Category: ACA Reporting

29 Mar 2017

A Historical Moment – Five Generations in the Workplace

We’re giving today’s collective workforce a new label: 5Gen. Why? Because there are five generations making a living in today’s business world. Think about it: five generations all in a single workforce. That means roots run deep, values differ, and technology can either be a bridge or a barrier.

Here is the breakdown of 20th and 21st century employees, who are all working together:

  • 1996-present: iGen, aka Generation Z
  • 1977-1995: Millennials, aka Generation Y
  • 1965-1976: Generation X
  • 1946-1964: Baby Boomers
  • 1945 and earlier: Traditionalists

 
The reason for this historic era is simple: people are living longer and more active lives. The Traditionalists and Baby Boomers do not have the financial security to retire, nor do they want to retire. In many cases the Baby Boomers are supporting the Millennials. Younger generations are more transitional, as they remain in their positions for shorter periods of time. Meanwhile, others, though fewer, aim for a “gold watch” career with a single employer. The reality is a multi-mindset, multigenerational workforce like never before. The challenge for HR is how to manage and support this five-generation workforce.

Getting Their Attention
How will you attract the new workforce? Job descriptions need to make an instant impression to move the reader from scanner to reader, yet be brief, because attention spans are short. Communicating is a challenge because each generation has its own preferences and expectations. Texting a Traditionalist might not be an option, while phoning an iGen might prove fruitless because they don’t check their cell voicemail. Managing communication with each target audience is a challenge. Technology works for all those born after 1964, however, the Boomers and Traditionalists are waiting for a personal phone call, or invitation to meet face-to-face. They have embraced technology, but they respond to more open communication and are more of a “we” vs. “me” generation. The Gen X, Y and Z candidates make up the “me” generations, and are extremely self-centric. They have global perspective and technology-driven tools, so they expect you to reach them easily: just email, text, Facetime, Skype or instant chat them.

Keeping Their Attention
How will you retain this multi-faceted workforce? Each group’s work ethic, values, and needs are completely different. Compensation and benefits are unique to each generation. Boomers and Traditionalists are concerned about affordable health plan options, while iGens, Millennials and Gen Xers want more time off and opportunities to enhance and expand their skills. Retaining top talent requires targeted benefits, development and advancement.

Avoiding the Gap
Mentoring and continuous learning are critical to the successful management of the multigenerational workforce. The right Human Capital Management (HCM) software can help HR directors bridge the generation gap to successfully recruit candidates, cultivate team building, implement effective leadership programs, and increase employee efficiency. HCM is the gateway to unifying and optimizing your talent, regardless of how many and which generations you’re engaging. You might need to provide more intense training for Traditionalists and Baby Boomers. You might be able to connect the generations by having Gen X, Y and Z employees mentor non-technology-driven employees. With HCM software, you will have the flexibility to meet the needs of all generations and the ability to evolve and grow with future generations as well.

For more information about our products, please click below.

29 Mar 2017

House Republicans Withdraw the AHCA Before A Planned Vote But Efforts to Repeal Continue

On Friday, March 24, 2017, the U.S. House of Representatives’ Speaker Paul Ryan pulled from the floor the American Health Care Act (AHCA), the proposed legislation to repeal and replace the Affordable Care Act (ACA), once it was clear that the bill was short on votes to pass.  Effectively, this means the AHCA will not survive to become law and, at this time, any future efforts to repeal and replace the ACA are uncertain.  This may mean, as Speaker Ryan said shortly after the announcement that the bill was withdrawn, “Obamacare is the law of the land. We’re going to be living with Obamacare for the foreseeable future.” However, as of March 28, there have been reports that the House Republican leaders and the Trump administration have started renegotiations on legislation to repeal the ACA. At this time, there are no details about what may be in any renewed repeal legislation or the timing of its release or a vote.

What the AHCA Would Have Done

If enacted, the AHCA would have retroactively repealed the individual and employer mandate penalties, delayed the 40% “Cadillac” tax on employer-sponsored health plans, made significant changes to the ACA insurance coverage and marketplace stabilization provisions, enhanced health savings accounts (HSAs), provided relief from many of the ACA’s taxes and fees, and curtailed Medicaid reforms, among other things.

