What is “Affordable” Coverage under Health Care Reform?

Under the Patient Protection and Affordable Care Act, the employer-provided coverage must be “Affordable,” so that Applicable Large Employers avoid penalties under the “Pay or Play” rules. Affordability will be determined by whether the coverage offered costs an employer more than 9.5% of their annual household income.  Since there is no practical way for an…

Draft Instructions and REVISED Draft 2015 Forms for IRS Reporting Requirements: August 7, 2015

On August 7, 2015, the Internal Revenue Service (IRS) released draft instructions and revised draft 1095-B and 1095-C forms to be used for Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting in 2016. The IRS has posted the 2015 draft instructions and forms at IRS.gov/draftforms as information only, and will post final versions at a later date.

The revised 2015 draft forms are generally unchanged from the versions released on June 19, 2015. However, the IRS made several changes to the 2014 final instructions, including:

  • “B” form instructions for applicable large employers – The draft instructions for forms 1094-B and 1095-B now allow applicable large employers (ALEs) the option to use the “B” forms to report coverage of individuals who are not considered full-time employees for any month during the calendar year.
  • “C” form instructions for applicable large employers – The draft instructions for forms 1094-C and 1095-C require that ALEs continue to report all employees enrolled in self-insured coverage on the “C” forms – as part of MEC reporting.
  • 30-day extension for IRS filing – An automatic extension is granted if Form 8809 is submitted to the IRS on or before the filing due date.
  • 30-day extension for providing forms to individuals – An extension may be granted by submitting a letter to the IRS on or before the due date for providing forms to individuals.
  • Details on how to file corrected forms – The draft instructions include details on filing corrected paper returns. Information on electronic filing corrections can be found on IRS Publication 5125.
  • Hand delivery – Both sets of reporting may be hand delivered to individuals.
  • Reporting supplemental coverage – The definition of a “plan sponsor” has been clarified for the purpose of reporting supplemental coverage by the same reporting entity as the health plan sponsor.
  • Reporting coverage offered under multiemployer plans – Simplified reporting now available for reporting offers of coverage for employers with multiemployer arrangements that qualify for relief.
  • Reporting on COBRA participants – Clarifications on how to report COBRA participants.

For more information on the final rules on this IRS information reporting, please read  Reporting Requirements Fact Sheet.

Draft Instructions and Forms:

Instructions for Forms 1094-C and 1095-C

Form 1094-C – Transmittal/“cover sheet” for Large Employer and self-insured MEC reporting (applicable large employers)

Form 1095-C – Report to individuals and the IRS information on coverage offered and self-insured MEC (applicable large employers)

Instructions for Forms 1094-B and 1095-B

Form 1094-B – Transmittal/“cover sheet” for MEC reporting (insurance carriers and self-insured small group employers)

Form 1095-B – Report to individuals and the IRS information on MEC (insurance carriers and self-insured small group employers)

 

We will keep you informed when instructions and revised or final forms are made available.

 

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.

ACA Reporting Requirements: Increased Penalties and New Electronic Filing Steps

On June 29, 2015, President Obama signed into law, The Trade Preferences Extension Act of 2015 (“Act”), which significantly increases potential penalties for insurers and employers that fail to comply with the new Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting requirements first due in 2016.

 

As a recap:

  • IRS Code 6055 requires insurers and self-insured plan sponsors to file reports with the IRS to verify whether an individual had MEC during a given calendar year to satisfy the Individual Mandate.
  • IRS Code 6056 requires an “applicable large employer,” employers with 50 or more full-time equivalent to file reports with the IRS verifying whether it offered minimum value and affordable coverage to full-time employees and their dependents in a given calendar year to satisfy the Employer Mandate.

 

The new penalties are effective for returns and statements required to be filed in 2016 for the 2015 calendar year:

 

PenaltyOld AmountNew Amount
Failure to file/furnish an annual IRS return or provide individual statements to all full-time employees$100$250
Annual cap on penalties$1,500,000$3,000,000
Failure to file/furnish when corrected within 30 days of the required filing date$30$50
Annual cap on penalties when corrected within 30 days of required filing date$250,000$500,000
Failure to file/furnish when corrected by August 1 of the year in which the required filing date occurs$60$100
Cap on penalties when corrected by August 1 of the year in which the required filing date occurs$500,000$1,500,000
Lesser cap for entities with gross receipts of not more than $5,000,000$500,000$1,000,000
Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected within 30 days of required filing date$75,000$175,000
Lesser cap for entities with gross receipts of not more than $5,000,000 when corrected by August 1 of the year in which the required filing date occurs$200,000$500,000
Penalty per filing in case of intentional disregard. No cap applies in this case.$250$500

Click here to access the Act.

