, or if they had waived coverage. This could allow for an immediate determination of eligibility. In return, the determination could be communicated to the employer without delay, thereby allowing an immediate response should an appeal be required.

The current plan to use a manual process for managing communications with Exchanges will be a heavy and costly burden on employer benefits/HR staffs. And the reconciliation of this issue as a manual process will also be very burdensome.

Health E(fx) is lobbying for the automation of this process, has pre-developed the capability, and is well positioned to deliver employer data directly to Exchanges if/when this automation occurs. But to date, this rests with the Exchanges and nobody is discussing it.

Delay Doesn’t Really Mean DELAY

Some time has passed since the fireworks of the July announcement of a one-year delay in employer penalties under the employer responsibility section of 4980H. In that month, many employers may have assumed that this meant all is status quo regarding employer health coverage for 2014—no penalties means non-compliance is okay, right?

Not so fast. While the delay is certainly welcome news for employers, it does not mean that they can ignore the ACA or the critical decisions it calls upon employers to make.

To put it in the clearest terms: the ACA is the law of the land, despite the penalty delay, and a very substantial number of compliance and management issues that are impacted by the ACA remain. 2014 is going to be a busy and confusing year for all. Employers need to be aware, prepared, and in compliance as major mandates go into effect beginning in October, less than a month away.

Critical ACA Regulations Currently in Effect

1.  Benefit Mandates

a.  All non-grandfathered plans must continue to offer preventive care coverage, clinical trial services, provider nondiscrimination, and limits on out-of-pocket maximums.
b.  Maximum 90-day waiting period.
c.  No limits on pre-existing conditions or essential health benefits.
d.  Dependent coverage changed to age 26.
e.  Expansion of Wellness Incentives (30%, or up to 50% for smoking-related incentives).
f.   Limits on deductibles and out of pockets not to exceed the HSA-regulated amount.

2.  Summary of Benefits and Coverage

a.  SBCs must be made available and distributed during the Open Enrollment period for 2014 and must indicate whether the plan provides minimum value, as defined under the ACA.

3.  W-2 Reporting

a.  Employers must continue to report the aggregate value of employee’s health coverage on Form W-2 each year.

4. Fees

a.  PCORI: Patient-Centered Outcome Research Institute Fees must be paid by July 31 each year. For plans beginning after October 2013, the fee is $2 per member.
b.  Transitional Reinsurance Fee is $63/year or $5.25/month for each covered member that must be paid on or before January 15, first one in 2015.

5.  Exchange Notification

a.  Employers must distribute ACA-mandated Exchange notices by October 31, 2013, to all current employees and to each new employee within 14 days of hire.

6. Application for Advance Premium Credits

a.  All employers are required to fill out the appropriate section of a 12-page application for health coverage when requested by employees who are applying for ACA advance premium tax credits when purchasing coverage through an Exchange.

7.  Employer Mandate Determination

a.  All employers must assess their monthly eligible population to determine if they will be subject to the employer-mandate penalties that will begin in January 2015. Since clarification on a transition period is needed, it is highly recommended that all employers track hours for each employee, every month, beginning no later than January 1, 2014. If a 12-month measurement period is going to be used and there is no short counting period allowed, this count should have begun as early as August 2013!

While employers will avoid penalties for offering unaffordable plans or not offering coverage at all, it is wise to continue to track and forecast the future predicted penalty for non-compliance as well as any risk for discriminatory practice penalties.

Top 10 Issues Employers Should Consider Now

1.  Review and revise documents related to healthcare plans and arrangements. Employers need to verify that they have made all necessary changes and eligibility provisions. Employers may have already had plan design changes in play in preparation for the Employer Mandate, and they should consider what to implement in 2014 and what to delay to 2015.

2.  Continue to prepare for the Employer Mandate. Employers do not have to worry about enforcing the Employer Mandate tax penalties and reporting requirements in 2014, yet they should continue to prepare by evaluating their workforce—both employee classification and hour counting.

3.  Review cost-sharing for 2014 coverage of the Employer Mandate. Even though the affordability requirement will not be enforced in 2014, limits on cost-sharing provisions are still effective in 2014. Employers should take the time to review their cost-sharing structures and evaluate whether to implement or delay any shifts in employee-contribution cost-sharing.

4.  Review and revise wellness programs and incentives based on the ACA guidance. Employers can financially incentivize employees to meet certain health standards. Compliance with the ACA's guidance on wellness programs does not guarantee compliance with other program provisions, however, so employers need to carefully develop their wellness programs.

5.  Prepare for the rest of the ACA. Although the Employer Mandate has been delayed, the rest of the ACA provisions are scheduled to move forward. Employees need to implement new employee notice requirements and communications, plan fees, and other ACA requirements as originally scheduled.

6.  Gear up for ACA notices. Significant ACA requirements involve communicating information regarding the employer’s health plan to employees. Employers are required to send notices to their employees regarding the “New Health Insurance Marketplace Coverage Options and Your Options.” All employers must produce and distribute this notice.

7.  Prepare for earlier open enrollment as a result of additional notice requirements. With the October 1, 2013, deadline for the distribution of the Marketplace Notice, employers should consider moving open enrollment to an earlier date to accommodate the Marketplace Notice deadline.

8.  Develop strategies for the Individual Mandate and Health Insurance Marketplaces. Even though the Employer Mandate is delayed to 2015, the obligation of employees to have individual coverage under the “Individual Mandate” begins January 1, 2014. The opportunity for individuals to purchase coverage on the Health Insurance Marketplaces starts October 1, 2013. Employers are required to provide notices to employees regarding the Marketplaces and will be required to respond to Marketplace requests to confirm employee data and coverage.