The AHCA was intended to be Phase I of a three-phase approach to repeal and replace the ACA through the budget reconciliation process, which requires a simple majority vote in Congress.  Phase II was envisioned to include regulatory relief by Health and Human Services (HHS) Secretary Thomas Price, and in Phase III legislation would be introduced to repeal the ACA market reforms, permit the sale of insurance across state lines, and effectuate other provisions that could not be addressed through the budget reconciliation process because of the Byrd rule, which limits reconciliation provisions in the Senate to provisions that affect government revenues and outlays.

Why it Failed

In large part, the bill failed because the more conservative wing of the Republican Party, known as the Freedom Caucus, was against the bill because of its preservation of certain ACA provisions.  Prior to the vote on the bill, which was initially scheduled for Thursday, changes were introduced (via what was referred to as the “Manager’s Amendment”) to add concessions (such as accelerating the repeal of most of the ACA tax provisions) in the hope that the Freedom Caucus, representing more than 30 members, would vote in favor of the bill.  However, when realizing that even those concessions were not enough, additional concessions, including the repeal of the federal “essential health benefits” definition were added.  At that point, more moderate Republicans were voicing concerns.  Late Thursday, President Trump issued an ultimatum, demanding a vote on Friday and threatening Republicans that the ACA would remain the law if Republicans did not back the AHCA.  By Friday afternoon, it was apparent that a compromise could not be reached, and the bill was withdrawn (at President Trump’s request) without going to a vote.

What Does This Mean for Employers

Effectively, at least for the short term, the ACA, including the employer and individual mandates (including associated reporting) remains the law of the land. Until further notice, employers must stay the course on their compliance efforts.

Administrative Relief May Be Forthcoming

Consistent with the President’s Executive Order issued immediately after his taking office, there may be pressure on HHS Secretary Price in the short-term to provide regulatory relief to the extent permitted by the ACA.  However, it is unclear whether any such relief will focus on issues facing employer-sponsored group health plans.

Future Legislative Efforts Uncertain

President Trump could remain firm on his ultimatum and not support any future efforts to repeal the ACA and test his theory that it will “explode.”  One way the Republicans may help hasten this is by choosing not to pursue a lawsuit filed by Congressional Republicans during the Obama administration that would de-fund the cost-sharing reduction subsidies paid to insurers to reduce out-of-pocket costs for low-income enrollees, which the Republicans have asserted are illegal.  In that case, Republicans argued that Congress never actually gave the Obama administration funding for the program that’s being used to pay insurers.  A district court judge decided in their favor, but the Obama administration appealed the case.  The case was delayed in February and is currently on hold, with an update due in May.  Many believe these payments are essential for the stability of the insurance market. It remains to be seen whether the administration will drop the case and Republicans will fund the next round of subsidies in the short-term spending bill due at the end of April in exchange for a commitment by insurance companies not to abandon the market over the next few weeks.  Many conservatives may view this course of action as “giving up” on repeal and may not support it unless it is part of a larger repeal and replace effort.

Initially, the Trump administration and other Republican leadership stated that they intended to move on to tax reform and other initiatives at the top of the Trump administration’s agenda.  However, there is nothing that could stop Republicans from trying to garner support for another repeal effort, and, in fact, there have been recent reports that the House Republicans and the Trump administration are back in negotiations on repeal legislation.  The details and timing of such renewed efforts have yet to be released.  It is possible that the Republicans may offer piecemeal legislation to address certain components of the ACA, rather than a complete repeal.

ACA Taxes Repeal May Be Left Out of Any Tax Reform

Taxes associated with the ACA will remain untouched while Congressional Republicans work on reforming the rest of the tax code, House Speaker Ryan said following the March 24 decision to pull the AHCA from a planned House vote.  According to the latest Congressional Budget Office report, repeal of the ACA taxes would have reduced revenues by nearly $1 trillion over the next ten years.  Republicans believed that repealing the ACA taxes first and being able to offset them with ACA spending cuts would have made tax reform easier.  According to Ryan, failure to pass the AHCA “just means the Obamacare taxes stay with Obamacare. We’re going to go fix the rest of the tax code.”

