2024 ACA Pay or Play Increasing Penalties

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On March 9, 2023, the IRS revised the penalty amounts for the employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA) for 2024. For the calendar year 2024, the adjusted $2,000 penalty amount is $2,970, and the revised $3,000 penalty amount is $4,460.

 

Pay Or Play Penalty

An applicable large employer (ALE) that complies with the pay or play regulations is only subject to penalties if at least one full-time employee receives a subsidy for Exchange coverage. Employees provided affordable minimum value (MV) coverage must be qualified for these Exchange subsidies. Based on the circumstances, the pay-or-play rules allow for applying either the 4980H(a) penalty or the 4980H(b) penalty.

 

  • Under Section 4980H(a): If an ALE does not provide coverage to typically at least 95% of its full-time workers (and dependents), and any full-time worker obtains a subsidy toward their Exchange plan, the ALE will be subject to a penalty. For any applicable month, the monthly fine imposed on ALEs that do not provide coverage to almost all full-time employees and their families equals the number of full-time employees at the ALE (minus 30), multiplied by 1/12 of $2,000 (as adjusted).

 

  • Under Section 4980H(b): If at least one full-time employee receives a subsidy through an Exchange due to the ALE not providing coverage to all full-time employees, the ALE’s coverage being prohibitively expensive, or the ALE’s coverage not providing MV, the ALE may still be subject to a penalty even if it offers coverage to nearly all full-time employees (and dependents). For each full-time employee who receives a subsidy, an ALE is subject to a monthly fine equal to 1/12 of $3,000 (as adjusted) for any applicable month. Nevertheless, the 4980H(a) penalty amount is the maximum punishment for an ALE.

 

Important Dates Description
August 16, 2022 For 2023, the IRS published revised pay-or-play penalty amounts.
March 9, 2023 For 2024, the IRS published revised pay-or-play penalty amounts.
2024 Calendar year 2024 penalty amounts are based on a failure to provide affordable minimum value coverage during the 2024 calendar year

 

IRS Pay Resources

The following IRS websites are available to employers for more information and updates regarding. pay or play provisions:

 

 

This ACA Pay Penalty Outline is provided for informational purposes only and should not be construed as legal or a recommendation of any kind. While we have attempted to provide current, accurate, and clearly expressed information, this information is provided “as is,” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness.

 

*sourcehttps://content.zywave.com/file/b1f47fcf-ae5c-4d8a-a1b2-1d74f01159e9/ACA%20Pay%20or%20Play%20Penalties%20Will%20Increase%20for%202024.pdf *

Benefits of a Grandfathered Plan

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Grandfathered Plan Overview

The grandfathered plan was created on March 23, 2010, with few changes implemented since then. Plans with grandfathered status are exempt from some Affordable Care Act (ACA) regulations, but if that status is lost, the plan must adhere to more ACA criteria. An attempt by employers to scale back the benefits of plans or raise participant expenses will result in the loss of grandfathered status. So, it is essential to note that employers are limited in what changes they can make to grandfathered plans’ benefits and costs. It is also important to note that an employer can decide it makes sense to give up the plan’s grandfathered status and adhere to the new ACA standards to make more significant changes to its health plan.

 

Grandfathered Health Plans are exempt from the following ACA requirements:

Coverage of Preventive Health Services

For plan years beginning on or after September 23, 2010, certain preventive health care must be covered by company health plans and group or individual health insurance policies without requiring cost-sharing requirements. In addition, for years beginning on or after August 1, 2012, preventative health treatments for women must be offered without cost-sharing.

 

Patient Protections (for plan years beginning before January 1, 2022)

The ACA requires the following patient protections that are effective for plan years beginning on or after September 23, 2010:

  • Any primary care physician, including a pediatrician for children, who are available and participates in the plan or network must be available to enrollees.
  • Emergency services provided by group health plans and group or individual health insurance policies are not subject to increased cost-sharing or pre-authorization restrictions.
  • For OB/GYN care, corporate health plans and individual or group health insurance policies may not demand preauthorization or referral.