 

New Electronic Filing Steps

Additionally, this week the IRS provided more information on the process for electronic reporting to the IRS. The electronic filing system, known as the ACA Information Return (AIR) system, is significantly more complex than simply uploading a PDF file containing the pertinent information. Employers, insurers and third-party fulfillment or filing software developers are required to complete the following steps prior to being able to electronically submit any Reporting Forms:

  1. Register with the IRS’s e-services website, including submission of personal information about the person registering for the Submitting Entity
  2. Obtain an AIR Transmitter Control Code (TCC), a unique identifier authorizing each Submitting Entity to submit the Reporting Forms, and
  3. Pass a series of technical/system tests to ensure that Reporting Forms will be properly submitted when due.

The first two steps can be completed now. The third step is anticipated to become available later this year.

Click here for more information on the AIR program.

Reference:  As seen on www.informedonreform.com, dated July 7, 2015.

U.S. Supreme Court Ruling: Subsidies Will Continue for Federal Marketplace Coverage

us supreme court

 

On June 25, 2015, the U.S. Supreme Court released their decision in the King v. Burwell case concerning the provision in the Patient Protection and Affordable Care Act (PPACA), and ruled that subsidies will continue to be available in all states and not just those with state-based exchanges.  Subsidies with federally-facilitated exchanges will continue, as the Obama administration intended.  The ruling affirmed the earlier decision by the Fourth Circuit Court of Appeals.

 

California has a state-based exchange, known as “Covered California,” and this decision does not affect things in California, but the clarification is important and applicable to the residents in the 34 states that utilize the Federal Marketplace.  Since nothing has changed as a result of this decision and NO ACTION is required by individuals who are currently receiving health insurance subsidies in California at this time.

 

The Court considered two possible scenarios in its decision:

  1. Adhere to the strict reading of the law that subsidies may only be available with state exchanges, OR
  2. rule in favor of the intent of the law for universal availability of subsidies in all states and all exchanged.

 

Following this ruling in favor of allowing premium subsidies to be distributed through both federal and state exchanges, the implementation of PPACA will continue and its insurance reform provision will remain in effect.

 

Since the continuity of subsidies, in both state and federal exchanges are no longer in question, it is our hope that legislation will make Health Care Reform more workable for both individual and business consumers.  In addition, it is our hope that sate and federal policymakers will not focus their attention on efforts to reduce the cost of providing health care, as PPACA has still not fully addressed the issue.  Lawmakers and regulators need to look at the portions of our health care system that are working well and keep a variety of health insurance products and options available to all consumers, and improve the areas that need adjustments.  We believe the employer-based system has been reliable and effectively delivered health coverage to generations of Americans, and as a nation, we need to preserve it!

 

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.

New Rules and Penalties for Cash “In Lieu” of Benefits

cash-hands

IRS Notice 2015-17: New Guidance for Employer Premium Reimbursement

In the past, many employers have helped employees pay for individual health insurance policies (i.e. through “Employer Payment Plans”) in the offering an employer-sponsored plan. In recent months, the Department of Labor (DOL), Health and Human Services (HHS), and Treasury Departments have released several pieces of guidance addressing these arrangements. According to this guidance, employer payment plans do not comply with several ACA provisions that took effect beginning in 2014. In May 2014 release from the IRS, violations of these rules can result in excess lines of $100 per day, per employee or $36,500 annually under section 4980D of the Internal Revenue Code.

Later, on February 18, 2015, the Internal Revenue Service issued Notice 2015–17. This Notice clarifies that increase in employee compensation does NOT constitute an employer payment plan, as long as the increases are not conditioned on the purchase of individual coverage; provides transitional relief from the excise tax for small employers through June 30, 2015 and to S-corporation healthcare arrangements for 2% shareholder employees; and addresses whether employers may reimburse employees for Medicare or TRICARE premiums for active employees under ACA. The DOL and HHS have reviewed the Notice and agree with the guidance provided.

What is an Employer Payment Plan?

An Employer Payment Plan is an arrangement through which an employer pays, directly or indirectly (i.e. including direct or indirect payments with after-tax dollars), and employee’s premiums for major medical coverage purchased and in the individual market (inside or outside the exchange), and/or Medicare Part B or D premiums. Employer Payment Plans violate one or more of the health insurance reform through the ACA (including the prohibition on annual dollar limits on essential health benefits and the requirement to provide preventive care without cost-sharing) and as such, excise taxes of up to $100 per day per employee would apply under Code Section 4980D. See IRS notice 2013–54 and Agency ACA FAQs XXII. The Notice also describes and clarifies the types of permissible arrangements that can be used for employers to reimburse Medicare Part B or D premiums or TRICARE expenses without running afoul of the health insurance reforms.