ACA Taxes Repeal May be Funded by Cap on Employer-Sponsored Health Coverage

However, ACA tax repeals may be part of the larger tax reform effort if other tax expenditures would be used to finance the repeal.  One option that has been suggested is instituting a cap on the exclusion for employer-sponsored health coverage.  Initial leaked drafts of the AHCA had included such a provision but were not included when the bill was introduced earlier this month after there was political pressure by employer groups to eliminate it.

While it is not quite clear yet that the dust has settled, employers should proceed with the expectation that the IRS will begin enforcing the employer mandate via the ACA reporting forms, and prepare for the return of the health insurance industry tax (HIT) in 2018 (the HIT affects fully-insured medical, dental and vision plans but was under a one-year moratorium for 2017).  Lastly, the Cadillac tax is expected to be effective in 2020, so employers should also continue evaluating how their plans may be impacted.  Of course, it’s certainly possible that the Cadillac tax will be delayed again in the future.

 

About ECI. Empower is ECi’s Flagship SaaS Human Capital Management Solution. A single, robust, real-time application, empower simplifies the entire HR process by eliminating manual and paper processes, automating critical workflows and improving interdepartmental communication. From A single access point, employees, their managers, recruiters, payroll and benefits administrators and more have access to the data necessary to their role, all delivered via the web. For more information, please visit our website.

About The Authors. This alert was prepared for ECI, Inc. by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2017 Marathas Barrow Weatherhead Lent LLP. All Rights Reserved.

 

09 Mar 2017

House Committees Release Proposed Legislation to Repeal and Replace the ACA

On Monday, March 6, the U.S. House of Representatives Ways and Means and Energy and Commerce Committees released the American Health Care Act (AHCA), their proposed legislation to repeal and replace the Affordable Care Act (ACA) through the budget reconciliation process, which requires a simple majority vote of Congress. Key provisions of the bill, if enacted, would:

  • retroactively repeal the individual and employer mandate penalties to months after December 31, 2015;
  • delay the 40% “Cadillac Tax” on employer-sponsored health plans until 2025 (but would not include a cap on the employer-provided health care tax exclusion, which had been proposed in an earlier leaked draft of the AHCA and which some had expected would replace the Cadillac tax and fund the replacement provisions);
  • make significant changes to the ACA insurance coverage and marketplace stabilization provisions;
  • enhance health savings accounts (HSAs) and provide a monthly tax credit;
  • provide relief from many of the ACA’s taxes and fees; and
  • curtail Medicaid reforms.


Preservation of a Majority of ACA’s Protections

The AHCA would preserve a majority of the ACA’s protections.  For example, the following key ACA provisions would remain in place under the terms of the AHCA:

  • out-of-pocket limits on essential health benefits (EHBs) for non-grandfathered plans (currently $7,150 for self-only coverage and $14,300 for family coverage);
  • prohibition on lifetime and annual dollar limits for EHBs;
  • prohibition on pre-existing condition exclusions;
  • coverage for adult children up to age 26;
  • guaranteed availability and renewability of coverage;
  • nondiscrimination rules (on the basis of race, nationality, disability, age or sex); and
  •  prohibition on health status underwriting.

The requirement to offer the EHB package for individual and small group plans also remains in place, although the actuarial value requirement would be repealed. The bill would allow states to permit rates to vary by age with a ratio of 5:1 (instead of the current 3:1 ratio) for plan years beginning on or after January 1, 2018.

Retroactive Repeal to 2016 of Individual and Employer Mandate Penalties

The AHCA would eliminate both the individual and employer mandate penalties by reducing to “zero” effective retroactively to 2016 the Section 5000A individual shared responsibility tax (“individual mandate”) and the Section 4980H employer shared responsibility tax (“employer mandate”).   Practically, this would mean that individuals who paid the individual mandate penalty for 2016 might be able to request a refund.  Large employers presumably would still be responsible for any penalties for 2015.

The ACA’s reporting requirements under Section 6055 and 6056 are not expressly repealed in the proposed bill.  However, the AHCA does outline a new prospective reporting process (discussed further below), under which employers would indicate an offer of health coverage on the employee’s W-2 tax form, which would make the current reporting redundant.  The Ways and Means section-by-section summary notes that “reconciliation rules limit the ability of Congress to repeal the current reporting, but, when the current reporting becomes redundant and replaced by the reporting mechanism called for in the bill, then the Secretary of the Treasury can stop enforcing reporting that is not needed for taxable purposes.”