9.  Review HIPAA/HITECH—Updates required for the Final Rule. All employers should be reviewing and updating their HIPAA policies and procedures for their covered entity health plan. Reviews should include updating Privacy Notices and evaluating business associate relationships and underlying agreements. The deadline for compliance is generally September 23, 2013.

10. Evaluate changes necessitated by the Supreme Court's ruling related to the Defense of Marriage Act (DOMA). Although it is anticipated that guidance for this act will be issued soon, all employers should be evaluating their health

Transition Relief for 2014 Announcement

On July 2, 2013, the Treasury Department made an announcement of transition relief for 2014 under sections 6055 (Reporting of Health Insurance Coverage by Individual), 6056 (Large Employer Health Coverage), and 4980H (Employer Shared Responsibility Provisions). Most have termed this transition relief a “delay”; some choose to call it “non-enforcement.” Regardless of the terms used, the announcement brought a huge sigh of relief from many employers given that there is now no penalty. But many substantial and critical provisions of the ACA will still be effective on January 1, 2014.

The released notice stated that employers only have to VOLUNTARILY comply with the reporting requirements under sections 6055 and 6056 of the code, and that reporting will begin in 2015. It also stated that employers will NOT be subject to any tax penalties under the employer mandate, section 4980H, until 2015. This transition, however, DOES NOT DELAY the following:

    • • Individual Mandate: This is a statue that requires all Americans to have health insurance coverage or face a penalty ($95 or 1% of household income in 2014).

    • • Transitional Reinsurance: This is a fee due on all self-insured plans and insurance companies to fund risk adjustments and risk corridors for plans in the individual market (2014 to 2016). For 2014, this fee is $63 per covered life (“belly button”), or $5.25 per life, per month.

    • • PCORI: This is a fee due on all insurance plans to pay for comparative clinical effectiveness research under the Patient-Centered Outcomes Research Institute (2012 to 2019); $1 per covered life for plan years ending before October 1, 2013, and $2 for all covered lives for all plan years ending after October 1, 2013.

    • • Wellness Programs: Employers are allowed to implement a 30% premium differential for participation in wellness programs (up to 50% for tobacco cessation).

    • • Insurance Product Reforms: No annual or lifetime limits and no co-pays are allowed on preventive services on any plans offered as of January 1, 2014.

    • • Exchange Communication: By October 1, 2013, all employers must provide all employees with information about coverage in the state and federal exchange/marketplace, including notification of the employer plan offer being affordable and of minimum value.

    • • 90-day Waiting Period: Under the ACA, an employer may not have a wait period longer than 90 days before enrolling an employee in coverage.


This transition relief leads to financial relief for employers, but it does not solve any of the issues that are an administrative burden to the employer benefits process. The transition relief makes one wonder how the employee will be affected. It has been stated that this “delay” allows an employer to offer unaffordable coverage because no penalty will be assessed. According to the Treasury statement, all individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.

As of mid July, no guidance on the delay has been released, and there has been no mention of an expected date for additional guidance other than the fact that agencies want to get immediate feedback on reporting capabilities and needs from employers. The transition relief announcement has only enhanced the already politically charged environment around implementing the ACA. A great deal of posturing is occurring, and many organizations and coalitions are trying to educate Congress on the impacts of the ACA and this transition on the business community.

So the sigh of relief has now led to the questions, “Should we use this year to practice, prepare, and move forward with what we have already accomplished in preparation, or should we stop and institute whole sale change in 2015 when the government demands we comply?” And, “Given this transition, should we or can we expect more legislative changes?” Good questions with many potential answers. While no penalties are being assessed this year, employers still must comply with the underlying design requirements. It is imperative that employers know what they are challenged with on a prospective basis. Being prepared from a cost perspective will ensure senior management, shareholders, and employees are educated and ready for 2015. Until more is known—and the government seems to be full of surprises—anything is possible.

Brokers/Consultants Quick Q&A

Q. What are some main obstacles brokers/consultants face when helping their clients with ACA compliance?

A. Brokers/consultants face many challenges when helping employers with ACA compliance. As most have discovered, much of the initial guidance issued was just that—guidance, and often ambiguous. Assisting clients means: 1) reviewing and interpreting the legislation’s legal jargon to put it into laymen’s terms, 2) understanding which items impact which clients, and 3) determining the strategic implications of the ACA and figuring out how to implement changes in the short and long term.


Brokers/consultants are also in the position of ensuring that each client receives consistent information—any conflict in interpretation of regulations can jeopardize a client’s trust in their broker/consultant. If brokers/consultants are not 100% certain about the ACA regulations, then this trust can be compromised. Brokers/consultants also have faced the issue of not agreeing with a client’s interpretation of aspects of the ACA. It can be challenging, to say the least, on both factual and philosophical levels when the broker/consultant and client disagree.


Q. How can brokers/consultants leverage Health E(fx) to better serve their clients?

A. Although it may not seem like it lately, navigating healthcare reform is only a portion of a broker/consultant’s role with clients. It has, however, been the number one concern of most clients, especially in 2013. How do brokers/consultants read 20,000 pages of legislation, decipher and understand it (keeping in mind they are not lawyers), identify implications to clients, and develop a strategy to implement ACA, while also managing day-to-day services such as vendor management, financial reporting, placement, and client services?


Health E(fx) takes much of the burden off of the broker/consultant. A broker/consultant can now say, here is a plug-and-play solution to help clients understand the implications of the ACA.


The Health E(fx) system works for all employer groups, including those who currently have a variable hour population who do not receive benefits, to those who offer benefits to everyone, and even those who do not offer benefits. Data-driven decision making empowers all Health E(fx) users to understand the implications of the ACA from a tactical approach, and provides the elements needed to develop a long-term strategy for ACA implementation.