Temporary Transition Relief for Small Employers until June 30, 2015

The new Notice acknowledges this rule may be a challenge for smaller employers with 50 or fewer full-time equivalent employees for 2014 to comply with, and therefore, small employers will not be penalized for noncompliant premium payment plans that were in effect during 2014. According to Notice 2015–17, there is a delay in the excise tax penalty for employer some are not considered to be an applicable large employer. Small employers may require more time to implement alternative health coverage. This transition relief is temporary and small employers may be subject to the excise tax after June 30, 2015. In addition to waiving the penalty, the smaller employers will not be required to file the Form 8928 on which non-compliance is expected to be self-reported.

It is important to note, there is no relief for employers with 50 or more full-time equivalent employees, and they were required to begin compiling as of January 1, 2014.

 

S-Corporation healthcare arrangements for 2% shareholder employees

Under IRS Notice 2008-1, if a S-corporation pays for, or reimburses premiums for individual health insurance coverage during a 2% shareholder, the payment for reimbursement is included in income, and the 2% shareholder may deduct the amount of premiums, provided that all other eligibility criteria for deductibility are satisfied. Notice 2015–17 refers to this as “2% shareholder-employee healthcare arrangement.”

The Notice indicates that the agencies expect to issue additional guidance in the future regarding the application at the health insurance reforms to more than 2% shareholder arrangements. Although not addressed in the Notice, it would seem that similar relief maybe necessary for other self-employed individuals who are allowed to take a section 162(I) deduction for individual market health insurance, such as partners in a partnership. The Notice also indicates that the IRS and Treasury are considering whether additional guidance is needed regarding the federal tax treatment of health coverage provided to more than 2% shareholder employees. Until then, S-corporations and more than 2% shareholders may continue to rely on Notice 2008-1 with regard to tax treatment of these arrangements for all federal income and employment tax purposes.

 

Reimbursement of Medicare premiums

Notice 2015-17 indicates that certain employer payment plans that reimburse Medicare Part B and/or D premiums will be considered integrated with a group health plan for the purposes of the health insurance reforms, if the following conditions are satisfied:

  • The employer offers a group health plan, other than the employer payment plan, that provides minimum value coverage;
  •  The employee participating in the employer payment plan is actually enrolled in Medicare;
  •  The employer payment plan is available only to those who are enrolled in Medicare; and
  •  The employer payment plan limits reimbursement to Medicare Part B or part D premiums and excepted benefits, including Medigap premiums.

Employer should proceed with caution regarding this portion of the notice. While this arrangement may not be in conflict of healthcare reform is, it will violate Medicare Secondary Payer (MSP) rules, unless a small employer (under 20 employees) MSP exception applies.

 

TRICARE Arrangements

TRICARE is not considered an employer group health plan. As a result, such coverage cannot be integrated with an employer payment plan (such as plan reimbursing individual medical premiums). Notice 2015–17 provides a similar relief for HRA’s that reimbursed expenses incurred by employees covered by TRICARE.

TRICARE arrangements will be considered integrated with a group health plan for the purposes of healthcare reform, providing the following conditions are met:

  • The employer offers a group health plan, other than reimbursement arrangement, that provides minimum value;
  •  The employee participating in the reimbursement arrangement is actually enrolled in TRICARE;
  •  The reimbursement arrangement is available only to those who are enrolled in TRICARE; and
  •  The reimbursement arrangement limits reimbursement to cost share under TRICARE and excepted benefits, including TRICARE supplemental arrangement.

Similar to Medicare, TRICARE has strict coordination rules that make this type of arrangement illegal for employers subject to TRICARE coordination.

 

Call to Action for Employers:

Health Care Reform has made many changes to the insurance industry, and we are here to assist you with ensuring your groups compliance and Employee Benefit needs. With the new, additional guidance from the IRS, we recommend employers to do the following:

  • Evaluate your current policy and procedure regarding benefits;
  • Small employers that reimburse employees to pay directly for all or part of employee’s premiums for individual health coverage must change this practice and seek other options for group health insurance to avoid costly penalties for non-compliance.

If you have any questions or would like further clarification, MNJ insurance Solutions is here to assist you with your group health insurance needs and compliance.