Replacing Low-Income Premium Tax Credits with Age-Adjusted Tax Credits Beginning in 2020 

The bill would completely repeal the ACA premium tax credits. In addition, the cost-sharing subsidies paid to insurers that covered low-income individuals would be repealed beginning in 2020.

Under current law, the amount a household is required to pay towards their premiums is based on income.  For households with incomes less than 400% of the federal poverty level there are certain limits on the amount the household is required to repay the federal government for the excess premium tax credits.  The legislation would end current income-based caps on excess advance premium tax credits, requiring households that received excess premium tax credits to repay the entire excess amount, regardless of income, for 2018 and 2019.  Under current law, qualified health plans must meet certain requirements for households to be eligible for the premium tax credit.  The bill would also modify the credit so that the credit could be used for certain non-Exchange and “catastrophic-only” coverage. The modified tax credits may not be applied for the purchase of any coverage that includes abortions (but does not prohibit the purchase of a separate policy that includes abortions). The bill also revises the schedule under which an individual’s or family’s share of premiums is determined by adjusting for household income and the age of the individual or family members.

Beginning in 2020, age-adjusted tax credit would be available for individuals purchasing insurance in the individual market, with older individuals receiving larger credits. The tax credit is refundable and advanceable on a monthly-basis to pay for individual market premiums (i.e., not employer coverage) or any unsubsidized COBRA coverage from a former employer. The annual tax credit amount is established as follows per individual:

  • $2,000 for those under 30;
  • $2,500 for those between 30 and 40;
  • $3,000 for those between 40 and 50;
  • $3,500 for those between 50 and 60; and
  • $4,000 for those over 60.

 

The new tax credits would be capped at $14,000 per family and would be adjusted for inflation over time.  In addition, the tax credit begins to phase out when a taxpayer’s modified adjusted gross income reaches $75,000 ($150,000 for joint filers) adjusted annually by the consumer price index plus one percentage point for inflation after 2020.

To be eligible for the tax credit, the individual may not be eligible for employer-sponsored health care coverage or government coverage such as Medicare or Medicaid.  The proposed legislation would require employers to report on an employee’s Form W-2 for each month of the year whether the employee has an offer of eligible employer-sponsored coverage. Insurers also would continue to have additional coverage reporting obligations regarding off-Exchange coverage for 2018 and 2019, and under a new Section 6050X for coverage that is eligible for the premium tax credit that would be available beginning in 2020.

Repeal of Small Business Tax Credits Beginning in 2020

The ACHA would repeal the ACA’s small business tax credit beginning in 2020.  Between 2018 and 2020, under the proposal, the small business tax credit would generally not be available with respect to a qualified health plan that provides coverage relating to elective abortions.

Preservation of Pre-Existing Conditions and Addition of a Continuous Coverage Requirement Beginning with Open Enrollment in 2019

The proposed legislation does not eliminate the ACA requirement that insurers must offer coverage to individuals without pre-existing condition exclusions.  However, beginning in 2019, the bill would replace the individual mandate with a continuous coverage requirement. To avoid a 30% premium surcharge, individuals would have to prove that they did not have a gap in creditable coverage of at least 63 continuous days during the 12 months preceding coverage. The penalty would last for the remainder of the plan year for special enrollments during 2018 (such as a dependent aging out), and for the 12-month period beginning with the first day of the plan year for 2019 and succeeding years. One practical implication of this requirement may be renewed reporting of HIPAA creditable coverage that existed prior to the ACA’s enactment.

Enhanced HSAs Beginning in 2018

The bill also contains various provisions to encourage use of health savings accounts (HSAs).  The AHCA would:

  • increase the maximum annual contribution limits on HSAs to match the annual deductible and out-of-pocket expenses under a high-deductible health plan (HDHP) (at least $6,550 for individuals and $13,100 for families beginning next year);
  • allow both spouses to make catch-up contributions to the same HSA; and
  • allow HSAs to cover medical expenses incurred during the first 60 days of HDHP coverage as long as the HSA is established within that 60-day period, with all provisions effective for 2018.