*For plan years beginning on or after January 1, 2022, the No surprise act (NSA) has expanded the ACA’s patient protection, which applies to protections for patients under health plans with grandfathered status.*

 

Nondiscrimination Rules for Fully Insured Plans

Once regulations are issued, fully insured plans must comply with section 105(h)(2) of the Internal Revenue Code. According to that clause, a plan and the benefits provided in the plan may not favor highly compensated people when determining who is eligible to participate.

 

Quality of Care Reporting

Reporting requirements will be implemented for group health plans and health insurance providers who provide group or individual health insurance coverage. The reports will deal with benefit and payment plans that are intended to enhance patient safety, lower medical errors, avoid readmissions to the hospital, and implement wellness programs.

 

Improved Appeals Process

For plan years starting on or after September 23, 2010, group health plans and health insurance providers that provide group or individual health insurance coverage must strengthen their internal appeals procedures and adhere to minimum standards for external reviews.

 

Insurance Premium Restrictions.

Premiums for health insurance coverage in the individual or small group market may not be discriminatory. They may differ solely by individual or family coverage, rating region, age, and tobacco use for plan years beginning on or after January 1, 2014.

 

Guaranteed Issue and Renewal of Coverage

For plan years starting on or after January 1, 2014, health insurance issuers that provide health insurance coverage in a state’s individual or group market must accept every employer and person who applies for coverage in the state. They also must renew or continue the coverage at the individual’s or plan sponsor’s discretion.

 

Nondiscrimination in Health Care

Group health plans and health insurance providers that provide group or individual insurance coverage may not discriminate against any provider practicing within their scope of practice as of January 1, 2014, or for plan years beginning on or after that date. This clause, however, does not mandate that a plan only work with agreeable providers or forbid tiered networks. In addition, plans and issuers are prohibited from treating people differently based on whether they accept subsidies or assist an inquiry under the Fair Labor Standards Act.

 

Comprehensive Health Insurance Coverage

For plan years beginning on or after January 1, 2014, health insurance issues that offer group or individual health insurance coverage need to provide the minimum set of benefits demanded of policies sold through health insurance exchanges.

 

Limits on Cost-Sharing.

For their coverage of essential health benefits, plan years starting on or after January 1, 2014, must employ a cost-sharing limit (total yearly limit) for solo and family coverage.

 

Coverage for Clinical Trials

For plan years beginning on or after January 1, 2014, group health plans and health insurance providers providing group or individual insurance coverage must allow certain enrollees to participate in specific clinical trials, with the recurring costs covered for participation. In addition, discrimination against the enrollees for the trial is prohibited.

 

Key Considerations for Employers

At each renewal, employers will need to decide whether to renew with their current Grandfathered plans or make changes to ACA plans.  It is important to know that once an employer no longer offers a Grandfathered plan or moves to a new carrier, the employer can no longer go back to the Grandfathered status. It is important to weigh all of your options, the pros and cons, at your renewal period.

If you are an employer, who still has Grandfathered plans, and are interested in a second opinion or evaluation of your benefits, please contact MNJ Insurance Solutions at (714) 716-4303 ext. 102 or sales@mnjinsurance.com.

 

This Grandfathered Plan Overview is provided for informational purposes only and should not be construed as legal or a recommendation of any kind. While we have attempted to provide current, accurate, and clearly expressed information, this information is provided “as is,” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness.

 

*source:https://content.zywave.com/file/4180adb7-d393-4c8f-9210-f99b31832eb8/Health%20Care%20Reform%3A%20What%20Are%20the%20Benefits%20of%20Having%20a%20Grandfathered%20Plan%3F%20.pdf *

2023 ACA Pay or Play Increasing Penalties

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On August 16, 2022, the IRS revised the penalty amounts for the employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA) for 2023. For the calendar year 2023, the adjusted $2,000 penalty amount is $2,880, and the revised $3,000 penalty amount is $4,320.

 

Pay Or Play Penalty

An applicable large employer (ALE) that complies with the pay or play regulations is only subject to penalties if at least one full-time employee receives a subsidy for Exchange coverage. In general, employees provided affordable minimum value (MV) coverage are not qualified for these Exchange subsidies. Based on the circumstances, the pay-or-play rules allow for applying either the 4980H(a) penalty or the 4980H(b) penalty.