 

More Information:

http://www.irs.gov/Affordable-Care-Act/Employer-Health-Care-Arrangements

IRS Notice 2013-54

IRS Notice 2015-17: Guidance on the Application of Code § 4980D to Certain Types of Health Coverage Reimbursement Arrangements

 

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.

CA Waiting Period Update & Federal Changes on the Horizon: August 20, 2014

california-state-flag-300x224

August 15, 2014 California Governor Jerry Brown signed into law legislation SB 1034 to better align California’s health coverage waiting period requirements with federal law. The intent of the bill is to resolve confusion between California and Federal law and to better conform to the waiting period provisions of the Affordable Care Act. While the ACA had established a 90-day waiting period for employers, California originally established a 60-day waiting period in 2014.

 

Therefore, as new plans begin or plans renew on or after January 1, 2015, employers will have the following options for waiting periods (depending on the medical carrier):

  1. First of the month following date of hire,
  2. First of the month following 30 days, or
  3. First of the month following 60 days.

 

Please check with your medical carrier for details or we can assist you to ensure you have the best option for your group.  If your group would like to change your waiting period for first of the month following 60 days, as your plan’s current waiting period was changed upon your renewal in 2014 to a lesser waiting period, this MAY be an option in 2015 (depending on carrier), or you can change upon your next renewal.

 

Federal action on waiting periods-in this case orientation periods – is also occurring at the federal level. In a final rule released in June 25, 2014 the Internal Revenue Service, the Employee Benefits Security Administration, and the Health and Human Services Department are authorizing an employer (who is offering ACA defined credible coverage) to have a “bona fide orientation period that occurs before the 90 waiting period begins. That means an employer that offers health coverage to employees could have an additional month of time before adding a new hire onto their health policy if there is a bona fide reason for an orientation period.

 

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. The regulations define “waiting period” as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. Being otherwise eligible to enroll in a plan means having met the plan’s substantive eligibility conditions (such as, for example, being in an eligible job classification, achieving job-related licensure requirements specified in the plan’s terms, or satisfying a reasonable and bona fide employment-based orientation period.

 

The proposed regulations provided that one month would be the maximum allowed length of any reasonable and bona fide employment-based orientation period. During an orientation period, the regulators envisioned that an employer and employee could evaluate whether the employment situation was satisfactory for each party, and standard orientation and training processes would begin. Under the proposed regulations, if a group health plan conditions eligibility on an employee’s having completed a reasonable and bona fide employment-based orientation period, the eligibility condition would not be considered to be designed to avoid compliance with the 90-day waiting period limitation if the orientation period did not exceed one month and the maximum 90-day waiting period would begin on the first day after the orientation period.

 

The federal orientation period rule becomes effective on all group policies issued or renewed after January 1, 2015.

 

Click here for the Federal Register Notice.

 

Reference:  CAHU News Agents Can Use (August 20, 2014)

 

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.

“To Grandmother or Not to Grandmother…That is the Question!”

Now that SB 1446, “Grandmothering” bill has been signed, it allows small employers (50 or fewer employees) with non-grandfathered health insurance policies in effect as of December 31, 2013, the option to renew their existing coverage for one year, rather than be required to move to 2014 ACA compliant plans.

 

Did you know that not all carriers are responding to “Grandmothering” the same way? Should you “Grandmother” your small group’s plan options, or are 2014 ACA plans lower in premium and a better fit for your group?   You can count on your MNJ Insurance Solutions Sales Team to inform you of the new law, compliance updates, how your client’s current carrier is or is not acknowledging “Grandmothering,” along with developing the right sales strategy for your company.

 

In order to prepare an analysis, we will need the following:

  1. Company Name, Company zip code, and SIC code,
  2. Census (include employee name, spouse’s name, children up to age 26 name, date of birth for covered members, and home zip codes),
  3. Copy of current plan design, current RAF (Risk Adjustment Factor), and rates, and
  4. Copy of renewal, renewal RAF and rates.

 

We are here to help explore these options with you, as we want to earn your business!

 

Do Not Delay…to Request a Quote Analysis or to learn more about MNJ Insurance Solutions Value-Added benefits, please contact us at (714) 716-4303.

Grandmothering Bill Signed (SB 1446): July 7, 2014

california-state-flag-300x224

California Senate Bill 1446 (“SB 1446″) was signed by Governor Brown on July 7, 2014, to provide some small employers with non-grandfathered health insurance plans in effect as of December 31, 2013, the option to renew their existing coverage for one year, rather than be required to move to new ACA-compliant coverage by the end of 2014.    The employer is not eligible if they are enrolled in ACA compliant plans.  Grandfathered plans (plans that were in force prior to March 23, 2010) are NOT impacted by SB 1446.