Repeal of Various ACA Taxes

In addition to the individual and employer mandates and small business tax credits discussed above, below is a list of some of the other tax relief provisions in the ACHA, which, if the bill is enacted, would effectively revert these taxes to pre-ACA limits in most cases:

The proposed legislation does not appear to repeal the Patient Center Outcomes Research Insurance (PCORI) fees at this time.

Medicaid Expansion Curtailed Beginning in 2020

The bill would maintain the ACA Medicaid expansion through Jan. 1, 2020. At that time, enrollment would be frozen and states would no longer be able to admit new enrollees, with the expectation that enrollment would slowly decline as enrollees’ incomes change and they shift off the program. Another significant change to Medicaid under the bill would be a conversion of Medicaid to a “per capita cap” system, where states would get a lump sum from the federal government for each enrollee. By contrast, under current Medicaid funding, the federal government has an open-ended commitment to paying all of a Medicaid enrollee’s health care costs, regardless of how high those costs go.

Next Steps

The AHCA is only the House Republicans’ initial proposal to repeal and replace the ACA and there is likely to continue to be significant debate over the legislation.  For instance, Sen. Rand Paul (R-Ky.) is among several other conservative senators who oppose the plan to provide income-based tax credits. Additionally, four key Republican senators, Sens. Rob Portman (Ohio), Shelley Moore Capito (W.Va.), Cory Gardner (Colo.) and Lisa Murkowski (Alaska), all from states that opted to expand Medicaid under the ACA, said they would oppose any new plan that does not include stability for Medicaid expansion populations or flexibility for states.

There is currently no Congressional Budget Office (CBO) score for the AHCA, which makes it impossible to determine if the bill complies with congressional PAYGO (pay-as-you-go) requirements. PAYGO compels new spending or tax changes not to add to the federal debt. Under the PAYGO rules a new proposal must either be “budget neutral” or offset with savings derived from existing funds.

Because the GOP leaders are maintaining a path to passage that does not include Democrats, the bill must be limited to the budget reconciliation process to avoid a filibuster and preserve the ability to pass by simple majority in the Senate. A potential problem with budget reconciliation is the Byrd rule which limits reconciliation provisions in the Senate to provisions that affect government revenues and outlays. This severely restricts what the bill is capable of achieving through substantive legislative change. Several provisions of the bill, such as the age rating or continuous coverage requirements, might violate the Byrd rule.

The Byrd rule also means that the bill cannot include several items that have regularly been raised as part of a replacement measure, such as tort reform, nor can it repeal McCarran-Ferguson, which would eliminate the antitrust exemption for insurance, remove states as the primary authority to regulate the industry, and create an insurance market expansion across state lines.

Any final legislation may look very different than the initial AHCA proposal and employers and other stakeholders should stay the course on ACA compliance at this time while they continue to monitor for changes as the AHCA makes its way through the legislative process.

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About The Authors.  This alert was prepared for ECI, Inc. by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2017 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

01 Mar 2017

IRS to Continue Accepting Tax Returns without Indication of Health Insurance

 

The IRS has announced that it will continue to process tax filings of individuals whose returns do not indicate whether they have maintained health insurance as required under the Affordable Care Act (ACA).  The announcement is in direct response to the President’s January executive order to ease the ACA’s economic and regulatory burdens.

In recent years, individuals were instructed to check a box on line 61 of Form 1040 if they had health insurance all year.  Those who did not were instructed to attach an exemption form (Form 8965) or make a shared responsibility payment.  Some taxpayers did not check the box on line 61 or include an exemption form.  These “silent returns” were still processed and individuals could claim any refund to which they were entitled.

Prior to the issuance of the President’s order, the IRS had put in place system changes to reject silent returns starting with those filed for calendar year 2016; however, in furtherance of the President’s order the IRS will continue to process silent returns and provide any refunds due.

The fact that silent returns will not be systematically rejected at the time of filing allows them to be processed and minimizes the burden on taxpayers, including those expecting refunds.  That said, taxpayers are still required to make an individual shared responsibility payment, if applicable.  The announcement emphasized that the individual mandate is still in effect and subject to enforcement until changed by Congress.  If the IRS has questions about a tax return, taxpayers may receive correspondence at a future date or they may experience collection activity.