 

  • Under Section 4980H(a): If an ALE does not provide coverage to around 95% of its full-time workers (and dependents), and any full-time worker obtains a subsidy toward their Exchange plan, the ALE will be subject to a penalty. For any applicable month, the monthly fine imposed on ALEs that do not provide coverage to almost all full-time employees and their families equals the number of full-time employees at the ALE (minus 30), multiplied by 1/12 of $2,000 (as adjusted).

 

  • Under Section 4980H(b): If at least one full-time employee receives a subsidy through an Exchange due to the ALE not providing coverage to all full-time employees, the ALE’s coverage being prohibitively expensive, or the ALE’s coverage not providing MV, the ALE may still be subject to a penalty even if it offers coverage to nearly all full-time employees (and dependents). For each full-time employee who receives a subsidy, an ALE is subject to a monthly fine equal to 1/12 of $3,000 (as adjusted) for any applicable month. Nevertheless, the 4980H(a) penalty amount is the maximum punishment for an ALE.

 

 

Important Dates Description
August 16, 2022 For 2023, the IRS published revised pay-or-play penalty amounts.
March 1, 2022 Prior to this, the IRS updated the 2023 affordability percentage to 9.12%
2024 Calendar year Updates are based on coverage offered during the 2023 calendar year

 

This ACA Pay Penalty Outline is provided for informational purposes only and should not be construed as legal or a recommendation of any kind. While we have attempted to provide current, accurate, and clearly expressed information, this information is provided “as is,” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness.

 

*source:https://content.zywave.com/file/b1f47fcf-ae5c-4d8a-a1b2-1d74f01159e9/ACA%20Pay%20or%20Play%20Penalties%20Will%20Increase%20for%202024.pdf *

 

2021 ACA Pay or Play Penalties Increase

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On August 19, 2020, the IRS updated its Pay or Play Frequently Asked Questions to include the annual adjusted penalty amounts for the 2021 calendar year.

When the Affordable Care Act was first implemented, there were two penalties for the Pay or Play, 4980H(a) penalty and the 4980H(b) penalty for Applicable Large Employers, also referred to as an “ALE.”

  • The Section 4980H(a) penalty can apply when an ALE, does not offer group health insurance to “substantially all” full-time employees (and dependents). The penalty is calculated as ALE number of full-time employees (minus 30) x $2,000 (as adjusted).

 

  • The Section 4980H(b) penalty can apply when an ALE does not offer coverage to all full-time employees or the ALE’s coverage is unaffordable or does not provide minimum value, and the employee receives an Exchange subsidy. The penalty is calculated as $3,000 (as adjusted) x the number of ALE’s full-time employees who receive an Exchange subsidy.

 

  • For 2021, the adjusted 4980H(a) $2,000 penalty amount is $2,700.
  • For 2021, the adjusted 4980H(b) $3,000 penalty amount is $4,060.

 

Employers with 50 or more full time equivalent employees, also known as Applicable Large Employers (“ALE”), should keep these penalty amounts in mind when reviewing benefit eligibility and employer contributions for 2021 calendar year to avoid penalties.

 

For more information, contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

California Individual Mandate Returns in 2020

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Beginning in 2020, California imposes a state individual mandate that requires individuals in California to maintain health coverage or pay a penalty. The California law largely mirrors the federal individual mandate requirement under the Affordable Care Act (ACA) that was effectively eliminated, beginning in 2019.  California’s individual mandate requires most individuals in the state (and their family members) to be covered under minimum essential coverage for each month of the year, beginning in 2020.

Similar to what we saw in the past with the ACA individual mandate, California’s individual mandate penalty is calculated in the same manner. The penalty is the greater of two amounts, the flat dollar amount ($695) or the percentage of income amount (2.5% of income).

For a limited time, you can still sign up through April 30, 2020 but you’ll have to enroll quickly to avoid paying the penalty.

You have until April 30, 2020 to apply if you just learned about the new financial help available to almost 1 million Californians or the new state penalty for not having insurance. You can still apply even if you already have coverage through a company like Kaiser Permanente, Blue Shield, Health Net or any other plan outside of Covered California. After you enroll, your coverage will start the first day of the next month, but April 30th is a firm deadline, unless you have a qualified event/special enrollment period.

Let us know if you have any questions or need help applying for Health Insurance coverage.