 

The new law provides employers with 50 or fewer employees the ability to renew their small group health plan if the policy was in effect as of December 31, 2013, and still in force at the time SB 1446 was signed into law as of July 7, 2014.  Plans that meet this definition are now referred to as “Grandmothered” plans.  SB 1446 will permit these Grandmothered plans to continue to renew until January 1, 2015 and those policies to remain in force until December 2015.  This change moves state law closer to recent federal policy changes, allowing for a longer transition period to ACA–compliant plans.  SB 1446 has an urgency measure, that provides the new law to take effect immediately after signing.

 

The small group policies affected by SB 1446 must still include many ACA and state-based mandated benefits, such as preventive healthcare coverage without copays or deductibles, no lifetime caps on benefits, maternity care, coverage for autism, and the elimination of gender discrimination in setting premiums.  The insurance carriers will be handling “Grandmothering” different, depending on their position they opt in the market.  Please refer to UpdatedCarriersGrandmotheringGuide_20140711B (1) (1) for more details.

 

The new law also requires insurers who offer “Grandmothered” plans for renew to provide notice to the group contract holder regarding the option to renew that states:

“New health care coverage options are available in California.  You currently have health care coverage that is not required to comply with many new laws.  A new health benefit plan may be more affordable and/or offer more comprehensive benefits.  New plans may also have limits on deductibles and out-of-pocket costs, while your existing plan may have no such limits.

You have the option to remain with your current coverage for one more year or switch to new coverage that complies with the new laws.  Covered California, the state’s new health insurance marketplace, offers small employers health insurance from a number of companies through tis Small Business Health Options Program (SHOP).  Federal tax credits are available through the SHOP to those small employers that qualify.  Talk to Covered California (1-877-453-9198), your plan representative, or your insurance agent to discuss your options.”

 

Please contact MNJ Insurance Solutions at (714) 716-4303 to discuss your group’s current plan and options.  We can evaluate Grandmothered plan options and rates, and compare them to the ACA-compatible plans to explore both options and rates.

 

Reference: CAHU News Agents can Use (July 7, 2014), “Grandmothering Bill Signed: Takes Immediate Effect”

 

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.

Health Care Reform: The Individual Mandate

Under the Affordable Care Act, the individual mandate requires all citizens and legal residents of the United States to have “minimum essential coverage” insurance b y January 1, 2014.  People who do not have qualified health insurance or government health plan, like Medicare or Medicaid, must obtain health insurance or pay a penalty tax called the “shared responsibility payment.”

People have “minimum essential coverage” if they have:

  • Government-sponsored plan (i.e. Medicare, Medi-Cal)
  • Employer-sponsored plan
  • Individual plan

U.S.-issued expatriate plans provide minimum essential coverage for expatriate employees and their dependents regardless of where they are located in the world.

People can choose to buy health insurance “on-exchange” or “off-exchange” plans that open in 2014.  Some people can also receive federal premium assistance on an exchange, depending on household income.  NOTE:  There is a specific Open Enrollment period for which individuals can apply for coverage on/off the exchange, and individuals can no longer enroll at any time throughout the year (as done in prior years to Health Care Reform).

ACA-graphic-3If a person does not have minimum essential coverage, the IRS will collect a tax penalty from him/her.  The monthly tax penalty is described as 1/12th of the greater of:

  • For 2014:  $95 per uninsured adult in the household (capped at $285 per household) or 1% of the household income over the filing threshold.
  • For 2015: $325 per uninsured adult in the household (capped at $975 per household) or 2% of the household income over the filing threshold.
  • For 2016:  $695 per uninsured adult in the household (capped at $2,085 per household) or 2.5% of the household income over the filing threshold.

The penalty will be half of the amount for people under age 18.  Beginning in 2017, the penalties will be increased by the cost-of-living adjustment.

There are a few exceptions to the penalty, including:

  • Religious reasons,
  • Not present in the United States,
  • In prison,
  • Not able to pay for coverage that is more than 8% of the household income,
  • An income that is below 100% of the Federal Poverty Level,
  • Having a hardship waiver, or
  • Not covered for less than three months during the year.

See the following sites for more details:

The Requirement to Buy Coverage Under the ACA

IRS Individual Shared Responsibility Provision

 

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.

The YouToons Get Ready for Obamacare

 

 

I am sure you will agree that the Kaiser Family Foundation did an excellent job with this short video summary of PPACA and what is yet to come.

Please contact us at MNJ Insurance Solutions at (714) 716-4303 if you have any questions or if you would like assistance with your health insurance needs.