About ECI. Empower is ECi’s Flagship SaaS Human Capital Management Solution. A single, robust, real-time application, empower simplifies the entire HR process by eliminating manual and paper processes, automating critical workflows and improving interdepartmental communication. From A single access point, employees, their managers, recruiters, payroll and benefits administrators and more have access to the data necessary to their role, all delivered via the web. For more information, please visit our website.

About The Authors.  This alert was prepared for ECI, Inc. by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2017 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

01 Mar 2017

White House Extends Transition Relief for Non-Compliant Plans through 2018

White House Extends Transition Relief for Non-Compliant Plans through 2018

On February 23, 2017, the White House announced a one-year extension to the transition policy (originally announced November 14, 2013 and extended several times since) for individual and small group health plans that allows issuers to continue policies that do not meet ACA standards.  This transition policy has now been extended to policy years beginning on or before October 1, 2018, provided that all policies end by December 31, 2018.  This means individuals and small businesses may be able to keep their non-ACA compliant coverage through the end of 2018, depending on the policy year.  Carriers may have the option to implement policy years that are shorter than 12 months or allow early renewals with a January 1, 2018 start date in order to take full advantage of the extension.

Background

The Affordable Care Act (ACA) includes key reforms that create new coverage standards for health insurance policies. For example, the ACA imposes modified community rating standards and requires individual and small group policies to cover a comprehensive set of benefits.

Millions of Americans received notices in late 2013 informing them that their health insurance plans were being canceled because they did not comply with the ACA’s reforms. Responding to pressure from consumers and Congress, on Nov. 14, 2013, President Obama announced a transition relief policy for 2014 for non-grandfathered coverage in the small group and individual health insurance markets. If permitted by their states, the transition policy gives health insurance issuers the option of renewing current policies for current enrollees without adopting all of the ACA’s market reforms.

Transition Relief Policy

Under the original transitional policy, health insurance coverage in the individual or small group market that is renewed for a policy year starting between Jan. 1, 2014, and Oct. 1, 2014 (and associated group health plans of small businesses), will not be out of compliance with specified ACA reforms.  These plans are referred to as “grandmothered” plans.

Also, to qualify for the transition relief, issuers must send a notice to all individuals and small businesses that received a cancellation or termination notice with respect to the coverage (or to all individuals and small businesses that would otherwise receive a cancellation or termination notice with respect to the coverage).

The transition relief only applies with respect to individuals and small businesses with coverage that was in effect since 2014. It does not apply with respect to individuals and small businesses that obtain new coverage after 2014. All new plans must comply with the full set of ACA reforms.

One-year Extension

According to HHS, the extension will ensure that consumers have multiple health insurance coverage options, and that states continue to have flexibility in their markets. Also, like the original transition relief, issuers that renew coverage under the extended transition relief must, for each policy year, provide a notice to affected individuals and small businesses.

Under the transition relief extension, at the option of the states, issuers that have issued policies under the transitional relief in 2014 may renew these policies at any time through October 1, 2018, and affected individuals and small businesses may choose to re-enroll in the coverage through October 1, 2018. Policies that are renewed under the extended transition relief will not be considered to be out of compliance with the following ACA reforms:

  • community premium rating standards, so consumers might be charged more based on factors such as gender or a pre-existing medical condition, and it might not comply with rules limiting age banding (PHS Act section 2701);
  • guaranteed availability and renewability (PHS Act sections 2702 & 2703);
  • if the coverage is an individual market policy, the ban on preexisting medical conditions for adults, so it might exclude coverage for treatment of an adult’s pre-existing medical condition such as diabetes or cancer (PHS Act section 2704);
  • if the coverage is an individual market policy, discrimination based on health status, so consumers may have premium increases based on claims experience or receipt of health care (PHS Act section 2705);
  • coverage of essential health benefits or limit on annual out-of-pocket spending, so it might not cover benefits such as prescription drugs or maternity care, or might have unlimited cost-sharing (PHS Act section 2707); and
  • standards for participation in clinical trials, so consumers might not have coverage for services related to a clinical trial for a life-threatening or other serious disease (PHS Act section 2709).