President Trump’s Executive Order: The Impact to Employers and Employees

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As stated in the prior blog posting, the Executive Order serves as a policy statement and the applicable agencies are not likely to take immediate action on this directive. However, once the Department heads for Health and Human Services, the Treasury, and Labor are confirmed and in place, we may see guidance as to how they intend to enforce (or not enforce) certain provisions of the Affordable Care Act (ACA).

So, What Should Employers Do?

For now, employers should continue to follow the requirements of the ACA until (and unless) further guidance from the applicable administrative agency is issued. Listed below are some of the ACA items still required by applicable employers as of January 2017:

  • Employers with 50 or more full-time equivalent: Continue to prepare and provide 2016 Forms 1094-C and 1095-C. For 2016, the Form 1095-C is due to ACA full-time employees, and for self-insured plans all covered individuals, by March 2, 2017.  form 1094-C and all forms 1095-C are due to the IRS by March 31, 2017 (unless filing paper, then the forms are due to the IRS by February 28, 2017).
  • Employers with 50 or more full-time equivalent: Prepare for the enforcement of the employer mandate penalties, if applicable.
  • Employers with 250 or more W-2 in the prior year, are required to report the value of health insurance coverage on the Form W-2 (box 12, code DD).
  • Continue to comply with the following mandates as to group health plans:
    • No lifetime or annual dollar limits on Essential Health Benefits
    • Cover children to age 26
    • No retroactive cancellation of health plan coverage, except due to fraud or intentional misrepresentation of material fact
    • No pre-existing condition exclusion clauses
    • No waiting periods in excess of 90 days
  • If applicable, comply with additional mandates for non-grandfathered plans.
  • Employers must continue to provide ACA-related notices, including but not limited to Summary of Benefits and Coverage (SBC), Notice of Coverage Options, etc.
  • For those employers who offer a health flexible spending account (FSA), the maximum employee contributions for 2017 cannot exceed $2,600.  In addition, over-the-counter drugs are excluded, unless prescribed by a physician.

What is the Impact to Employees?

Individuals should still continue to act as though the individual mandate will be enforced (have minimum essential coverage, qualify or an exemption, or pay a penalty). For the immediate future, it appears subsidies remain available to assist certain low and middle income individuals to purchase coverage in the Marketplace, if coverage is not available elsewhere (e.g., employer-sponsored, Medicare, or Medicaid).

There is a significant question as to whether the Trump administration will continue to enforce the individual mandate. It is a crucial component of the ACA in that it operates to keep the risk pool large enough to reduce adverse selection. However, by not enforcing the coverage requirement, it could lead to an exodus of healthy individuals from Covered California and creating an unstable risk pool.

There is also question around the continued availability of subsidies during this transition period. As of right now, they remain available. However, this will be an area to be closely monitored as the leadership at HHS takes shape.

We will continue to monitor and report developments. If you have any questions, please contact MNJ Insurance Solutions at (714) 716-4303.

This content is provided for informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

President Trump Signed Executive Order Addressing the ACA

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Many of our clients and prospects have been asking the same question…”Now that President Trump is in office, what is going to happen with the ACA? When do you foresee changes?  What is going to happen to Covered California?”  These are all valid questions and concerns.  We are going to stay informed of any changes…

Read more

Understanding the Small Business Health Care Tax Credit for 2016

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We receive many calls from clients and prospects regarding the Small Business Health Care Tax Credit, so we thought we would provide a brief summary for 2016.  The Small Business Health Care Tax Credit is designed to encourage small businesses and small tax-exempt employers to offer health insurance coverage to their employees.

 

In general, an employer may be eligible for the credit for tax year 2016 if the employer:

• Had fewer than 25 full-time equivalent employees;
• Paid an average wage of less than $52,000 a year;
• Paid at least half of employee health insurance premiums; and
• Paid premiums on behalf of employees enrolled in a qualified health plan offered through the Small Business Health Options Plan (SHOP).

 

Employers seeking to claim the credit should know the following key facts:

• The maximum credit is 50% of premiums paid for small business employers, and 35% of premiums paid for small tax-exempt employers.  Eligible credit is on a sliding scale, depending on number of employees and average salaries.
• Small employers may claim the credit for no more than two consecutive taxable years, beginning in tax year 2014 and beyond.
• Small employers must be enrolled with SHOP/Covered California for the tax credit. If the employer is offering medical through other carriers, they may be eligible for business expense write off, and not the tax credit.
• Eligible small employers (other than those that are tax-exempt) may claim the credit on their annual income tax returns, with an attached Form 8941Credit for Small Employer Health Insurance Premiums, showing the calculation of the credit.

 

If you would like to further discuss the Small Business Health Care Tax Credit and how it may affect your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

2017 Key Dates for Open Enrollment: Individual/Family Medical Plans

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2017 IFP open enrollment

 

Did you know that in 2017 the Open Enrollment period is November 1, 2016 through January 31, 2017?  Did you know that if you do not have qualified medical coverage, meeting the minimum essential benefits, that you may face a penalty for not having health insurance coverage, according to the ACA?  (Note: there are a few exemptions for this rule.)

It is important to understand the key dates for Open Enrollment for Individual and Family coverage, both on and off the exchange.

If you are enrolling for individual/family medical coverage between November 1, 2016 and through December 15, 2016, coverage will begin as of January 1, 2017.  If you are enrolling for individual/family medical coverage on December 15, 2016 through January 15, 2017, coverage will begin as of February 1, 2017.  Finally, if you are enrolling for health coverage on January 16, 2017 through January 31, 2017, coverage will begin as of March 1, 2017.

Outside of Open Enrollment, individuals can enroll in the individual/family health coverage only if you qualify for a Special Enrollment Period (SEP).  Some examples may include, but are not limited to the following:  loss of group coverage, divorce and therefore, losing medical coverage through spouse’s employer plan, or employer terminates their group plan and therefore, no longer offers coverage.  It is also important to enroll within a certain period of time of the qualifying event.

If you have any questions, or would like to explore Individual/Family Health Insurance plans, please do not hesitate to contact Julie Mangrello-Jennings at (714) 716-4303.

IRS Issued Notice 2016-4: Extending the Due Dates for Forms 1094-C and 1095-C for 2015

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1094-c and 1095-c

Great news for Applicable Large Employers (ALE) and self-insuring employers, who are required to report under Section 6055 and 6056 of the Internal Revenue Code.  Per the IRS Notice 2016-4, they extended the deadlines for the 2015 Affordable Care Act (ACA) information requirements to complete the 2015 Forms 1094-C and 1095-C.  Coverage providers also have additional time to file and distribute the B series forms for 2015 Calendar Year only.

Under the ACA, Applicable Large Employers must file the 2015 Forms 1094-C and 1095-C with the IRS, and furnish copies of the 1095-Cs to full-time employees (and to covered part-time employees, if the employer’s plan is self-funded).  There are no exceptions to the filing requirement.  Many ALEs have found compliance with this mandate challenging, therefore, we welcome the extension from the IRS to allow employers a couple more months to prepare.

Extensions:

  • Form Distribution to Individuals (Forms 1095-B and 1095-C):
    • Extended from February 1, 2016 to March 31, 0216.
  • IRS Form Filing (1094-B, 1095-B, 1094-C, and 1095-C):
    • Extended from February 29, 2015 to May 31, 0216 (paper filing)
    • Extended from March 31, 2016 to June 30, 2016 (electronic filing)

IMPORTANT NOTE: The extensions for the ACA information reporting requirements apply for calendar year 2015 only and have no effect of the requirements for other years or on the effective dates or application of the ACA “Pay or Play” provisions.  Applicable Large Employers or other coverage providers that do not comply with these extended due dates will be subject to penalties.

 

2015 Required Forms:

Form 1094-B

Form 1095-B

Form 1094-C

Form 1095-C

2015 Form Instructions:

1094-B Instructions

1095-B Instructions

1094-C Instructions

1095-C Instructions

General Penalty:

HR 1295

Questions?

6055 IRS Q&A

6056 IRS Q&A

1094-C & 1095-C FAQs

 

If you would like to further discuss the ACA Employer Reporting Requirements, penalties, and how it affects your company, please contact MNJ Insurance Solutions at (714) 716-4303.

 

This content is provided for informational purposes only.  While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy  and completeness.  The information provided should not be construed as legal or tax advice or as a recommendation of any kind.  External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.