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About The Authors.  This alert was prepared for ECI by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2017 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

24 Jan 2017

President Trump Issues Executive Order on the Affordable Care Act

President Trump moved swiftly after taking office on Friday, issuing an Executive Order intended to minimize the economic and regulatory burdens of the Affordable Care Act (“ACA”).  The order is somewhat symbolic and has no immediate effect on employers, many of whom are in the process of complying with the ACA’s onerous reporting requirements (Forms 1094 and 1095), which are not rescinded by the order.

The order directs HHS and the heads of other departments and agencies (e.g., U.S. Department of Labor, Treasury Department) to exercise all available authority and discretion to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.  It should be noted that employers are not among those explicitly listed as requiring protection from regulatory burdens.

The order is broadly drafted and does not specify which provisions of the law should be targeted.  However, to the extent that following the order would require revision of regulations issued through notice-and-comment rulemaking, the agencies will need to comply with the Administrative Procedures Act (“APA”).

Under the APA, agencies cannot rescind existing regulations until they engage in a new notice-and-comment rulemaking process (including required public comment period and delayed effective dates) and observe other procedural requirements.  In practical terms, the APA makes it difficult for an incoming President to overturn final regulations implemented by a predecessor.  Regulations that haven’t taken effect can be suspended while they are reviewed to determine if they conform to the new administration’s agenda, or if modification or revocation is necessary.  To that end, the President’s chief of staff has instructed federal agencies to cease issuing new regulations and withdraw rules that have been sent to the Office of the Federal Register until they can be reviewed by the new agency heads.

The order is somewhat symbolic given the constraints imposed by the APA, yet is has some substantive effect.  The directive gives HHS wide latitude when granting hardship exemptions from the individual mandate (it does not, however, waive the requirement for individuals to maintain minimum essential coverage).  The order also signals to states that the federal government may be more receptive to granting Medicaid waivers, which afford states additional flexibility in designing and administering their programs.  Another section of the order instructs the agency heads to work with states to encourage the sale of insurance across state lines, to the maximum extent permitted by law.  Current law (the McCarran-Ferguson Act), protects insurance companies from interstate competition by permitting states to regulate health plans sold in their state, creating a patchwork of state insurance laws across the U.S.

From an employer perspective, employers with 50 or more full-time equivalent employees and sponsors of self-insured health plans are preparing to comply with the ACA’s reporting requirements (Forms 1094 & 1095) over the next couple of months.  They may be tempted to view the order as a sign that the Internal Revenue Service will not enforce the employer mandate or ACA reporting.  However, until further regulatory guidance is released, the final regulations implementing the employer mandate and its reporting requirements remain in effect and are subject to enforcement by the IRS.  The IRS recently indicated in FAQ guidance that it intends to begin notifying employers of their potential liability for an employer shared responsibility payment for the 2015 calendar year “in early 2017.”

Once President Trump’s appointments to the regulatory agencies are seated we’ll likely see new regulations proposed to ease the ACA’s economic and administrative burdens, although the process will take some time.  Also, now that President Trump has taken initial action on the ACA, it may ease the pressure on Congress to attempt an immediate repeal or find a replacement.

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About The Authors.  This alert was prepared for ECI, Inc. by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act.  Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2017 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

25 Feb 2016

IS THERE AN EASY PART OF ACA REPORTING?

Reporting the 1094-C is by far the easiest part of ACA reporting. The data you need for the 1094-C is employer-level data, which is information that all employers are tracking, even if it’s in an Excel spreadsheet.  It is fairly easy for a payroll solution to track total number of employees on a month-to-month basis. This is especially true if there is an HR component tied to payroll to pick up employees who are considered part of that total employee count who are not receiving a paycheck (e.g. employees out on unpaid FLMA). Full-time employee count on a month-to-month basis can be a little trickier, particularly when employers are utilizing a look back measurement period. This data point is still fairly easy to come up with, or track from a payroll and time & attendance perspective. The hardest part of the 1094-C is line 22, but the answers to line 22 are really answers that need to be figured out by a broker advisor, or at the employer level, not by a technology solution.

If you still have questions about ACA reporting, look for our next blog post on this page, or tune into one of our previously recorded webinars http://www.ecipay.com/Webcasts.